Close profitable busienss in bad economy?

November 20, 2008 1:44 PM

Wife down about economy wants to close business. Now what?

My wife has owned and operated a boutique clothing store for over 7 years. It has definitely had it's ups and downs, but it has largely been a very prosperous and rewarding experience.

Lately, the store has been slow, and the economy has really gotten her down. She doesn't like working, she feels the store is a drag on her psyche and moods. She's been having trouble sleeping and is just overall worn out. She has gotten to the point where she just wants to throw in the towel and close the store. The store has no debt and continues to operate fine, but the burden of operating versus the reward has become overly imbalanced.

More than anything, I want my wife to be happy. But I feel that if she can just make it through these crappy economic times, things will be much better in the long run. She is VERY resistant to thinking this way and has resolved herself to closing the store and finding a day job.

I feel that we are going through a once in a lifetime economic disaster and that she would not make this decision if things were good as they have been in the past.

Anything I say, she resists and just wants to close the store.

Should I even encourage her to keep the store? What could tell her to get her to wait it out a bit longer? Any advice?

posted by blueplasticfish to clothing, beauty, & fashion (23 comments total)

Is hiring someone to help her a possibility?
posted by puckish at 1:58 PM on November 20, 2008

No, she has employees, but she has cut their hours to reduce expenses, which has increased her workload/anxiety.
posted by blueplasticfish at 2:02 PM on November 20, 2008

Wouldn't it be possible to sell? Maybe one of her employees would like it... rather than simply close and get nothing out of the deal.
posted by MegoSteve at 2:07 PM on November 20, 2008

When was the last time she took a real vacation away from the store? Working what is basically 24/7/365 takes it out of you after a while.
posted by mikesch at 2:09 PM on November 20, 2008

Anything I say, she resists and just wants to close the store.

Is it possible she's just really burned out? Perhaps the slowdown has given her space to think about what she wants (or doesn't want), and maybe, after 7 years, she's ready to go work for someone else for a while - to have a boss who has to make the big decisions, to have a job that she can just go to and then leave at the end of the day. Maybe it's not the economy that's causing her to not like owning her own business; maybe it's just given her subconscious a way to make the desire conscious.
posted by rtha at 2:10 PM on November 20, 2008

More importantly than the economic downturn, I think, is the burn-out your wife is experiencing. (Which in itself is being reinforced by the shitty circumstances.) When such a personal venture becomes a drag, it causes emotional and physical havoc in every aspect of that person's life. (Speaking from personal experience here.)

Has she tried taking an extended vacation, or break, from running the store? A span of time, one to three months, where she doesn't have to think about the store, doesn't have to do any work there, doesn't even have to step foot in it, may help reignite her enthusiasm for her business.
posted by greenland at 2:13 PM on November 20, 2008

I've always been a fan of quitting while you're ahead. So if the store is doing well, and has no debt, and she's just plain tired of it, I can't really see any problem with shutting it down and moving on to the next venture. If she misses it later, she can always start another!
posted by M.C. Lo-Carb! at 2:15 PM on November 20, 2008 [2 favorites has favorites]

Burnout is real and debilitating, and the only cure I've ever found for it is to do something else.

If that were my wife, and those were the circumstances, I'd be taking her opinion seriously instead of trying to change it.

That said, selling the business as a going concern is probably a better idea than shutting up shop.
posted by flabdablet at 2:15 PM on November 20, 2008

@greenland I suggested that, but she shot it down because she didn't want to have the expense of letting someone else control the store. they way she sees it, she is the only one that can successfully run the business.
posted by blueplasticfish at 2:16 PM on November 20, 2008

If the store is profitable, there's no reason not to offer some kind of buyout deal to its current employees (or anyone else she knows that might be interested), whereby, in exchange for regular payments to buy out the money she has in it, they will become full owners of the store bit by bit. (Think land contract but for a business instead of real estate).

Unless someone walks in with a whole whack of cash (unlikely in this economy!), I doubt anyone will buy her out outright, but this could be a source of a. income b. less stress (make it part of the deal that they run it, staff it, the whole shebang) and c. in the event she DOES change her mind, she could always come back into the business until the final sale is done, yes?

Good luck!
posted by bitter-girl.com at 2:23 PM on November 20, 2008 [1 favorite has favorites]

Ah, yes. Seven year itch. Decisions like this should not be made based on feelings. They should be made based on math.

Two suggestions. One, go see a financial planner or accountant to review your actual business position. She may come out feeling better than she went in.

Two, if your wife is feeling unenthusiastic about her business, you might look at new approaches to re-light the fire. Does she have a website? An online store? Might she be interested in blogging about fashion and small retail businesses?

Finally, you might gently point out the fatal flaw in her thinking. If she wants to close the store because of a downturn in the economy, the plan to just "go out and get a job" may not be so easy. Because, you know, there's a downturn in the economy.
posted by DarlingBri at 2:24 PM on November 20, 2008

(And, on post -- if she thinks she's the only one who could run it successfully, perhaps she can take a paid advisory position instead? as in, help the new owners during the transition, but she won't be required to be there 24/7. I co-own a small shop with 2 other women myself and we've all taken time away from it periodically to do our own projects, etc. It's a major help, and prevents the kind of burnout your wife is no doubt experiencing).
posted by bitter-girl.com at 2:25 PM on November 20, 2008

Should I even encourage her to keep the store? What could tell her to get her to wait it out a bit longer? Any advice?

