Ep. 164 The Top Five Reasons Why Independent Retail Stores Fail

Let me be real with you: this is not a feel-good topic. It’s uncomfortable to think and talk about why independent retail stores fail, especially as small business owners who want to succeed. 

To be clear, I’m not talking about stores that close intentionally for reasons like retirement or family tragedy. I mean the stores that fail because the owner didn’t have control of the business, even if they don’t want to admit it. 

Let’s look at the five reasons why independent retail stores fail AND what you can do to keep your business healthy, thriving, and successful. 

#1. A Stubborn or Arrogant Owner

Retail store owners who are stubborn, arrogant, and refuse to try new things are setting themselves up for failure. I’ve heard countless stories of stubborn owners staying in a bad location, refusing to try new products or services, or only relying on word of mouth instead of doing any marketing.

Whether it’s because they’re too prideful or they just want to be right, these owners balk at the idea of change. Their pride, fear, and “save-face” attitude are why their independent retail stores fail.

If you’ve made a mistake when choosing your location, what are you willing to do about it? Moving isn’t fun—it’s scary and overwhelming! But I have seen at least two Master Shopkeepers members do this successfully, and their location change was what changed everything for their businesses. 

And I’m all for word-of-mouth marketing. But if your store isn’t getting enough foot traffic, what are you doing about it?

If your store IS getting a decent amount of foot traffic but you still aren’t getting the sales you need, then why aren’t you changing your products, categories, and service offerings? What are you doing to convert that traffic into sales?

Unfortunately, these are often situations where the store owner is digging their heels in the sand. They just don’t want to change what might be hurting them. They don’t want to seek or ask for help. And their fear of change ends up suffocating their business.

There’s a lot of pride mixed in with this. But sometimes we have to swallow our pride in order to survive and maybe even thrive.

#2. Poor Financial Management

I’ll be the first to admit that indie retail businesses can be cash flow beasts. Without systems in place, it is challenging to understand what in your bank account is really yours versus what is accounted for. I get it! 

Because cash flow issues are so common, I taught a free cash flow masterclass in 2022. Indie retailers often don’t realize that a single bank account balance is NOT an indicator of the state of their business. But there are tools and systems you can put into place to get a better understanding of how much money you actually have. 

Another common money management problem for small store owners is paying taxes. If you’re not paying taxes, particularly sales tax, please hire a CPA. You have to push your fear or shame to the side—especially if you love your business and want it to be around in the future. 

And if you think you can’t afford a bookkeeper and CPA…well, the retailers who struggle the most with their finances or taxes are the retailers who can’t afford NOT to hire them. 

#3. Poor Systems

If you’ve ever listened to the podcast or read this blog before, you know I’m a huge fan of systems! 

Some successful retailers are naturals at systems. They might not even realize that’s what helping them succeed. But others need support in this area. Poor systems are a major reason why independent retail stores fail. 

Systems will help you…

• Save time
• Spare you from overworking and exhausting yourself
• Help you hire
• Give you the information you need to understand when you’re over/under stocked
• Help you decide when it’s time to get rid of dead inventory
• Figure out if you’re underpricing items

…and SO much more. You MUST set up systems in your business. 

In 2021 and 2022, I hosted a Retail CEO Challenge. We spent quite a bit of time on systems for all the reasons mentioned above! I haven’t hosted the challenge this year (at least, not yet!). In the meantime, listen to this episode to learn about the systems I use in my retail store. 

#4. Mindset!

Dealing with limiting beliefs, programmed thinking, conditioned social norms, and just regular money mindset baggage can make running a business so much harder than it needs to be. I sincerely believe that mindset work should be a top priority for all entrepreneurs. 

I see it affecting so many store owners in SO many ways—and they don’t even realize it! They think it’s something tangible that is going wrong in their business. They don’t realize it’s their THINKING. 

If you want to work on your mindset, start with this episode about raising your prices or this one about managing your mind, not your time.

#5. Treating Their Store Like a Hobby

Hobbyist owners simply don’t take their business seriously. They might keep inconsistent hours, avoid doing the day in and day out work of running a store, or refuse to make sacrifices in other areas of their life. This is probably the biggest reason why independent retail stores fail.

Hours can be a particularly sticky conversation. I’m not saying everyone needs to be open 7 days a week, but it is crucial that you are conscientious of your customers’ needs and that you’re consistent. 

And if you aren’t willing to do the work mentioned in reasons 1-4 so you can take your business seriously…well, you’re most likely not in this to win. 

You Have to Be Willing to Learn

You know the expression, “you don’t know what you don’t know?” 

It’s totally fine to not know everything! But if you’re not willing to learn, to put in the work, and to treat your business like a BUSINESS, then your store is far more likely to fail. 

On a recent new group member call in Master Shopkeepers, I acknowledged that there are MANY things most of us don’t know when we open our stores. 

I also shared that the one thing I definitely didn’t know—but wish I had known!—was how slim net profit is in a retail business. I had to learn this the hard way. 

It’s absolutely possible to be profitable and hit personal income goals with a retail business. But the Aspiring Shopkeepers who understand net profit before opening their store have a huge leg up on those who don’t. 

If you have a salary goal in mind, then knowing what revenue you need to hit that goal (while factoring in the very slim profit margins in retail!) is critical. Be sure to grab my free Sales to Salary Calculator to figure this out for your business. 

If Your Store is Failing, Figure Out WHY

I’m not a fan of talking about why independent retail stores fail. But it is a hard reality of our industry.

If you’re feeling stuck in your business and are worried that it’s failing, go back through this post and identify WHY. There’s no better time than now to have an honest conversation with yourself and decide what you can do about it.

Resources

• Last call for early bird tickets to the 2023 Savvy Shopkeeper Virtual Conference!
• Ep. 79: Are Your Personal Opinions Hurting Your Business?
• Ep. 127: Cash is Queen: A Free Cash Flow Masterclass for Indie Retailers
• Cash Flow Masterclass replay (exclusively for members of Master Shopkeepers)
• Ep. 56: The Retail CEO Challenge: Systems & Processes
• Ep. 114: How Retailers Can Raise Prices Confidently
• Ep. 110: Don’t Manage Time, Manage Your Mind
• Ep. 2: How Much Do I Need to Make In Sales In Order to Pay Myself? {Sales to Salary Calculator}
• Learn more about the only territory-protected mastermind & coaching program for independent retailers: Master Shopkeepers
• Take the Savvy Shopkeeper Quiz to get an actionable roadmap with curated resources for your exact stage in business!

Timestamps

• [03:55] #1. A Stubborn or Arrogant Owner
• [08:00] #2. Poor Financial Management
• [11:01] #3. Poor Systems
• [13:29] #4. Mindset!
• [14:57] #5. Treating Their Store Like a Hobby
• [19:02] If Your Store is Failing, Figure Out WHY