5 Good Reasons to NEVER Open a Brick-and-Mortar Business

Well FIRST I need to explain this title and this topic-- because I already know what many of you are thinking. Don’t I encourage and teach entrepreneurs exactly how to be successful in, very specifically, a brick and mortar industry? Well, the answer is YES. 

And even though I believe success and happiness are very possible in the brick-and-mortar space, this journey is NOT for everyone. 

So you can call this my “tough love” blog for all of my brick-and-mortar hopefuls -- and try to think of this as a fun tongue-in-cheek type of warning-- but I am going to share the nitty gritty of what YOU can expect once you put pen to paper and sign that lease, because it would NOT be fair to only share the good stuff.

And one last time this is NOT meant to discourage anyone but rather to force you to do some self-reflection and have those tough conversations with your spouse or family BEFORE you make a decision you regret. That’s my goal here. 

While  a brick and mortar business isn’t for everyone-- it CAN be so rewarding and fulfilling for the right kind of person. So, is that you? Let’s dig in and find out.

 

1) IT’S EXPENSIVE

Unlike an online business, like maybe a consulting or a freelance business that can really be launched and start generating revenue for under a thousand dollars, brick and mortar endeavors require a lot more of an investment up front BEFORE you will ever generate revenue, and that’s a scary thing.

If you follow me on YouTube you probably saw my full 1-hour coaching call with Carmen from last week and we did talk a lot about creating a minimum viable product for your business, so in her case it would be more of a MOBILE indoor playground not dependent on a physical location and how you can use that to raise awareness of your business and generate funds for your future build out but we also addressed a lot of challenges with that as well on the call.

And I know what you are probably thinking-- well, I can pre-book parties and I can pre-sell memberships and take pre-orders for services depending on what kind of business you are planning to open-- you can’t actually recognize that revenue until you actually deliver on whatever you’re selling. Sure, you can use it to fund your build out but it’s technically a liability as your accountant will tell you until you fulfill  whatever was promised so just be careful with that.

And for indoor playgrounds specifically it will definitely be difficult to pre-sell a large number of memberships or book a ton of parties completely sight-unseen, meaning people will have no real visual of what your space will look like OR if it will be a good fit for them.

Yes, of course, there are mock ups and vision boards and sneak previews and if you position your marketing right you can pre-sell but I just want to set your expectations here that you can NOT expect to fund any significant portion of your business with this revenue-- doing so would be risky and irresponsible as a business owner because you really never know what could happen. 

You could be met with construction delays which are more common than not, you could be faced with some sort of weather event or natural disaster or widespread illness that you didn’t expect that could delay or prevent the delivery of the services you pre-sold. We are going to talk more about these external factors when we get to point number 4 but I just want those things to be in the back of your mind as we go through this episode.

And, by the way, After helping hundreds of indoor playground owners and prospective owners get their businesses up and running, I have noticed that the funding phase can be the most difficult part of the entire process of opening a brick and mortar business.

 In fact, of the prospective owners I have worked with that did NOT end up making it to the finish line, most have cited insufficient funding as their reason for halting progress on their plans.

While insufficient funding can certainly be a very real issue you face on this journey, I would like to encourage you, if you decide to proceed, to think outside the box when planning your efforts. Also, remember that the funding process can take YEARS depending on your savings and assets. 

Something I NEVER recommend is starting a business with the bare-minimum capital required because unforeseen issues WILL occur and will need financial attention. You also want to be sure your buildout is substantial and detailed enough to allow your customers to have an outstanding experience every visit. So, don’t skimp here, and be realistic.

The amount you will need to secure will be determined by the factors you came up with in your business plan, which should be as detailed and thought-out as possible to ensure you don’t underestimate the costs required to open, which is a major trap many indoor playground owners and really any brick and mortar businesses fall into.

And let’s say you get funded and move forward but some of those unforeseen issues come up like you need extra plumbing or you need to invest in a better sprinkler system or maybe a clause was hiding in your lease that’s going to cost you thousands of dollars in building maintenance. There are some things you NEED to open like bathrooms and some things you do not NEED to open, like that nice shiny climbing structure.

So let me put on my customer hat for a second. Let’s say I visit your facility with my family on your grand opening and while it’s a nice idea overall, it looks clearly unfinished or sparse and seems to be fairly low-budget. And don’t roll your eyes because let me tell you right now-- customers are NOT going to thank you for the $10,000 you shelled out on each bathroom-- they already EXPECT that-- that’s the BARE minimum expectation they have. They really only care about their experience beyond the bare minimum.

So let’s say you blew your budget on these things and while you PLAN to get more equipment-- you have to open with less than expected. No big deal right? Always room for improvement.

Well, not really, and you NEED to be careful here. While I do absolutely condone surprising and delighting your customers with new offers or features and refreshing your space-- you also can’t expect someone who had a BAD first experience to 1) ever forget it or 2) trust you again enough to come back and spend more money.

