Let's celebrate the fact that we're still here
Pay no attention to the bigger boats or the storms ahead, just keep rowing with me
Two weeks ago I wrote a post about how your past decisions might be a good indicator of your ability to stay in business even when things feel uncertain. In it, I proposed an exercise that asked you to think back on three big business decisions you've made that you can now reasonably say kept you afloat through volatile times and answer some questions about them.
I thought this exercise would help build confidence in your ability to thrive in uncertainty by identifying the ways in which you already have. After all, past success is the best indicator of future success, right? With the superpower of hindsight, we recognize that we somehow steered the ship in the right direction after our compass fell overboard. Let’s give ourselves credit! It wasn’t luck, it was a pattern of smart decision making.
I hope I’m not making sweeping assumptions that anyone else with a retail business is facing choppy waters at the moment, but as I mentioned in my last post, a lot of shops have been closing for good this year. I’ve also had off-the-cuff conversations with shops owners recently that included words like “brutal” and “2008.”
It’s been a volatile few years. No one wants to dig deeper into debt or compromise their physical and mental well being to keep a business open in this Uncertain Economic Environment. However I think that if we take the time to reflect in detail on our past decisions, we get a better sense that we are engaging in a pattern of smart stewardship of our businesses, even if it feels like chaos internally. There’s something about seeing our decisions as a pattern—rather than knee-jerk reactions—that calms the insides, even if outside the storms rage on. If we’re the slightest bit calmer, more confident, we can conserve fuel for the rough seas ahead. Inner resolve isn’t the same thing as a cash infusion, but it’s a bit easier to access.
Small business owners, and in particular storefront business owners who depend on retail sales, are rain soaked captains of solo dinghies on a very rough ocean right now. We get tossed around by the same macro economic forces that affect every business—interest rates, real estate markets, the labor market, economic stimulus packages—but we have far less protection from them.
Right now I’m not questioning why we’re rowing at all, or why we chose to row out here in these damn dinghies when maybe we should have boarded (or built?) a cargo ship. Today I am just rowing up next to you and shouting over the waves: what have you done to stay afloat out here? And also NICE JOB, way to go!
The fact that we’re still out here rowing is in itself something to celebrate and a reason to keep going. The cruise ships aren’t going to rescue us, the air craft carriers aren’t going to rescue us. Maybe I actually believe that we’re out here to save ourselves, and the fact that we’re still out here means we have the capacity to do it.
Anyway, if you want to go back and read my previous post before reading my answers to this thought exercise, I recommend it.
I said I would share my answers this week, but rather than sharing three decisions, I’m sharing the decision I think had the biggest impact on my business and that felt the least certain (read: terrifying) while I was making it.
Decision: Opening a second location in the midst of the pandemic (July, 2020)
Some background: I opened Fernseed in April of 2019, eleven months before COVID. Prior to the forced closure of our first (and only) location in March of 2020, I had been toying with the idea opening a second location—or at least a warehouse—so we could expand the floral side of our business and increase storage capacity, but because of the financial uncertainty of the pandemic, I put those plans on hold.
What information did you have leading into the decision and where, to the best of your recollection, did you get that information?
In March of 2020 I wanted to believe COVID would be over in a matter of weeks, but the data said otherwise. Epidemiologists predicted it would last a year or longer, with restrictions loosening and tightening in cycles. If the pandemic was going to drag on this way, I predicted people would continue to shop online even if our store could re-open to the public, and I knew we needed more square footage to process online orders because we couldn’t do it in the tiny retail shop we currently occupied.
I had also read a lot about the frenzy of the mid-pandemic plant trend, so I knew that while plants were ragingly popular in 2020, we might see a drop off in plant sales in the years to come. Flowers, on the other hand, are less trendy and have the benefit of being a delivery-oriented product—like pizza!—so it seemed like a good second revenue stream for a society in lock-down. We also needed more square footage to process flowers, so I started looking for warehouse space again. Turns out warehouse space is just as expensive as some retail space per square foot, so I figured for the price, why not add the potential to make some walk-in sales? In July of 2020, I signed a lease on a second storefront in the South Tacoma neighborhood, about 6 miles from the first location.
How did you feel before making the decision? During?
It was quite difficult to stare the reality of COVID in the face. I didn’t want to believe it would cycle for years, but I couldn’t hide from that reality if I wanted to make informed business decisions. I say “informed” business decisions rather than “smart” business decisions because I had no idea if it was smart to nearly triple my fixed expenses on the hope that by expanding our square footage, we’d have a better chance of surviving ongoing lockdown and a potential decline in house plant sales. The chips could fall either way, and I’d be on the hook for expenses no matter what. It kind of felt like one of those decision moments playing Oregon Trail but with way more at stake because it wasn’t a 1990s simulation.
How certain were you at the time that it was the right decision to make?
I had concerns about everything from how it made sense from a branding perspective to open another shop so geographically close to the first shop, to whether we’d be accused of gentrifying and get canceled, to not being able to afford the additional rent. The same month we signed the lease, I was switching my bookkeeping over from Quickbooks to Bench, and until the migration was complete, I had very little insight into how much money we were making or losing each month. I was seriously closing my eyes, leaping, and hoping for the best.
