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Why Small Business Saturday Was an Epic Fail — 17 Comments

  1. This is right up my alley since I’m in the economic development business, a small business consultant, and on the board of my local downtown revitalization group, which is part of the Main Street program of the National Trust for Historic Preservation.

    1. American Express’ campaign is totally illogical when, as you stated, few small businesses even take American Express. Their $25 rebate won’t affect that many customers, but it sure sounds good – for American Express.

    2. I’ve been preaching Facebook/Twitter marketing for several years to my local/county businesses and they, in fact, are using Facebook extremely well now. It did take some time convincing them of the benefits, but they are seeing good results.

    3. Small businesses have a real problem understanding the correct business hours concept. In rural areas such as mine, many residents commute to larger towns and will shop there because the local stores are closed by the time they return home. And boy have I had a hard time convincing local stores to be open on Sundays!

    4. One of the things I’m constantly battling is the concept of revitalization of downtown back to the “good old days” . Revitalization now should be looking at more modern concepts of service businesses and businesses that serve employees of service businesses.

    5. In rural areas, it’s not just the businesses’ fault, it is also the residents. They want local businesses in town when the weather is bad and roads are closed and they can’t shop out of town, but when the sun is shining they forget the local businesses who ARE accomodating to their customers. It’s an educational campaign that needs to work both sides.

    I could write an entire blog on small business development and downtowns. Hmmm… perhaps I will.

  2. @Catch Her: had you in mind as the exception that proves the rule. Congratulations on your successes. You know what they say about horses and water. Good luck!

  3. I whole heartedly disagree with your article. Although American Express is not known for being “the little guy”, they are offering $100.00 to small businesses in free advertisement on Facebook. I work for a small business, and my family owns a small business, and both of us were able to take advantage of the generous offer, and yes, both shops have Facebook pages that are regularly updated. We run sales and promotions for our customers in order to keep them in contact, and coming into the shop.

    We work hard, and we do not feel a sense of entitlement – I work six days a week – which does include extended evening hours AND weekends. One of the major issues we face is not competing with Walmart, but the fact that customers feel we should pay their tax on goods because they do not have to pay tax for things they order online. We do not just laze around waiting for people to come in, we hold many community events, including ones to support local charities.

    There is nothing wrong with American Express encouraging people to shop at their local businesses, and although the timing might not be the best, they were supporting a cause they feel is worthy, and they are driving business our way today. There is no need to put a negative spin on an event just because it is funded by American Express, and there is certainly no need to generalize all Local Business as a bunch of Lazy Slackers waiting for a hand-out, when we work hard to provide goods and services to our community.

  4. Cait: Yes, there are exceptions – and you are certainly one – but you are in the minority. There is a problem with generalizing, true, but I can show you case after case in town after town that backs up my claim. I suspect you can name some businesses near you that back up my claim.
    I’ll bet you are in a suburban area with a large population from which to draw. Therefore by going into business you are forced to compete on the established practices that are successful.

    • One big consideration that you do not bring up in your article is that many of the “dying” small businesses are fundamentally based on obsoleted technologies or services. For example, people don’t go to fax/copy stores anymore, since many people own a multifunction printer. No one goes to a cobbler anymore because shoes are so inexpensive now that it does not make sense to pay to repair them.

      Many niche businesses also keep short hours/close on certain weekdays because they either want to keep costs down, or they are a one-man-show, and owners are unable to keep the shop open 7 days a week. Often times the consumer will go out of their way for quality niche service, because not everything can be ordered online. Not every small business needs to “imitate a Big Box Store” in order to survive. In fact – I have many customers who come in specifically because of the personal treatment that they get from our shop.

      All businesses are “forced” to compete, it is the nature of a free economy. However, it is not that small business does not want to offer the same price as the Big Box store, since Small Businesses can not buy in the same bulk, there is rarely the same room for markdowns and price matching.

      This article starts out saying why Small Business Saturday is a failure, but it ends up describing why you think Small Business is a failure. Even if American Express could have chosen a better weekend to host their First Small Business Saturday – why would you complain about them giving away millions dollars for free to be injected into our local economy? We have had customers today come in to participate in this, and I am going after work to buy something from another local business.