First impressions are everything when you meet someone, right? Well the same goes for brick and mortar businesses. People, when they walk into your facility and do a lap around will INSTANTLY develop a feeling about your business and if it FEELS like you skimped or like their children won’t have enough to do, it’s going to be REALLY hard to wipe that memory from their mind.

And if that’s their first impression, they definitely won’t be shelling out right away for memberships or parties until they see a concrete improvement.

It cost us around $200,000 to open each location and I would expect a similar investment if a similar brick and mortar is in your plans, of course depending on a LOT of factors. If you are planning to buy a building or build one from scratch instead of lease, of course your upfront costs will be even higher.

Now, there are 3 main ways to get funded-- banks, friends and family, and crowdfunding-- and Each of these methods has pros and cons. Choose one-- or a combination of methods, which I recommend and which is what we did-- that works best for your needs and circumstances. I am not going to get too much into the funding details here because we have other stuff to get to but if you want more information on exactly how we determined our start up costs, what critical mistakes we made, and how we got funded just go to openanindoorplayground.com there is a free 1-hour class waiting for you there.

And before we move on I just want to note, those three ways I mentioned are 3 ways to get OUTSIDE funding. Your personal savings should always be your MAIN funding source. If you do not have a significant amount of money to contribute to your startup efforts- find a way to get some. Becoming a virtual assistant, flipping items on eBay, and selling handmade goods are all great side hustles to get started with to save the money you need over time. But again I offer some more specific examples over at openanindoorplayground.com.


2) IT’S RISKY

Growing up I have ALWAYS considered myself to be very risk-averse. I don’t gamble except for fantasy football and a few like penny slots last October in Vegas, I almost never buy lottery tickets, I do NOT like risk. For years and years I always did the SAFE thing like getting a bachelors degree and then a masters degree and then getting a nice cushy corporate job and taking a steady paycheck over risking it all to live out any sort of dream I had. To me, having that steady paycheck WAS the dream.

But as I got older and had my first child I realized that the 9-5 life just wasn’t for me and I quickly realized that I would need to increase my appetite for risk if I ever wanted the reward of being home more with my son. 

So after a lotttt of hard thought and consideration-- but still probably not enough-- I left my job and IMMEDIATELY dove head first into signing a lease and starting our indoor playground build out. I knew that I was signing my name to something and committing at least the next 5 years of my life to this project, but I don’t think I was ever able, in those early stages, able to fully comprehend just how much I was putting at risk by moving forward with that first brick and mortar business.

Yes, I was risking all of our start up money. I always knew that there was a chance that I would invest all of this money and the business would go belly up, and I’d have to break our lease and go to court to settle with our landlord-- all of that.

What I did not really realize was first of all just how common that situation is and also what else a failing business kind of entails. Now I have been extremely honest about struggling our first year and losing a LOT of money the first summer we were open-- so much so that we DID consider closing before even our 1st anniversary.

So I have a masters degree in economics, right? So I always just figured if our revenue was not yet covering variable costs -- things that we can change-- then we were still OK and we could make adjustments and figure it out. And anyone who has taken ECON 101 knows that if your revenue isn’t covering your variable OR your fixed costs-- well that's the shutdown point and you are actually LOSING money by continuing to operate instead of closing.

Pretty black and white right? Nope, it is not that black and white in practice especially if your life savings are on the line, you owe money to family and friends, and you are FIGHTING for your dream.

Let me tell you, when those bills are piling up and you just FEEL it inside of you that you CAN figure this out and your business IS sustainable-- it’s NOT EASY to make those hard decisions.

But if you are losing money which most businesses DO for quite a while-- closing or staying open is not the only decision you have to make. Those bills need to get paid and the money has to come from SOMEwhere. We personally dipped into our savings putting our livelihoods and retirement and college funds all at risk EVEN though the business wasn’t doing so well.

We were lucky enough that we had enough to do that and lucky that we did end up figuring it our and turning the business around but most people actually aren’t that lucky so just remember there very likely will come a time when your back is against the wall and you’re late on payments and you need to fork up some cash out of pocket.

And speaking of this dipping into personal finances-- some people are lucky to have very supportive spouses but let me tell you even the most supportive spouse will likely have trouble understanding or NOT resenting this need to feed more money into the business.

After all, the saying goes something like, “you shouldn’t throw good money after bad”, right? Well again luckily we figured it out and earned the money back but that is a RISK you are taking. So remember it’s not just about the money you are also putting your children your spouse your relationships all on the line when you make this kind of commitment and investment.

So before we move on, just pause for a second and ask yourself if you are up for this type of risk or if you’d be more comfortable with just a steady paycheck that you know is coming and in turn give up that time freedom that can sometimes-- key word sometimes-- come with the entrepreneurial life?

