Bimbos, Broads, and Floozies.......Why Women Fail in Retail

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Sales has never been my favorite thing but it's an inevitable task when fueling a creative existence. Thankfully Bonnie (my mom) has a gift for it! Grudgingly I tail along. My disdain for it doesn't make me an expert but 21 years of watching stores succeed and fail has taught me a great deal.

Surprisingly, I would say about 9.5 out 10 stores we have met with over the years fail within the first two years. On the outset nearly all of them look like they have the potential to be successful but I've found over the years that there is a pattern to success and the randomness of the women in business are often the sole cause of a retail stores failure.

Retail is theatre. It is constant movement and physical work, scenery, props, lines: improv at it's best! It's diplomacy, networking, marketing, and advertising - not to mention customer relations, human resources, and occasional psychotherapy. It's also accounting, budgets, numbers, and not always your own personal style. Retail is work! And all of these points are reasons that women fail in retail businesses.

People have asked us for years why we do wholesale instead of retail since we only make 50% of what a product actually sells for on a store's shelf - sometimes less. There are a few reasons for that but the primary one is that in spite of the fact we only make half the money, there is more money in wholesale. Why? Most retail businesses owned by women fail in the first two years - and over half of them in the first. And for every one that fails another two peek through the cracks. They don't have to fail though. Success requires both an art and a formula for success.

Earlier this summer there was a wave of financial experts in the news informing Americans that it would be smarter to invest in a business venture for their children than to invest money in a college education. I will agree that the financial expense of a college education is off the charts for most Americans paying out of pocket. It certainly wasn't an option for me. The flip side of this though, is someone is telling Americans that their children are a good financial investment right out of high school. Given that across the board, 50% of all start up businesses fail within the first two years, and that most high school graduates know virtually nothing about balancing their own bank account much less taxes, insurance, accounting, inventory, sales, human resources, etc... I'd re-think an investment of that scale - not only your life savings but your child's future and maybe your own.

The average store owner that we have dealt with over the years are women around 40-50 years of age - some married, some divorced, usually stay at home mom's that invented a way for themselves into the job market after their kids were fully enrolled in school or after a divorce. They usually have some start up money - a loan (rarely), a life insurance policy left by a deceased parent, a divorce settlement, or they somehow came into a piece of property (by inheritance or luck) that afforded them the opportunity. More often than not they've been stay at home mom's who profess to have master's degrees in this or that from their favorite football team's school. They rarely read books, keep up with magazines, or watch the news but they typically know everything there is to know about local school sports. They came into some money (usually not near enough), they rented a space, tacked up a sign, and opened a store. It's a start!

I read once that the difference between women and men in business is that men think long term - decades ahead of themselves. Women are thinking five minutes to 3 days ahead. That says alot!

The failures open a store and spend every dime they have on whatever they think the latest, greatest trend is with the anticipation that people will pour in through the doors and empty their pockets. Often this has more to do with trying to take over an established businesses clientelle with an identical product rather than building their own identity, which usually also goes back to some earlier rivalry. When people don't instantly pour through the front doors spending wads of cash they're angry, hurt, and mad but it somehow never occurred to them to:

* ADVERTISE! ADVERTISE! ADVERTISE!... Newspaper, radio, television, bill boards, flyers, bulletins, and internet marketing. Surprisingly enough, few advertise at all. Some stores only advertise sales which only gets them traffic when they are sacrificing profit to pay to advertise discounted goods. Duh! "Just Arrived!... the newest most fabulous and expensive jeans in town!" vs. "Last weeks newest, most fabulous and expensive jeans in town 90% off" This may be a news flash for people but just because you have a retail store, doesn't mean even one person will come into it every single day unless you invite them, lure them, do something to entice them in. We knew one store owner many years ago that tracked her customers over six months - she had on average 25 paying customer per month. From that you can average your expense and evaluate how much you need each customer to spend to meet your monthly expenses, or how many more customers you need to generate in comparison to the dollar amount of your average sale. And even after you get them in the door, you have to be on your toes to get them to drop money before they leave, much less to get them to ever want to come back again.

* Circulate and Work the Room.... I'm always amazed to walk in a store and wait and wait and wait for the owner or manager to finish a conversation on her cell phone, finish harvesting her Farmville crop, or have to shout "hello, hello" until she emerges from a back room. IF YOU'RE IN RETAIL SALES IS YOUR JOB! This floors me!? Women who think they open a store and customers will come in and wait on themselves, just leaving money on the counter with no work involved. If you don't know how to sell something - read some books, go to some seminars, do whatever you have to do to learn the craft because all that inventory you thought was so fabulous for your store that is sitting in inventory isn't going to sell itself. And if you don't sell it you won't have any money to buy more fabulous inventory to keep your store going. Owning a retail store means you have yourself a sales job plus a whole lot more responsibility!

* Diversify.... Most women open a store because they have a particular interest they want to expand on. If they have small children they may want to open a children's clothing store, if they have a new house they may be opening an antique and home decor store, if they love weddings they may open a wedding shop or florist, if they love clothes and accessories then they focus their interests in fashion, etc... You have to consider your prospective clientelle. In my experience, stores in small towns have the best opportunity for success and one reason for that is because they have the opportunity to get to know all of their customers and potential customers very well. As a wholesaler I can show them my merchandise and they will pick through it with certain customers in mind - knowing their favorite colors, likes, dislikes, sizes, birthdays, vacations, etc... A common mistake is buying merchandise that only you like. People have a wide variety of tastes and styles, and what you love may not be what your biggest spending customer cares for at all. Not everyone is your shape or size or has your coloring. Not everyone has your style of home or lifestyle. Know your clientelle and don't pigeon hole yourself by limiting your market.