      As I had mentioned earlier – they are also giving away free advertising to any small business, you had to sign up on Facebook, but they made the process incredibly easy – even those Small Businesses who do not use Social Media yet would be able to easily set up their own free $100 ad campaign. So why complain about American Express, when they are trying to give back to the Small Businesses that they gain their revenue from? I also think that it is a real shame that you feel the need to beat down young entrepreneurs by telling them Small Business is Dying in America because there is no way to compete with Big Business. That is simply not true if you provide excellent customer service, and work personally with your customers, and keep up with the times in advertising in the Internet Age.
      Do you think anyone said the same thing when department stores were emerging with ads on television, as compared to the Local Business having a small print ad in the local paper? Not every business is strong enough to withstand change, but it is incorrect to assume we’ll all be phased out do to incompetency.

      • GLS raises very good issues and they are very common, especially in smaller to mid-size communities, and may not be in suburban or tourist areas. These are the very reasons so many small businesses fail in the first 3 years of existence.

        The American Express SBS is a marketing tool to promote their American Express Open which is a forum for small businesses. There is nothing wrong with that as long as businesses understand that they are not simply promoting small business saturday, but they are promoting American Express and essentially giving Amex permission to spam their emails with their marketing/advertising in the future. Most small businesses don’t take Amex and most of their customers don’t use Amex cards.

        This promotion is designed to get more small businesses to take their charge card. Even at a cheap flat rate of $7.95 per month for less than $5000 in Amex charges, if Amex get a million new small businesses signed up from this promo, that’s a pretty good return on their $100 fee advertising give-away.

        I advise small businesses to stick with Visa, M/C and Discover to keep costs down. Almost everyone with a credit card has at least one of those three.

        • I am not saying American Express isn’t benefiting from their promotion – of course they are, they are a business. I have to disagree with you saying no one takes Amex, that is just ridiculous. Although not everyone does, there are plenty of small businesses that do. So what if this is a marketing tool for American Express? At least they are giving small businesses the opportunity to share this tool, and benefit themselves. I understand that credit card companies can be difficult to work with and sometimes expensive, but when that is how consumers want to spend, it would be foolish to bite the hand that feeds. I am sure that is how American Express feels about the Small Businesses, which is why they are rewarding them with this Program, as well as encouraging business to use their service.

          My issue with many of the “points” raised is that I do not believe it is reasonable to suggest that because some small businesses choose to limit their hours, they are lazy, and because not every blow out price can be matched, they are being foolhearted. Although I do agree closing on Sundays is foolish for certain types of business, it all really depends on your industry. Also, as I had mentioned earlier, I am sure many small businesses would love to match Walmart’s pricing if they could, but the vendors certainly do not give the same price to Joe’s Corner Store as they do to Walmart, who buys in much larger quantities.

          This whole article, and Catch Her in the Wry’s preachy “I told you so” comments are insulting to anyone who works hard to successfully run a business by insinuating that we don’t try hard enough to earn our living.

          Businesses will fail when the owner does not understand business, or understand their market – and although there are some who are rooted in tradition and unwilling to budge, there are so many new budding small businesses out there that are embracing the current market, with or without the support of American Express, or this blog. To say the majority of Small Businesses are doomed for failure because of incompetent ownership is a very dark outlook on Business, and our Economy. Not every business will succeed, but this article is just completely pessimistic when it comes to judging the Small Business Community.

          • “Businesses will fail when the owner does not understand business, or understand their market – and although there are some who are rooted in tradition and unwilling to budge, ”

            EXACTLY. This is my point. Not all small businesses – just because they are SMALL deserve to survive.

  5. @Cait: Fax? Cobblers? OMG. Of course not! But would you have guessed five years ago that the video store would be obsolete? Check back with me in 3 years to see how many $4 cupcake stores are still around.

    Unless a business is located in a high traffic – high population area, niche businesses cannot compete on quality or personal service alone. You can have dozens/hundreds of customers who love you and your store. But how many times a year do you see them? There is always a very thin market for any good or service. (Food and beverages is an exception – thus locally owned coffee shops, bars, restaurants, etc. can do well.)

    If you are serious about succeeding, why not forget the bricks and mortar and open an Etsy store or Yahoo store and have the world as your market?