How did the decision impact your business going forward? What were the results?
I always felt the neighborhood where we opened the second location was in an upswing, I think in part because I could see it as an outsider who had recently moved from Chicago, whereas lifelong Tacoma residents viewed South Tacoma as a neighborhood in decline. We’re in an historic business district, near a commuter rail station, with lots of vacant storefronts in interesting old buildings.
We were warmly welcomed by the neighborhood when we opened, and in the years since, several Tacoma landmark businesses and new ventures have moved in around us. Some of those business owners shared the same concerns I had about locating in this developing district, and some even came to me for candid advice about the decision. My answer has been, “Everyone who lives here wants to see this street thriving again, and you will probably feel as welcome and supported as we have if you locate here.”
While the sales from both shops cannibalize each other somewhat, we ultimately could not function in the first location without the warehouse and storage space of the second store. I’ve written a lot in the past year about profitability, and some of you have floated the very reasonable suggestion that we consider closing one of the locations to conserve cash. I agree that having two locations within such a close geographic area is not ideal, and I wouldn’t have planned it this way, but it’s working out okay for us for now.
As far as the brand differentiation between the two stores, our customers do occasionally ask what the difference between locations is. My answer to that is pretty simple: one location houses our entire floral program, and the other doesn’t. My friend Tracey gave me some great advice when I was trying to figure out how to brand the two locations differently before we opened the second one. She said, “I think your customers will figure that one out for you.” For the most part, they have. Differentiating the two just hasn’t been that much of a concern; customers tend to prefer one store or the other, or they visit both. I did what I had to do operationally, and I let them figure out what it means to them to shop at either place. (Thanks, Tracey!)
How did the process of making these decisions, or their impact, guide how you run your business going forward?
I made a mistake when I didn’t lay anyone off during the pandemic. If I had, my staff would have been able to collect unemployment, rather than me paying them for work that ultimately had no effect on our bottom line in 2020. I paid a lot of people to just kind of hang out waiting for that second storefront to open while we were building it out, and the buildout took 8 weeks longer than planned. To be fair, I gave my team the option of being laid off, but I thought I was doing something noble by continuing to employ them.
I am much more protective of my payroll expenses these days, to the point where I am as okay as any decent human can be about laying someone off or cutting their hours because we don’t have the cash. To avoid this, I’m much more conservative about wages, hours, and raises upfront.
I avoid the “close your eyes and leap” approach to business decisions these days, because since opening the second location I have worked at developing a deep understanding of cash flow and our balance sheet. While I still take risks, my risk taking is more calculated today.
How did it change you personally?
I ultimately lost every employee who worked for me when we launched that second location in part because I was running an operational shit-show and assumed my staff could just figure it out. It took me a year to recognize that I was the problem, that I needed to change my approach to managing people, and that it didn’t matter if the right approach to management didn’t align with how I saw myself as a boss or a person. I might like winging it, but the people who work for me often don’t, so I no longer believe in closing my eyes and hoping for the best as an operational and management style.
So what about you? I would love to hear about your decision making process, so if you took the time to embark on this exercise, feel free to email me your answers by replying to this email.
I’m working my way back to regular updates, so you can expect to hear from me every other Thursday. Here’s a preview of some posts I’m working on:
We all know Urban Outfitters—and shops like them—steal from artists and designers. At Fernseed, we don’t carry mass manufactured products that look handmade, so I’m writing about how that works practically not just in our buying, but in our communication with staff and customers.
I recently devised a method to help manage our monthly spending even as the economy tanks and our sales are in decline. The great thing about this method is that I have buy-in from all the managers on the team and they’re going to help maintain it. I thought I would write a little bit about this method, how I practically apply it, and if it’s working for Fernseed. (We start April 1, so TBD.)
Just for fun, I’m working on a round-up of some of my personal favorite retail businesses of all time, a love letter to the places and shop owners that left an impression on my youth. I invite you to share yours as well!
To that end, I’m also keeping a running list of some of the best independent retailers of all time in North America, like Amoeba Records in San Francisco, Elliott Bay Books in Seattle, Strand Bookstore in New York, Wall Drug in South Dakota, Powell’s in Portland, ABC Carpet and Home in New York, and Ragstock (originally based in Minneapolis, now all over the Midwest, Colorado and Texas). These can be multi-location or single storefront businesses. The idea is that they’re legendary (at least regionally), enduring, and still independently owned. Help me add to this list! Email me your own ideas, and don’t worry about criteria or duplicating.
Thank you for your honesty about all of your adventures in business, Katherine. I love your fearless ability to move forward regardless of pitfalls. You are an inspiration to us all!
People worry about making the right or wrong decision in business. AsDeepak Chopra so eloquently states:
“If you obsess over whether you are making the right decision, you are basically assuming that the universe will reward you for one thing and punish you for another.
The universe has no fixed agenda. Once you make any decision, it works around that decision. There is no right or wrong, only a series of possibilities that shift with each thought, feeling, and action that you experience.”
Katherine, you rock!