Reader Connie writes in:
I own a very small gift shop and the economic times are having an impact on me like so many others. The area in which my shop is located is becoming somewhat economically depressed, with some of the other business in our retail complex closing. However, I have a good customer base and many repeat customers even though sales have been down somewhat from this time last year.
First off Connie, you’re taking loans from credit cards and your husband to pay off expenses. Even though you’re paid up with vendors and utilities, you now owe the money to your credit cards and your husband. So in essence your business is losing money more than it’s taking in. You’re paying an additional 5%, 10% 20% to credit cards to finance your business.
Second, operating in a retail complex that’s losing stores will most likely result in the continued demise of the other stores that remain open, simply because customers won’t shop at the complex anymore. They’re looking for convenience – a one stop shop where they can get a number of errands run. I’m guessing your sales must be decreasing even though you have a loyal customer base. Time to do a little analysis of sales, of transactions, etc. to see how far they’ve gone down in the last few years to give you a little insight into your own business, if you haven’t done so already.
Regardless, you should strongly consider closing or moving the business, lest you continue to rack up debt to keep the operation going. I’m making the assumption that the lack of traffic at the retail complex is the main reason your sales are down. If you have a loyal customer base, are you sending out regular emails and other marketing communications to them to get them in your store on a frequent basis?
Third, if you decide to move, then you can indeed apply for a business loan to cover such a move and open your store in a new location. The bank or other entity will want to look at your history of operating the business as well as your personal finances to see how qualified you are for a loan (another reason to cut your losses with your current business as the more debt you have, the less likely the chances you’ll receive a loan).