    You have fallen into the trap that many new small businesses fall into: free advertisign is good advertising. Learn about reach and frequency and then tell me a business can spend $100 every once in a while and grow. Successful retail businesses spend from 1.5 to 3% of SALES on advertising/marketing. If that $100 won’t generate at least $3,000 in sales, it was a failure.

    If small businesses are not “phased out due to incompetency” what other reason is there?

    I am not anti-small business. I am anti-small business that expects patronage from the consumer for the single reason that they are a SMALL BUSINESS.

    Earn my business. (Again, congratulations to you for knowing this stuff already – your parents taught you well.)

    Change or die. It really is that simple.

    I enjoy your comments. Thanks.

    • I run the eBay and Internet sales for the Small Business I work for, as well as the Facebook page. We do advertise in local magazines, as well as run email campaigns. I am not saying every customer has to be one that walks in the front door of my shop, that is just the way that the market we are in now.

      My point is that most of the small businesses that I have seen fail are poor concepts (like the $4 Cupcake places), or fad shops. It is not because the owners do not care.
      As for repeat customers based on service – we see many people in on a weekly basis. I run the front of a motorcycle shop, and one of the most important things for loyal customers is personal level of customer service that we provide, whether it be in person in our shop, or on the phone. We have 3 large Harley-Davidson dealerships to compete with, but customers still come to us because we do compete with their pricing and we also provide them with a level of customer service well above what any large national dealership is able to.
      I understand your point of people need to “get with the times”, but I think your message might be better received by not patronizing the entire work force of Small Businesses.
      I am sure American Express is getting a ton of good publicity for this event, and I am also sure they deserve it. If shops take American Express, than they’re likely to make a few extra bucks today, and they’re entitled to free advertisement – and if American Express looks good for providing that, good for them. They were trying to do a good thing. This is a completely straight forward campaign with no strings attached for merchants (or cardholders who want to purchase from their local business), and I think you are just being overly pessimistic about a campaign that can only do good for Local Business.

      • We agree: “small businesses need to get with the time.” In order to make this point I HAVE to speak in broad general terms. It is a fact that most small businesses fail because they are undercapitalized. “caring” has nothing to do with it. They just don’t have the money to last past three years.

        Shall we blame the bankers? Are there any “local” banks left? 🙂 (another hot button issue!)

        • I didn’t mean to be preachy, but Cait, you are doing things right and adapting to the times. There are so many small businesses out there that are not. That is why you are succeeding and they are not.

          I speak from personal experience as a successful multiple small business owner, and as a consultant to small businesses now that I am semi-retired. I am only relating problems that I have seen with older businesses failing to change and with new businesses who jump into the game without understanding the strategies and concepts of business. There are many, many successful small businesses and I know being a small business owner involves a 24/7 committment.

          As regards to SBS: There is absolutely nothing wrong with what American Express is doing, but small businesses should not jump on board the marketing wagon without fully understanding that this is more to American Express than simply promoting small business. The real ulterior motive is about driving use for their credit card. You and I understand that there is no such thing as a “free” ride and that there is a trade-off involved. Many business owners don’t.

          This is a modern marketing method used by many, many businesses to promote themselves – find a cause and covertly sell your product to those who support it. These types of campaigns have generally been successful; Amex is just late jumping on the “for a good cause” bandwagon. The interesting thing will be to see how long this charitable marketing trend lasts.

          • Well, in this particular case – it is a “free” ride. I know, because not only did I register my personal credit card and get the $25 statement credit, but I also registered the Small Business I work at, as well as the Small Business my family owns for the free $100 in Facebook advertising. It was absolutely 100% free, with no strings attached. You do not even need to accept American Express cards to be part of the promotion and get the free advertising (though I’m not sure why you would do that), I know, because before signing up for anything – yes – I read through the entire fine print, just in case there ARE stipulations.

            Of course Amex wants people to use their card – but they’re also driving business to our shop by rewarding people with an incentive to come out and spend the $25. Yes, they will make their credit card processing fees, but if they had not had the promotion, we would have never gotten certain customers to spend the additional $25 yesterday.

            My other question to GoingLikeSixty is this:

            How can you possibly have called Small Business Saturday a failure well before the day was even over?

