Small businesses

Most small businesses fail relatively quickly, and a large percentage of those fail because they are run by morons.017e51a06fe2cbb526ba3a0758211f00

Seems to happen a lot particularly in the restaurant business.

Here’s a personal example. There was a pizza place that opened up when we still lived in St. Petersburg.

It was on a busy strip of road and there weren’t a lot of competing pizza places nearby.

So far, so good.

But they bought an actual fleet or cars to run delivery with. Not pay for use of employee cars – no, they paid for a fleet of SmartCars. At least four. Perhaps more – I don’t really remember. Not a good idea, having a huge CapEx at a low-margin business. Already a bad sign.

And the kicker is that I went in one time to try the place out thinking they’d have slices of pizza for sale.

Nope, they had no such thing, despite that being their best business proposition in that area as it was surrounded by commercial properties and not residential. The lunch crowd could’ve been very large, and would’ve paid a few bucks for a slice.

Making $3 per slice is a lot better than competing with Domino’s at $10 or $11 per pizza. $3 per slice plus a drink is way, way more profit.

SONY DSC                     And the even worse thing is that when I went in to ask about pizza in slices they were utterly rude to me. Like dripping with venom. I am sure they called me an idiot as soon as I walked out the door.

As I walked out I said to myself, “This place won’t be open in a month.”

Sure enough, about two weeks later it closed and was gone.

Utterly predictable. If it’d been a stock I would’ve shorted that business into the ground from day one.

So they did no market research, no business analysis – nothing. They can’t have, because they made every mistake possible to make.

I know nothing about the restaurant business, but I do know something about not being a huge dumbass so if they’d paid me $10,000 to tell them also how to avoid being huge dumbasses they’d probably still be in business today.