Re-Affirmed: Brick & Mortar Business Not For ME
Last weekend I took some time away from the computer to get stuck into some physical work! … OMG, yes that thing that involves movement and use of muscles other than the keyboard-typing fingers and mouse-moving wrist. (yes currently my entire body is aching)
Actually myself and a few other friends were helping a mates parents strip out their shop as they were closing down their business. They ran a electronics/hi-fi business franchise called “Leading Edge”. Tis a long story but originally they were a “Dick Smith Electronics” franchise and had built up a large amount of goodwill around the town. But DSE treated them badly so they switched over to Leading Edge.
Things were going well until a large shopping centre opened up in the middle of town and as luck would have it, a big, new DSE opened up there too within a mere 20 metres of Leading Edge which was across the street. The shopping centre has managed to soak up the traffic, killing the majority of the rest of the town.
Anyways we spent the weekend unscrewing fittings and knocking things out and carrying them away. It was actually pretty fun!
But what it made me realise again is that I hope I manage to stay away from physical, “brick & mortar” businesses for the majority of my entrepreneurial life (except maybe a service-based business). Some people obviously prefer having a physical business where you can interact with customers and don’t have to sit in front of a computer all day.
But I’ll go through the points of why I don’t like the idea of it:
- 9-5 is hectic enough… but that is just for an employee. When you’re the employer, the business owner running everything, that time changes to a 7-7 schedule and that could include weekends as well!
- Stock. Think of how much capital you need to first get the stock, then think of how you’re going to store it, track it, display it, price it, sell it and worst of all, what if you can’t sell it? There was a lot of stock that remained un-sold after they had a large, almost at-cost sale at Leading Edge.
- Expansion. How many brick & mortar businesses do you see turning over millions of dollars each year? … I know there are a lot, but when you look at how many aren’t, it becomes a little saddening. To expand your business you basically need to franchise out and open up a new shop in a new location, which is a logistical issue and an expensive move. I tend to figure that when you open a shop in a town you are immediately limited in the amount of revenue and profits you can achieve from that shop. There is only a certain amount/population that might buy goods from you in that location and the only instance where people will travel 10, 20km is if they’re after something unique or if prices are cheap enough to travel the distance.
- It’s expensive. When you look at all the overheads of offline businesses such as rent, wages and stock to name a few… it is very pricey to not only startup, but it’s pricey just to keep it running.
You take an online business and these tend not to be issues in a lot of cases. If you’re lucky you can work just a few hours per day when you want to, you can use drop-shipping services or you may not even need stock, expanding doesn’t necessarily require a large amount of money as you basically just need to market to a wider audience using your existing website and startup/running costs are very, very low.
Heck, even when you go bust the offline business bites harder than the online one. A majority of online businesses can be run with little costs, but if you do need to close-up it’s just a matter of taking down the website, sending out a mass notification mailout to your customers and perhaps selling the site/domain. If an offline business goes under, you have un-sold stock to worry about selling, you have customers you need to notify, you have lay-bys you need to fulfil, you have shop fittings and office furniture to remove, rent contracts to get out of etc etc.
So that’s my opinion… I’d love to hear yours, post a comment!
Dugg this post? Why not digg it? 
Update: There’s also an interesting discussion on the YGG Forums following on from what I’ve said here.
Nathan Waters
“Hosting & Internet” over “Brick & Mortar”
August 8th, 2006 at 5:39 am
Great post Nathan, I couldn’t agree more. Thank God for computers and the internet - I don’t know what us entrepreneurs would be doing if we were born 50 years ago!
August 9th, 2006 at 10:09 am
Hello. I am visiting your site for the first time. I can only imagine starting a business online when I was 19. The internet was barely getting started when I was 19. I do agree with this post and find owning a brick and mortar business a bit of a head ache. I do have ideas for brick and mortar bsinesses but want to try those out once I am sufficiently established online. I look forward to future posts.
August 12th, 2006 at 3:13 am
Don’t brick and mortar businesses outnumber online businesses?
Online business gives everybody a chance… which makes it harder to succeed since everybody is in the same level playing field.
Of course I love to do business on the internet - barriers to entry are low, costs are low and the audience is unlimited.
Unless I really discover some great new widget, in the end (in the longer term), I will think a brick and mortar business is the way to go.
August 14th, 2006 at 12:49 pm
Hey nathan,
I’ve been reading your blog alot and i thought well i should post a comment(yes its my first one, maybe i’ll go to your others and post on those too!). Anyways i like the perspective your looking at it and your found out because of your experience with your friends shop, most people woul say at this point ”Better theres, then yours” but i’m not going to say this as these look like they are decent friends of yours and they don’t deserve a comment being made like that, after all if i owned the shop i wouldn’t want a comment like that. Anyways i like your perspective and maybe this should be mentioned on other sites too becuase, this information you’ve found out first hand hasn’t been told in alot of places, if any and its the first time i’ve ever seen it in this perspecitve and i think its eye-opening and shows you there are a hell of alot more risks offline then they are online(even thought there are thousands of sites online that could offer the same as you, your using globalisation wheres as your birck and mortar shop can only reach not even 1% of your potential online 24/7 becuase i doubt 1% of online potential will ever visit your brick and mortar shop unless you have alot of them(but that doesnt count!). Anyways it was a great read and that was enough rambling from me!
August 14th, 2006 at 1:30 pm
Wow thanks for the responses all!
There seems to be arguments both for and against and I agree with all of them… i.e. Net-based businesses are cheaper and easier to start/run, but that being case, almost anyone can start an online business so the competition is obviously greater.
However, as n-james pointed out the potential customer reach online is far greater than it is for an offline business.
So who wins lol?
I think if you can manage to build a successful online business, then anything offline becomes obsolete. But if you can’t make it online (as it is difficult), then an offline environment may be better suited.
cheers
nathan
August 18th, 2006 at 1:04 am
How do you feel about clicks and mortar?
August 18th, 2006 at 3:48 pm
Clicks and Mortar? … is that like a combination of online and offline business?
I think it would be a great business. But again, for me I’d prefer not to have to deal with stock or a business that requires me to be there from at least 9-5
September 13th, 2006 at 8:19 pm
Well, I guess it all comes down to different strokes for different folks and that’s where so many books and seminars come unstuck in my opinion. We’ve all got a different personality and it’s important to choose what works best with our personality. I love the freedom of working from home and being creative and not having to talk to anyone most of the time, but for some it would be the definition of torture. Check out “Wealth Dynamics”… it’s a cool profiling system to help you figure out how to create wealth based on who you are, rather than what you do.
Me, I’ve got both… I’ve got a bricks and mortar business which is under management (and gives me great cashflow)… never have to go there, and another business which is all done from home in my own time… perfect for me cos I really value freedom. Ciao… Lisa
October 17th, 2006 at 10:02 pm
I recently did the same thing after sitting behind a desk for a number of years. I worked for a builder for a few days and was I ever sore. I am actually working for a builder next year but have a few net things on the go as well so I am hoping that they will take off so I wont be forced to work too hard.
I think that the web offers so much opportunity and it is the biggest frontier where a person can really build something of worth. It still takes hard work and perserverance but it can be done.