            Also, I know that businesses are undercapitalized, which is why many of them extend credit with companies such as American Express. Right now it is a tough economy, for Small Business AND Big Business (see Blockbuster, Linens’n’Things, Toys”r”Us, etc), and sometimes Business Owners just need to be a little more creative with their capital in order to (a) drive more sales in and (b) keep their store stocked with sellable inventory.

            The point here is that most of your points on why SBS was a failure before Noon on Saturday really have very little to do with American Express’ promotion, and more to do with the fact that you believe you would be much better at running a Business than many of the folks who have put themselves out there and tried. Your insights may be true for some Businesses, but do not discount the fact that many Small Businesses take advantage of hiring Bright, Eager, Inventive, INTERNET SAVVY young people so that they can grow their business.
            You were very quick to admit to generalizing and that there are in fact exceptions – are the streets of your town barren? After 6pm is there really nothing to do near you except for shop at Walmart?

            One of the reasons towns invest in “Downtown Revitalization” (by the way, neither of the Small Businesses I have mentioned are Downtown, and we have been prosperous for over 6 years), is to encourage people to go out locally, and give them something to do. Not only shop at local businesses, but also go out to eat at local restaurants, who’s food quality is much higher than chains like Applebee’s, while the price is the same, and generally the food is coming from more sustainable resources. Often, especially in the warmer months, towns encourage the businesses to keep late hours on weekends by holding events or street fairs which encourages members of the town to be part of the local community and support local businesses, which many times ARE competitively priced, and often offer a much higher quality of goods than a Big Box Store. I don’t see the harm in my tax dollars going to introduce Locals to businesses they may have not been aware of. I think it is wonderful to build and sustain a sense of community, although it is quite obviously different today than 50 years ago.

            I am by no means saying that everyone knows how to run a business, or that every business model is perfect and will be able to be successful, but I find your assumptions about how “all” small businesses run to be small minded and disappointing. Keep in mind that many of the shops that are empty in your town now were closed because we truly have been in a terrible economy, and not every business model is recession-proof. It takes a lot of business knowledge to plan ahead for these things, and of course not every business was prepared for that – Small or Big.

            Have you ever run a Small Business? Is it still operating and successful? If not, why?

  6. 1. Failure before day was over: I can say that because a bad plan will generate bad results. I wrote this post on Friday!

    2. I’ve worked with small businesses my whole career. I was just close enough to retail to understand it was never a career I wanted. So what? I don’t want to be a coal miner either, but I never worked in a coal mine. Your logic is failed.

    3. Downtown Revitalization: since you don’t have business downtown, doesn’t it frost your cookies that tax money is being spent to benefit THOSE businesses? Remember: “grants” are tax dollars.

    4. Yes! after 6 p.m. during the week there is no place to shop in the downtown. Only bars and restaurants! And it’s this way in the seven other small towns I have lived in. The same.

    You ever been to a rural Iowa downtown? a rural Utah downtown? a rural Virginia downtown? Take away the “professions” and the restaurant and bars, and there is NO retail left.

    You are making my point: if retailers are to succeed they need to follow you. But they aren’t because they are old, complacent and/or lazy.

  7. Excellent article and excellent comments as well. A rare combination. And to be honest, you hit the situation in my little town of Newport (Vermont) “City” (laughable) right square in the middle of Main Street. I won’t bother to explain the situation since you already did. We even have a local “Downtown renewal committee” made up of people who will, most likely, never know hunger. All the businesses on Main St, except for perhaps 2 or 3, are either empty or on their last legs. Two of the restaurants have even failed and just for the very reasons you stated.

    And the kicker is that there’s no reason Newport should fail at all considering it’s excellent [touristy] location. It’s even more ironic that nearest strip mall/Walmart/Staples/Lowes/Home Depot type of thing is 2 hours away and downtown is still failing. Unbelievable.

    Heh, one of the best suggestions so far for renovating the downtown area is to raze it to the ground and start over. In fact it seems the powers-that-be in the town are changing the downtown zoning laws in order to begin that very process.

    Ironically enough, we have a local cobbler on E. Main St. that’s been doing a bang up business for a three decades now and is still going strong. And across the street is a small office supply store that specializes in copies of all types and yes, faxing, both of which are highly utilized. Go figure.

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