Five Fatal Mistakes for Small Retailing

In today's fast-moving and ever-changing business environment, mistakes can be fatal. Even at best, statistics show that about half of small businesses last less than two years. My 20-plus years of successfully operating several retail stores have made me a keen observer of the retail scene, and more important, the mistakes made by many retailers that have, in many cases, caused their demise. Even though the list of potential mistakes that retailers can make is long, I have found these five to be some of the most frequent and devastating.

1. Failure to plan effectively and objectively: Many new retailers plunge into business with little more than a prayer and a lot of optimism. Take time to prepare a business plan and estimate your financial needs. Nothing kills a retail business quicker than underfunding. Planning should also include location, your market demographics and your product line. In Retail in Detail, I have included many worksheets and planning tools you can use to accurately assess your prospects for success.

2. Focusing on products and not the market: I've seen stores slowly stagnate because the owner stubbornly hangs on to a product or product line, even though the market has passed them by. You're in business to make a profit, not to sell a particular widget. Don't become married to your products. A word of caution is appropriate here: You shouldn't arbitrarily dump a product line because of seasonal or occasional setbacks. There are ways to update your product lines without ditching them entirely. For example, if you run a gift shop that carries home decor products, you need to update your product offerings regularly to stay in step with changing decorating styles.