Business Failures
Reasons for Failure
Business failures have become a properly investigated field of study in the past few years as a struggling economy and an overall difficult business environment have combined to discourage potential entrepreneurs from entering the market place and to cause many existing business owners / entrepreneurs from continuing their endeavors. This interest in business failures is precipitated by the fact that the number and nature of business failures impacts negatively on the overall business climate and examining possible causes in an effort to forestall further such failures is vital to maintaining a healthy business environment. The emphasis in recent years has shifted from examining why and how businesses fail toward an analysis of how to avoid and prevent business failures.
The failed business that I chose to review was a small ice cream / restaurant in my neighborhood. The name of the business was Charlie’s Ice Cream and Edibles. Located in a strip center along one of the major streets running through the center of town it appeared to be strategically located to attract good traffic both from the passing of automobiles and walk-up business from the surrounding neighborhood. The strip center was well-maintained and attractive and there was no noticeable problem with loitering or nearby business that might draw customers that might cast negatively on the ice cream or restaurant industry. The proprietor himself was a friendly, out-going personality that was well-liked and respected. The business was within easy walking distance from the area’s largest recreational facility. This facility had a large Olympic sized outside swimming pool, inside handball and basketball courts, and a large workout facility supported by a number of year-round exercise programs. In addition, there were several school located nearby. Unfortunately, however, the central business district was several miles away and, although there were several smaller office buildings nearby, there were no large businesses of factories nearby. Based on the demographics of the surrounding area, Charlie, the proprietor was relying upon doing a heavy business during the warm months when the nearby swimming facility was open and hope that profits earned during those months would hold him over during the sparser winter months.
For the first two years Charlie’s theory of capitalizing on the profits of the summer months to sustain the business during the slower winter months worked quite well. During the months when the pool was open his small store was filled to capacity nearly every day. Customers would be lined out the door to buy his homemade ice cream and old-fashion style hamburgers. It quickly became a local gathering spot for families and, despite the huge drop-off in business from November to early May, his business flourished. He had expanded his space twice and added items to the menu in an effort to increase business. The future looked bright for Charlie as his business seemed to be establishing a foothold in the community. He began to become active in the activities of the local school system donating both his time and product to various causes and there were no apparent signs that the business was anything but successful and that it should remain so for a number of years. The neighborhood surrounding the business remained solid and was marked by some minor growth in regard to some smaller office buildings being added and the addition of a bank and coffee shop nearby. Unfortunately, toward the end of the third year of Charlie’s business some downward trends were noted and the business began to struggle. It struggled to the point that making until the summer months became a reality and in the middle of February Charlie determined that he could no longer afford to keep the doors open and the business was suddenly forced to close to the shock of the entire community.
II. Reasons for Failure
The reasons why Charlie’s business failed are not immediately obvious (U.S. Small Business Administration). He had chosen his location wisely and done an excellent job of maintaining a clean, professional operation. His product was well received and was unique for the area. Within close proximity of his location there was initially no competition for his business. There were a number of fast food options but there was no business that could combine good product with personalized service plus, there was no one within walking distance of the community’s number one warm weather attraction: the swimming pool. Charlie was careful to keep a qualified and friendly staff at all times and managed to maintain a warm, family friendly facility at all times. He had never had a problem with teenagers loitering or a harassing element bothering his customers. Most importantly, success had never caused Charlie to lose sight of his dream of operating a successful business or cause him to stop working as hard as he ever did. From the day that the business opened until the day that it ultimately closed, Charlie worked in the building every single day.
For Charlie, the biggest problem was a struggling economy and competition from a national chain that eventually caused him to lose his strangle-hold on his market. Two conditions that are often at the core of business failure but two conditions over which Charlie had little or no control. As to the economy, Charlie suffered in two ways. First, his primary product was ice cream. Although he served other products such as sandwiches, soups, and salads his number one product remained ice cream and it was the once product that gave his restaurant its uniqueness. Ice cream, however, is not a necessity on the family menu particularly high-priced, home-made varieties. In struggling economic times, young families stop purchasing ice cream from small shops and begin buying cheaper varieties from grocery stores. Concurrently, in struggling economies membership at swimming facilities suffer as well. Fewer members at the health facility translated into fewer ice cream customers and this combination of factors resulted in reduced profits. Subsequently, this meant less a reserve and the winter of Charlie’s third year was therefore a real test of his ability to persevere.
