While on the surface this appears to be a heartwarming story of locals rallying to support a failing business, there is an underlying problem here which despite the effort to help them pay off a bank loan which was not being extended/renewed – will likely doom the business to fail anyhow.
There are a ton of different opinions on the topic of big business vs small business.Â I know far too many people who complain that when a big business like Wal-Mart comes to town, the smaller businesses get driven out.Â I can’t argue this – it’s true… but nobody stops to ask “why did the small business fail?”
Simply put – they didn’t compete.
Within 45 minutes of myÂ home there are 3 Wal-Mart and innumerable other big box stores which sell the same exact or similar products to what I can find at local businesses.Â In some – not all – cases, the big stores offer lower prices.Â Still, most days if I need something and know I can get it 5 or 10 minutes from my home, I will forsake a few extra dollars or cents and buy local.
* I use less gas when I buy local.
* The local business knows me.
* The local business offers a selection of products to satisfy my requirements.
* The customer service is generally superior.
* The prices may be higher in certain instances – but the marginally higher cost is worth the convenience and service.
This toy store owed nearly $76k on a bank loan, the bank wanted its money and refused to extend the loan.Â The toy store didn’t make enough money to pay back its loan because it didn’t attract enough customers in order to satisfy its financial requirements.Â Once the publicity from this passes, unless they come up with new initiatives and ideas in order to stay viable despite the presence of big box and Internet stores – the same management and the same policies will put them right out of business.
They need to expand their market, lower their operating costs, and streamline their business model in order to keep going.Â I don’t always shop local – case in point when I needed a snow blower this past winter, the local hardware store had an electric for over $350 while a Lowes another 10 minutes down the road had a more powerful similar model for under $300.Â It’s a fine line between paying more for convenience and service or less, especially in this economy… When businesses can’t compete, they can and should fail.Â Kudos to the customer base and business community that helped clear up the current financial issues, but without significant change in the business itself – all they’ve done is buy them a few more months before the “going out of business” sale starts.