HOW TO PIVOT YOUR SMALL BUSINESS


A sizable proportion of new businesses fail in their first few years in business. Different sources cite various numbers, but suffice it to say that it isn't easy to come up with an idea, find money to bring it to life, and sustain your new small business. Last year we wrote an article about Building a Profitable Plant Shop in Six Months - today we're writing an article about closing that plant shop, along with the second one we opened in Miami a few months ago.  While it has been a wonderful experience to open two brick and mortar retail stores, to hire and train employees, and to operationalize our procedures so that we could step away and continue to build on our dream, the reality is that despite our best efforts, sometimes our original ideas just don't have the right ingredients.  Let's take a look at why we had to close our shops, and what lessons we can derive from the experience.

1. DON'T BE REACTIVE

We opened our Miami shop for a few reasons. At the time it seemed like our best option, so we went with it, despite the huge change in our lives.  We were living in New York and had been working on Water & Light full time for 6-8 months. Our New York shop was surviving the winter with us working most of the shifts behind the counter, making enough money to pay the rent on the shop space.  We had a pipeline of retailers that wanted to sell our plants, and we were aggressively developing our dropshipping offering with our standard price list, getting suppliers in place, and improving our shipping procedures. We were able to close a deal with a retailer that would require us having lower prices and a bigger space. We needed to be closer to our suppliers (the growers in Florida, not the greenhouses in New York) and we needed to be able to ship more boxes faster.  We knew we couldn't fulfill all these upcoming orders from our New York shop, so we decided to hire an amazing shop manager and move to Florida to find cheaper plants that we could ship without waiting for them to be shipped to New York.  

We moved. We found cheaper plants. But we couldn't find a great place to ship them from. A few growers said they would consider letting us use their shipping bays if we paid them a small fee, but eventually we decided that we should open a second brick and mortar shop as the retail sales should offset the cost of the rent. We had the experience of opening our first successful shop, and even though the shop hadn't made enough yet to pay our own wages, it was paying for itself and its employees with the income it generated. We figured we could replicate the model in Miami.  So we opened our second shop and people came and bought plants. Signs were good. People wrote about us again. But one critical piece of research we overlooked was that of buying behavior in the Miami market.  As it turns out, Miami is a unique city in terms of the movement of people. What we saw after our first month in business in Miami quickly faded as many people physically leave the city in the summer months and do not return until the cooler fall months. Unbearable heat, torrential downpours, and the constant threat of hurricanes from July until November has turned Miami into an on-again off-again kind of town that comes alive when people come back.  As we write this, the temperatures are dropping to freezing in New York, but staying near 85 in Miami. There is no rain now in Miami and the threat of a hurricane is nearly nonexistent. People are coming back, and they are wondering what happened to that new plant shop that opening at the end of last spring.  It's gone because we didn't account for 4 months of no retail sales.  Point of story - had we done more homework, we could have found a temporary space from where we could fulfill our dropshipping orders, instead of signing a lease on a new retail space.  Not all markets are created equal, despite how turnkey we thought we had made our brick and mortar business.

2. LOOK AT THE BIG PICTURE

When we decided to close the Miami shop, we had to take an honest look at the New York shop and our brick and mortar business in general. We also had to take a look at our entire business, including dropshipping and onsite plant care. We had done this before - when we left for Miami, we decided that we would no longer take rental work or custom installations. While the margin was good on plant rentals (events, etc.), the amount of work that went into each gig meant that we could never hire someone to do the work and pay them a good wage while still making money.  Plus with a rental, you need a large inventory of plants to pull from depending on the tastes of the client, and then you need to keep them looking great from gig to gig. Same with custom installations and selling plants on consignment. When we put plants in a retail space for a client, it was usually on consignment (60/40 or 70/30) in exchange for the exposure our brand could get in that space. The amount of work required in either scenario far outweighed the amount of money that came back into our bank account. So we took those lines of business off our website and stopped trying to sell those services.

Closing the Miami shop warranted a closer look at our brick and mortar business. While we had started our first plant shop as a way to learn about plants, learn about hiring employees, have a space from where we could ship orders, have an inventory from where we could pull rentals, and most importantly, make a commitment to ourselves, we were learning that the amount of work that goes into physical stores is more than we can manage with the money we have. We decided that closing our New York shop was also needed as this frees us up to focus on ecommerce sales and all the challenges involved with that one single line of business.  Similarly, with our onsite plant care line of business, we learned that while the margins are actually quite good, it requires more coordination than we could give it. Plant maintenance requires detailed records on client inventory, specific plans for each plant, and a large staff that can swap shifts in the case of missed appointments. Missing a week with a client is bad because your clients get accustomed to having someone else take care of their plants, and then they forget what to do if they need to take care of them one week.

Long story short, when we took a hard look at our business, we found that the only part worth keeping and developing is our ecommerce and dropshipping line of business.  Selling plants online (whether from our site or through a third party) has enough challenges to keep us busy working on making the experience amazing. We didn't need the headache of the other parts of our business as the risk was not worth the reward.

3. FOCUS ON WHAT WORKS

Once you have enough data from your business to decide which parts to keep and which parts to dump, your work is just getting started.  With our ecommerce/dropshipping line of business, we have shipped thousands of plants across the country. The logistics of making sure a customer doesn't get a dried out stick in a pot of dirt are no joke.  Even though this line of business doesn't bring in nearly the same income as our brick and mortar shops, the margin is there and mastering the process is a worthy endeavor. What we have found is that uncovering a niche where your product or service is one of the only solutions out there is key to getting any kind of organic traction.  No amount of write ups in major publications or partnerships with influencers can drive the amount of traffic you are looking for if you are one of a hundred other companies offering the same things. With our dropshipping offering, we quickly found that we had a new offering in a relatively new industry. Dropshipping has been popular for five years, but apparently no one offers plants in this way, so we quickly rose to the first result in search engines. It also turns out that many people actually search for this term because we see a handful of new leads for retailers that want to sell our plants every week. Seeing this organic interest in our offering has encouraged us enough to develop the service further and put our time and energy there. If we hadn't have gone through the year and a half of trial and error with everything else, we would have never found this tiny little bubbling spring of new interest in our company. Sometimes the most promising ideas for your business come in the most unplanned ways.







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