If the struggling economy did not present enough problems for Charlie, the opening of a national change specializing in the same style of ice cream product as Charlie’s acerbated the situation. In late August, this national chain opened its doors to considerable fanfare including extensive advertising. The chain offered a much wider choice of products and at a lower price than Charlie could ever hope to offer his products. This presented Charlie with a variety of problems and with few real solutions. Although he had enjoyed two profitable years, he had not had the good fortune of being able to save a great deal as he was paying down the cost of the start-up of his business and the expansions that he felt he needed to make in order to increase what business he did have. He had planned for the future based on the conditions existing in the first two years but had not planned for an extended recession and the opening of a well-financed, chain operation. Perhaps he could have withstood the effects of one of those contingencies but the two of them at the same time and in close proximity presented an insurmountable obstacle.
The greatest asset that Charlie had entering this downturn period was his reputation and the good will that he had developed over the three years that he operated. There was not a person in the community that wanted his business to fail and everyone was disappointed to see the business close. Unfortunately, the struggling economy added another nail to his coffin as the money needed to assist Charlie’s cash flow difficulties in the form of a small business loan was not available as the banking industry was just coming out of their own difficulties and loans of that nature were simply not being made. Charlie was caught in the middle of down economy and was unable to find an escape route.
III. Analysis
As earlier indicated, Charlie made many prudent decisions in how he initiated and operated his business. He started with a simple idea, worked hard, maintained his passion, and enjoyed an excellent location. If he failed in any of the usual areas it was in failing to plan appropriately. In hindsight, the two expansions during the good times may have been ill-timed. There is a fine line between irritating customers by keeping them waiting and benefiting from creating the image that your product is so popular that people are willing to wait in line to buy it. Charlie might have been better off allowing the lines to keep waiting and delaying expansion until he had the available capital to do so without affecting his cash flow. Preparing for the recession is also something that he could, or should, have foreseen. Usually such events do not occur in a matter of weeks. Recessions generally occur in cycles and Charlie should have had the foresight to prepare for the event and likely did but due to timing and related factors was unable to stem the tide.
Planning for the increased competition in the form of a national chain is never an easy proposition for a small business owner. National chains operate on a much different margin in the way of pricing and purchasing and few small local businesses have the resources to withstand such an invasion. If Charlie had been better capitalized or been able to obtain a small business loan to provide him with cash flow for the time necessary to withstand the initial popularity of the national chain he might have gained back the customers he lost but Charlie did not have that luxury.
In the end the community lost a good business and community asset. A business that began with such promise and offered the community an alternative to a national chain fell victim to continued nationalization, a failed banking system, and a prolonged recession. It is interesting that Charlie’s business failed even in light of his being able to avoid many of the usual causes that result in business failings (Goltz, 2011). He appeared to start his business for the right reasons; he managed the business appropriately; found an excellent location; and was sufficiently capitalized, at least in the early going. Where he failed was in not planning properly for the prolonged recession and the eventuality of possible competition. Can he be criticized for these failings? The business ultimately failed and a reason must be determined but this is all done in hindsight. Whether he failed in the operation is questionable. Hindsight provides information that is not available in the day-to-day operation and, therein, lays many of the reasons why business fail. Under different circumstances Charlie’s would have continued to thrive and the community would have retained a valuable asset.
IV. Conclusion
The failure of Charlie’s business was difficult to watch and analyze. Unlike so many small businesses where one mistake is made after another, Charlie, for the most part, did what he needed to do to make his business a success. Unfortunately, Charlie’s business points out that the fortunes of business are often precarious and subject to events over which no one has any control. The current recession continues and no one has come up with a workable solution and the effect of national chains continues to impact on small local business owners. In Charlie’s case slightly different circumstances may have allowed his business to continue but the combination of events led to an unfortunate end. In the end even the best laid plans of men fail. Life can be unfair and Charlie and his business are living proof of the adage.
Bibliography
Goltz, J. (2011, January 5). Top 10 Reasons Small Business Fail. New York Tmes .
U.S. Small Business Administration. (n.d.). Standard Operating Procedures. Retrieved May 25, 2011, from SBA: http://www.sba.gov/about-sba-services/
Entrepreneur
Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Why Choose Our Academic Writing Service?
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
Online Academic Help With Different Subjects
Literature
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Finance
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
Psychology
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
Nursing
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Sociology
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
Business
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
Statistics
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Law
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
What discipline/subjects do you deal in?
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Are your writers competent enough to handle my paper?
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
What if I don’t like the paper?
There is a very low likelihood that you won’t like the paper.
Reasons being:
- When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
- We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.
In the event that you don’t like your paper:
- The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
- We will have a different writer write the paper from scratch.
- Last resort, if the above does not work, we will refund your money.
Will the professor find out I didn’t write the paper myself?
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
What if the paper is plagiarized?
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
When will I get my paper?
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
Will anyone find out that I used your services?
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
How our Assignment Help Service Works
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