This isn’t to persuade you one way or another but again overall I am so happy I took this path but hey do I sometimes wish just punching in and punching out-- getting to take TRUE vacations and never really having to take work home? Yeah, sometimes I do. But for me the risk is worth the time I get back with my family-- but is it for you? What would happen to you or your loved ones in the worst case scenario? What if the bank put a lien on your mortgage if you break your lease? Would it cause you a ton of shame if you got evicted and had to go to court? 

Some of this is all normal in business and the entrepreneur life but it’s often more than some can stomach so I just need you to think about it. My FAVORITE author is Chuck Palaniuk and one of my favorite quotes from his book Survivor is, “find out what you’re afraid of, and go live there”. SO before you take a loan,  before you sign a lease, VISIT these scenarios and don’t gloss over any detail. Meet with a personal financial advisor who will be able to paint a clear picture for you. It might seem like talking about divorce before even getting married but its necessary and will save you a lot of time money and heartache later. Alright moving on.

3) IT’S LIMITED

One of the toughest things about a brick and mortar business is that you are often limited with who you can serve based on both your size and your geographical location.

Yes, there are some ways you can scale your brick and mortar offerings but overall this will hold pretty true. 

For example if you are a floral shop-- people will only come from so far, maybe 20 miles, to purchase from you and you only have so many hours in the day in order to serve people so there will always be a ceiling. 

Yes you can do online orders and training classes but having too many different revenue streams without a clear focus can create a mess of new issues in your business so just be aware of this.

With an online business like with my online courses or things like that--- I can serve hundreds or even thousands of people all over the world and neither my location NOR my time is tied to the people I serve. I’ve already created my Play Cafe Academy course so I when I get a notification on my phone that someones purchased it-- I don’t have to do anything. There is no order to fill or anything like that-- they get access to what I have created and I just go on about my day.

For my group coaching program it’s similar. 

Every single month I do an advanced training lesson, a coaching call, and an interview with a guest expert. I am spending the same amount of time on these 3 things whether there are 10 people in the program or 10,000.  So it’s another example of my time or location being unimportant to the amount of revenue I can earn.

Now I am not saying to go out and become a course creator or anything like that but just open your mind to other business models that may not SEEM as legitimate to maybe your parents or grandparents because there is no physical location -- but can actually be a lot MORE lucrative and a lot less risky. Just don’t join a pyramid scheme and we’re good? Ok? Ok. Moving on.

If you’re still listening to this episode you probably are still deciding if you’re the right type of person to open a brick and mortar business so if that’s the case I wanted to share a few tips about thinking outside the box and scaling your brick and mortar or local business.

  • Online training

Now I talked about this on my podcast last week but it’s something I really believe in so I’m saying it again-- we use an online video training system for all new employees and you should to.  

It covers the basics of what they need to know and walks them through all of our systems so that by the time their first shift comes around, they are SO much more prepared and productive. When I used to work for Wegmans Food Markets at the corporate headquarters, there was an 8-hour training course all new hires took. And because no one has to spend time training these new hires in person, Wegmans saves millions and millions every year. 

Now most local business owners think, “well I don’t have thousands of employees, so this doesn’t matter for me” but trust me, even if you’re training 2 or 3 new hires a month, which in this industry is likely, you will save SO MUCH TIME and money.

 Plus, you can be confident that your training is consistent and that ALL team members are on the same page at all times which is invaluable. And also let me just say, the younger generation absorbs video content MUCH better than an employee handbook. We use an online education system but you can get started with this by taking super simple videos on your cell phone of your processes and uploading them to google drive for free.

  • Online booking and e-commerce

If you are not allowing your customers to book or purchase your products and services online— at their convenience— with NO employee intervention— you WILL get left behind by competition who does. Just trust me on this one. When a new indoor playground opens and I see “call to book” or “email for availability”— I can tell right away they will never reach their potential. It’s all about convenience and as a customer, I will definitely pass over one facility for another if they don’t make things easy for me online. That’s just the way it is. DO NOT create a bottleneck in your business by needing your team to be a part of the booking process.

  • Branching out from your location

The third way you can think outside the box is to have a MOBILE arm of your business that is not dependent on your physical location.

Because we can only do one party at a time at climbing vines- doing off site parties helps us scale our revenue while still doing what we do best.

  • Digital products

You can also sell digital products online. If you’re an indoor playground you can sell things like designed invitations, party checklists, craft print-outs— the possibilities are endless here. 

If you’re that flower shop you can sell videos and online programs about gardening or flower arranging or other books and resources not dependent on your time or location.

And you can use these to both better serve your local customers AND serve new customers you would not normally have the opportunity to serve.

