What's the worst possible burn rate for a downtown business.? If one had unlimited funds, the go ahead to create the best space possible, full-time employees, and a great location? With the advantage of much of your original stock donated?
Apparently, about 200k a year.
I'm assuming not a whole lot of money was made.
The Praegitzer Gallery on the face of it would seem to be a bad example for a downtown business, and yet it had many of the same characteristics I see over and over again. Too much money spent up front, not enough money returned. Nice looking businesses that never really have any real hope of making a profit, much less a return on the investment.
The more money you have to spend, the more you have to lose.
You can have a great location, lots of capital, all the knowledge and expertise in the world, enthusiasm, motivation, wonderful displays and full inventory -- and still not make money. Because it all comes down to the math. How many people are customers? How much profit do you make? What's your overhead and your break-even point?
Let's say you create a wonderful business, but without knowing it (and sometimes you can't tell without trying, which is why business is basically a gamble) you need 250k population, and 1 million tourists as a base to turn a profit, and you have 200k population and 800k tourists. Then you're within striking distance -- not utter failure (like a burn rate of 200k per 14 months) but enough to think you can do it. So you slowly bleed money.
You can cut costs, improve your business, gain new regulars. But the math of population won't change. And even if you succeed in reaching a profitable cash flow, I keep going back to the return on the investment. This going to take years and years, if ever, and there is the pesky little problem of having to reinvest all the time to keep your business vital.
So people with lots of money and time tend to burn through the cash at -- what is to me -- a truly astounding and alarming rate.
Went by Northwest Crossing and actually got out of my car and walked around a visited the shops. Saw three customers in the fifteen minutes I was there. Saw one guy walk out of the cafe with a drink with a name tag on his shirt, who crossed the street and walked into the bank. The two women sitting outside at a table, waved at him familiarly, so at a guess all three customers I saw actually work there. Nice stores, though.
No one walking around. The surrounding buildings are husks.
And Riley's Market, which they are apparently hand crafting, since it's been -- what? -- 6 or 8 months since they started? I'm sure it will be magnificent looking.
Apparently, about 200k a year.
I'm assuming not a whole lot of money was made.
The Praegitzer Gallery on the face of it would seem to be a bad example for a downtown business, and yet it had many of the same characteristics I see over and over again. Too much money spent up front, not enough money returned. Nice looking businesses that never really have any real hope of making a profit, much less a return on the investment.
The more money you have to spend, the more you have to lose.
You can have a great location, lots of capital, all the knowledge and expertise in the world, enthusiasm, motivation, wonderful displays and full inventory -- and still not make money. Because it all comes down to the math. How many people are customers? How much profit do you make? What's your overhead and your break-even point?
Let's say you create a wonderful business, but without knowing it (and sometimes you can't tell without trying, which is why business is basically a gamble) you need 250k population, and 1 million tourists as a base to turn a profit, and you have 200k population and 800k tourists. Then you're within striking distance -- not utter failure (like a burn rate of 200k per 14 months) but enough to think you can do it. So you slowly bleed money.
You can cut costs, improve your business, gain new regulars. But the math of population won't change. And even if you succeed in reaching a profitable cash flow, I keep going back to the return on the investment. This going to take years and years, if ever, and there is the pesky little problem of having to reinvest all the time to keep your business vital.
So people with lots of money and time tend to burn through the cash at -- what is to me -- a truly astounding and alarming rate.
Went by Northwest Crossing and actually got out of my car and walked around a visited the shops. Saw three customers in the fifteen minutes I was there. Saw one guy walk out of the cafe with a drink with a name tag on his shirt, who crossed the street and walked into the bank. The two women sitting outside at a table, waved at him familiarly, so at a guess all three customers I saw actually work there. Nice stores, though.
No one walking around. The surrounding buildings are husks.
And Riley's Market, which they are apparently hand crafting, since it's been -- what? -- 6 or 8 months since they started? I'm sure it will be magnificent looking.