* Tapping the Till...or letting your spouse, kids, or significant other tap it.... I see this all the time - a husband, boyfriend, or teenagers standing at the register pulling cash as quickly as it comes in. If you don't have an accounting background then it's well work investing a few hours time with an accountant to work out a budget strategy. Know how much your expense are vs. how much your mark up is vs. how much revenue you bring in on average. Work up a budget and stick with it! It's all too common on Friday afternoons, Saturdays, and just before holidays to see people that don't belong to the store hanging around the cash register and talking about happy hour, the lake, the game, or whatever they're waiting on money to go do. While women store owners are always fully aware of this, it would really be in the best interest of the business to say no. Keep the cash under lock and key and stay within your budget regardless of whatever carnival passes through town.

* Owning a Business is Not a Regular Pay Check... It's very common for people to have the idea that if they own a business they've suddenly got regular income. Nothing could be farther from the truth. If you're in retail your business flows with holidays and tourism if you're store is located in an area that generates tourism. Typically 50% of your annual revenue can be expected in the 4th quarter (Oct, Nov, Dec) and very little income at all in the first quarter (Jan, Feb, March). Taxes are typically due in April - unless you operate on a fiscal year which means you have to have ample reserves to make it through lean times that may last many weeks or months. If you spend all the money you made throughout the holiday season you may not have enough reserves to meet your first quarter expenses and pay your taxes.

* Location, Location, Location - The jazziest new mall or shopping center isn't necessarily the most profitable location. Tourist towns are also usually not the best bet for a successful venture unless you own the building outright. Owning a building, any building, outright is usually your best opportunity for success regardless of the location. If you're renting though, there are many potential traps for failure. some real estate contracts require that you offer your store inventory as security for the lease. It is a legal practice and if you sign that you'll most likely be bound to it by law. We've seen it happen over and over and over, and more and more frequently. Look at the type of customer your marketing to and consider whether or not they will venture through the mall to find you, or whether they will want to cart the products you offer through the mall if they wanted to buy them. While shopping centers may seem to offer lots of traffic - a busy restaurant next door may be a deterrent to potential customers entering your door - people follow their noses first. If you have higher end merchandise then you don't necessarily want subsidiary traffic from a liquor store, thrift store or pawn shop next door. Likewise, if you're looking into a touristy town, if you can't afford to buy don't rent. It's a trap and it will take you under financially before you ever have a chance. The implied added revenue of the tourists is often misleading and vs. the added expense it's rarely worth it unless you can afford to own the property.

* Scenery and Props.... The same person can walk into the same store every single day for a month and see the very same thing. We humans are creatures of habit. People typically walk into a store and circulate counter-clockwise. A store has to move, displays have to move and be reinvented on a daily basis, windows have to be interesting and always changing (both to keep merchandise from fading and to keep people on the street interested in coming in). Move both products and entire displays, re-create and re-invent on a regular basis. I can't tell you how many times a store owner has pointed to a product and said to me, "that's been there for 6 months and nobody's even looked at it." Then move it, display it, do something to make it interesting. If it interested you enough to buy it as merchandise in the first place then maybe you just need to present it in a way that do the same for your customers. On that note, consider what sold you on a product when selling it and then present it in a similar way to your customers.

* Sell it!... Where prayer is talking to God and meditating is listening to God, sales is as much listening to your customer as it is talking to them. I hate selling and I HATE SALESPEOPLE. By salespeople, I mean those people that are intent on talking you to death about a product until you submit to something you don't even know if you want it or not you just buy it to shut them up. It's not necessary. Start a conversation the way you would if you were hosting a party and talking to a plus one you didn't know. Be friendly, show them around, invite them to try something on or show them an interesting feature of something you like. You have to start somewhere.

* Partnerships... In the long term, they universally never work. If you don't have the money to start on your own then start smaller than you intended and do it on your own anyway. Partnerships in retail are destined to fail.

* If your spouse or boyfriend has another business or occupation then keep them out of the business end of your business. It may be an ugly argument or two but it's a boundary line that must be drawn.

* Don't Be Snooty... You wouldn't think I would have to say it but it does happen. I have a relative who was a wealthy cattleman and rancher. He walked in his bank one day in his work clothes and the teller who didn't recognize him out of his suit, went out of her way to be rude to him because of his appearance. He was so incensed by her rudeness that he chartered his own bank in that same town as a direct result of the incident. A spoonful of honey goes a long way but a spoonful of vinegar will go a lot farther. Nothing travels faster than an ugly truth.

With that said, the stores that we have dealt with over the years that actually succeeded in the long term all have some additional common traits.

* They started small... often with antiques and garage sale findings that they gradually upgraded to the products that interested them.

* They held onto their money for rainy days

* Own It....They owned their property from the start or they bought it outright as soon as they possibly could.

Keep Regular and Convenient Hours... Many successful stores stay open until 7:00 or 7:30 to allow people to stop by on their way home from work. They also stay open a full day on Saturdays. Most retail stores close on Mondays but occasionally that varies locally. A common mistake is opening at 11:00 and then closing at noon for lunch and again at 3:00 to pick children up from school and make deliveries, then closing at 5:00 to be home in time to cook dinner for family. Although we all agree that family should never be a sacrifice, if you can't find a way for the business to function around your personal needs then maybe this isn't the best time because owning a business isn't unlike being a new mom to a constantly crying baby.

*Be Professional... Know that you're not always going to look like a super model, that you'll be uncrating boxes, up ladders and hanging by your toes re-creating displays, dealing with all kinds of people and personalities on a daily basis, and basically pulled in a multiple directions at once every hour of every day. Whatever you're doing, how ever you feel on any particular day, check your ego at the door and don't present yourself as a bimbo, broad, or floozie. They're the ones that bite the dust first every time.
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