  • Retail

So the same goes for retail, you can sell your merchandise and toys online and reach customers all over the country or even the world. If you’re a flower shop you can do something like the fleur de lis company does-- they found a way to ship flowers all around the WORLD and they last a YEAR. SO keep up with technology and changing trends and don’t be a blockbuster ok. Find a way to break free from the mold of your business model and  branch out of your location and that whole time for dollars concept or your business will suffer and you will likely suffer as well because a straight up trading time for dollars business is a very quick way to burnout as an entrepreneur.

 

4) ITS UNCONTROLLABLE

So I touched on this a bit earlier but one of the things I struggle with most about a brick and mortar business is there is a LOT that’s out of your control and as a recovering control freak-- this is very hard to cope with.

It honestly feels like there is ALWAYS something that needs tending to at our brick and mortar. There’s the basic things like changing lightbulbs and general maintenance and that’s to be expected. I’m talking more about things you literally can’t prepare for or anticipate and can have a dramatic affect on your business. I’ll give a few examples

Want some concrete examples of exactly when this has happened to us? Listen to my podcast episode here!

 

5) IT REQUIRES YOU

So this is the most challenging part for me because I am an introvert and I really do not love putting myself out there much, especially in person. I love teaching my online classes because even though I can be speaking to a thousand or more people-- I’m still just sitting upstairs in my guest bedroom with my headphones on.

I know a LOT of business owners who feed off of the energy of getting their hands dirty and being on the front lines serving their customers but that -- as I was forced to learn over the years-- just isn’t me. I don’t gain any energy or get recharged from these interactions but it in-fact drains me and makes me feel really burnt out and overwhelmed. 

I much prefer to be behind the scenes and that’s another thing you’re just going to have to look inside and search for within yourself.

And I know a lot of people here will say that there are TONS of brick and mortar business owners who are completely hands off and have their team run the show.

And let me tell you based on my experience working behind the scenes with hundreds and hundreds of brick and mortar businesses through my marketing business-- this is very rarely the case. 

And also in 2020 people want to feel good about where they are spending the money and having an owners’ presence usually actually helps attract more loyal customers. 

But even if they don’t have a big physical presence at their location they are usually working tirelessly and often fruitlessly behind the scenes to keep everything afloat. 

Because the thing with brick and mortar businesses is that even if you are going through stuff in your life or even if you need to take a break-- the bills are going to keep on coming. You’re still going to need to pay your rent, your team needs to be paid, your customers aren’t going to be super understanding about you closing during normal hours, and any “down time” usually equals money lost.

I actually went through a pretty tough birth and a rough bout of depression while my brick and mortar business was open and it was SO hard to even look at social media yet alone read reviews, answer countless emails a day, show up for my staff, and prep for parties. But I had absolutely no choice I had to do it-- and let me tell you that was not easy and it was hard to get out of bed a lot of days. 

SO if you have a child or a death in the family or some sort of mental health or physical health issue yourself-- you don’t have a whole lot of options because those bills will still pile up.

On the flip side, with my online business, as long as I am serving my customers and delivering on what I promised them-- I can carve out as much time as I need for rest or for emergencies. I am actually planning to take most of July and August off and I feel totally at ease about it because I can create my membership content ahead of time and there is no pressure to keep up with rent or maintenance or anyyything like that. I have some very basic expenses like my website and email marketing tool but that’s pretty much it, And guess what-- I have tons of content out there that attracts people to my resources every single day and I have email automations set up to take care of them after they sign up for a free class or free content so I don’t expect ANY dip in revenue while I take the summer off.

SO again just be aware of this and ask yourself if you would enjoy being physically tied to the location.

When you have a physical location you are exposing yourself to a lot more visibility than other business models. You’ll likely get more reviews and social media attention-- both positive and negative-- that can feel very personal. I try to remove myself from this but it’s one of the more difficult and draining parts of business ownership for me. I have some tips for handling online criticism on my blog which I’ll link in the show notes but it still isn’t easy to get all of that feedback from SO many different angles constantly.

Well, hopefully that wasn’t too deterring-- but I did want to be very honest about the tough stuff about owning a brick and mortar location.

But if you got through this and thought-- ‘NONE of this scares me, I am ready to take all of this on”-- then you might just be one of the special ones cut out for this. 

My best advice to those of you who are STILL feeling this dream in their heart is to invest in the expertise of someone who has gone on this path before you and who can help you avoid some of the mistakes they made so you can accelerate your path to success. 

Some of you may be considering an indoor playground business-- and if that's the case-- I hope you choose me as your honest mentor but regardless of your industry-- you will NEVER regret investing in your education and knowledge as SOON as you can in the process.

FOLLOW MY YOUTUBE CHANNEL FOR MORE INDOOR PLAYGROUND BUSINESS MODEL TIPS-- AND DON’T FORGET TO DOWNLOAD MY FREE E-BOOK BELOW!

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