I don't know whether it's a great idea for her to keep it, but refusing to consider letting other parties buy her out seems selfish. If she has employees, the impact of losing their jobs can't be underestimated, particularly in our economic climate, where it might be difficult for them to find other employment, even part time.
posted by PhoBWanKenobi at 2:32 PM on November 20, 2008

Her store, her decision.

Just support her in what she wants to do.
posted by St. Alia of the Bunnies at 2:34 PM on November 20, 2008

Running a business is much higher stress than having any simple "job". When she wants to get a regular job, she's probably really just looking for the mental break. The economy might not even have much to do with it.

(Also, great employees can make things easy. Bad employees can make a bad situation worse.)

Can you help her with the business, just to keep it running for a year or two (it does not need to do well, just stay afloat.) If so, that might be enough time for her to take a mental vacation, while working or not, and reevaluate.
posted by rokusan at 2:49 PM on November 20, 2008

@DarlingBri i suggested an online store (i'm a software engineer) and a blog but in her mind that is just more work with no certain payout.

@rokusan she has good employees, but they are high school/college age and don't know the ins and outs of buying. she doesn't have the desire to teach them, nor pay them the wage they would deserve. I can't really help her because I don't know enough about the industry. I'm a 28 year old guy and have no idea what 30 and 40 something women want to wear.
posted by blueplasticfish at 2:59 PM on November 20, 2008

Is she thinking about closing down because of the current economic downturn? Or because she's burnt out and no longer enjoying running her own business? I think it's important for her to understand which of these two things is the real driver for her wanting to close shop.

If it's the first, it sounds like it's a temporary blip - most economists are suggesting a fairly quick rebound - that if the shop can get through, will lead her back to a rewarding business. But part of this may involve readjusting her expectations of profit in the short term - so that "breaking even" becomes the definition of success.

But if it's the second (and just happens to be occuring at the same time as the economic downturn), then the question becomes whether she just needs a break, or whether she really doesn't want to be running a shop any more. And if she really doesn't want to be running her own business any more, then maybe closing is the best solution (or selling up as other posters have suggested).

What would she want to do when the economy starts getting better? Would she consider opening a new business then? This might help her identify which of the two is the real driver.

But as other posters have said, your role is to support her in whatever decision she finally makes. Best wishes to both of you!
posted by finding.perdita at 3:03 PM on November 20, 2008

A good entrepreneur in a good business situation should spend about five years building the business up and then about five years grooming her most capable employees to take it over, either as owners or as employees of a new owner. Ten years is often a good time to step aside and let someone else assume it. Ideally she would sell for a profit and use the proceeds to find a new opportunity.

Even if her employees did not want to take on the business after the grooming period, they would be a strong asset that would help to entice an outsider to buy.

>she is the only one that can successfully run the business

If that is truly the case, then she has not run things as she should.
posted by yclipse at 3:40 PM on November 20, 2008

This is a tough one. Two things to think about. it's not a given that she will be able to find another job or a buyer for the business. I hate to sound like every other answerer on Metafilter, but she may need a therapist or at the every least a SCORE mentor.
posted by Xurando at 3:56 PM on November 20, 2008

I have the impression that she sounds burned out even before the economy became a factor. (And with that...um, the business probably won't do better). Honestly, it just sounds like it's no fun for her any more and she wants out.
posted by jenfullmoon at 3:59 PM on November 20, 2008

If you have kids and financial obligations (mortgage, etc.) it might not be the wisest move to get rid of something profitable (even if its not doing as well as it once did) to go look for a day job that might not exist and most likely won't solve her problems.

I know you want her to be happy but sometimes people just need to suck it up and stick at it because its the best thing to do in the long run. Also, maybe find a delicate way of reminding her that millions of people would KILL to have a business of their own they could run profitably and not have to work for someone else. I know I would.
posted by Elminster24 at 6:40 PM on November 20, 2008

Try reading The E-Myth Revisited by Michael Gerber. Even though I have an MBA and do business plans for other people, I really think this book gets at what it really means to be in business. It talks about putting systems in place so that the business runs without you -- and so that ANYONE can do the work you do. As a business owner, I've found it to be a tremendously freeing book. It changed the way I look at my work. As a result, I've doubled my revenues in the last couple of months and I now have three people working on things I thought *I* had to do before.

It sounds like your wife currently has a "job". What she needs is to put systems in place so that things run without her.
posted by acoutu at 9:40 PM on November 20, 2008 [2 favorites has favorites]

Do the numbers. What's the rent, what's the projected cash flow/ projected net/profit/loss for the nest 12 months/next 5 years? Then she should decide whether it's worth it.

If she can find a partner, perhaps an employee, who wants to run if for her, that's an option. She has an investment in good will/marketing, fixtures, paint, decor, possibly lease, etc. She has relationships and credit with vendors, which is a huge asset. A partner who would do the day-to-day work for a while, allowing her to be a silent partner, could be a good arrangement. A good business partner is very hard to find. Honesty is critical. But since she wants out, she has much less to lose. In a partnership arrangemnt, a good lawyer and a good accountant are critical.

I was in a similar position at one point, and sold my profitable business. It could have gone either way, but I really wanted out, and have not regretted it.
posted by theora55 at 6:47 AM on November 21, 2008