My husband and I opened our new store (The Three Little Bears Cottage Store) in the small community of Smiths Cove, Nova Scotia, with great expectations one morning in early December 2013. We changed our “Opening Soon” and “CLOSED” signs to “OPEN”. We waited inside for the inevitable herd of eager, curious shoppers. Oh, we knew some of them wouldn’t buy much. They would step in mainly just to look around and see what this new store in their small community was all about. After all, everything shut down in the fall in this tourist-driven village filled with campgrounds, motels and inns and didn’t open again until the spring.
This new store was a re-creation of Fundy’s Mountain General Store, the store in Hillsburn that we had sold in September. So we knew exactly what we were doing (or so we thought!). The general store with takeout that we had sold was popular and well supported by many in the community (again, small and rural) that surrounded it. They had had a store for as long as anyone could remember, and they weren’t about to lose it. We didn’t expect them to buy their week’s groceries in our little store, but they would pop in for two or three items rather than drive over North Mountain to Annapolis Royal. It worked well for all concerned. A bad day for us sales-wise was $500.
We had two customers that first day in early December. Total before-tax sales didn’t even crack $10. The next day was a little bit worse, and the next day saw no sales.
Well, $10 isn’t that bad, you say. It isn’t great, but it’s still $10.
No, it’s not. Don’t forget that retailers buy and resell. What they actually make from selling an item depends on the margin between what they paid for it and what they sold it for. We may have made $3 on the day. Some products have a much better margin than others. Milk (a top seller) has one of the worst. We currently pay $4.23 for a 2 Litre milk and sell it for $3.99 because the going price in the nearby Conway supermarkets is $3.69. We do receive a small rebate so don’t actually lose money. Tobacco products are another item that have to be priced close to cost in order to stay competitive. On average, we may make 50 cents on a pack. With some, it is less than that. If we had to borrow to buy the cigarettes, the interest chews up any actual profit.
The days and weeks that followed showed slight improvement. We gradually began to acquire a handful of regulars who would come in to buy one or two target items. We knew we were in the off-season, but this was ridiculous. Didn’t any of the locals eat?
It was time to re-evaluate. Why did a store that worked in one location not work in another?
We had sold our store because we had wanted to start a new business with more facets than a basic convenience store. Having moved to Nova Scotia from Ontario two years previously to buy the general store, we were aware of some differences between the two provinces. What we had considered to be our small have-not city of 20,000 in Ontario (Brockville) was richly endowed with shopping outlets compared to the region of Nova Scotia in which we now found ourselves living. We were going to change that by opening a small store with a few different specialties. The convenience store part would tide us over while the other aspects developed (pet store with live pets, plant store with a selection of soils, a food section with Dutch and local products, a Christian book area, a small consignment area, a livestock feed and farm supply department, a dairy bar with soft-serve ice cream for the campers and tourists). We would do our part to fill in some of the many retail holes we noticed in the area. We would skip the takeout, though, as this was not really “our thing”.
But the convenience store part wasn’t tiding anything over. It seemed like a total failure, and after a couple of months we began to seriously wonder if we had made a mistake and should put the property back on the market.
What do you do when your brand-new business is on the brink of extinction?
Visit my post What to Do When Your Business is “Failing” to see some of the options we’ve been considering.