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Have you noticed? There sure seem to be lots of new businesses opening up.
Well, turns out there are some stats that can substantiate this.
According to an analysis of Census Bureau records by NerdWallet, new business applications through April 2024 have settled into a 12-month average of 455,000 per month. This is a significant 48% increase over the average of 293,000 applications per month in 2019 (pre-pandemic.)
Indeed, as reported by Andy Medici in The Business Journals, “the United States has seen a small business boom that shows no signs of letting up. A record-breaking 5.5 million new business applications were filed in 2023 alone. That's the strongest year on record.”
Compared to before the pandemic, new business founders have changed substantially.
Veterans started 11% of them (vs owning 5% of new start-ups before the pandemic;)
Another 17% of 2023 new businesses were founded by immigrants or children of immigrants.
49% of the new businesses in '20 and '21 are women-owned (vs 28% women-owned in 2019.)
Instead, across 19 different industries, the first year survival rate ranges from 3 out of 4 (74.9%) to almost 9 out of 10 (87.5%.)
And this may surprise you:
Retail businesses have an 84.2% survival rate (second only to agriculture) in their first year.
Moreover, after 5 years, 58% of retail businesses are still active, (ranking third among 19 industries), with 42% surviving through their 10th year (dropping to fifth place among the survivors.)
Just a reminder: these new retailers have a built-in competitive edge.
Everything about them is NEW!!! And customers do love New! (Ever had someone come in and ask to see what was old and stale? Didn't think so.)
More and better competition has always been the case for retailers. Adjusting and sharpening your competitive edge is a constant.
Emphasize that sense of "every day is a new day!" This fast-pace vitality is one of the compelling attractions of retailing for many an owner. It also is the foundation of your staying power.
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Go to RetailStartup.com for more information and resources for new or expanding retailers.
The constant challenge for retailers is to anticipate what their customers really want. And this year, there seem to be plenty of choices available.
It is all part of the on-going challenge of retail; the art and craft of being a merchant. Then there are the customers who are reacting to the constant drumbeat of news about supply chain issues, merchandise shortages, and looming price increases by starting their shopping early.
Adding to this stampede, some major chains were launching their Black Friday specials before Halloween!
Your results are likely to be consistent with these patterns.
About a year ago, as the pandemics were beginning to hit their stride, we introduced a framework for retailers to "rethink your merchandise mix."
As depicted in the chart above, we cautioned that once the lockdown was over, as customers resumed shopping, retailers should be prepared for (1) reduced sales totals overall; (2) significantly re-balanced merchandise mixes, initially dominated by "basics/never-outs."
Further, we anticipated that the merchandise mix would continue to change as we re-emerge from the effects of the pandemics. And we urged retailers to take this overall construct and adapt it to their own situation; to develop their own customized strategic response.*
Now, one year later, here's how this can become "news you can use" to quickly produce your Big Picture buying plan. Especially in the spring of 2021, some practical answers to "What to buy?" , "How much?" and "When?" are likely to be very welcome.
You've seen all the headlines. Worldwide inflation. Dire warnings of a coming recession. Big time discounts at retailers due to boatloads of inventory. Amazon doubling down on their Prime Day(s) sales. Shoppers shopping early in anticipation of rising prices. Shaping up to be yet another "unprecedented" Holiday season for retailers, isn't it? And a wonderful opportunity for all merchants! How best to start? Set the boundaries.
Next, establish clear routines for monitoring inventory levels.
People don't go into retailing to be financiers.
But few are attracted to the financial part. Which is exactly why The Retail Owners Institute website has been built! Given our years of experience consulting with retailers, especially in turnaround situations, our speaking at conferences and publishing in trade publications, we wanted to "level the playing field" for retailers.
Have you seen what the Silicon Valley venture capital firms are saying to the startup firms they've invested in?
While it may be tempting to smile and nod approvingly at this dose of business reality, there's a ripple effect to be aware of. As reported in the May 31 edition of the Wall Street Journal*, "Their advice includes cutting costs, preserving cash, and jettisoning hopes that hedge funds or other investors will swoop in with big checks."
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