Sunday, January 31, 2010

Another One Bites the Dust

In December, 2008, a wine bar business, which a friend helped start up, went out of business, a victim of the great recession. The owner could no longer get the funding needed to sustain the business during the downturn. Rather than continuing to lose money every month, the owner closed the business.

Just last week, another business started by someone I know closed it doors for a final time. It was a franchise business that was opened in early 2009. I had met the owner in 2007, at a networking event, not long after I took early retirement. I promised that I would visit his restaurant when it opened. Unfortunately, it took nearly 18 month for him to get the permits needed to start the business and by then, the great recession was underway. Thus, he was never able to build up the clientele to make his business a success. By the time I got around to visiting, it was the restaurant's last day, after only being open for 9 months.

To me, it appears that small companies with lower financial backing and inability to easily tap financial resources are choosing to go out of business, versus continuing to lose money. 2010 will likely be a critical year of survival for many small businesses. It is unlikely that stimulus programs, such as tax credits for new hires, will be enough help these companies. Hopefully, the economy will recover sufficiently to give these businesses a fighting chance.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or business advice. Please consult a professional advisor.

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