DennisBeaverMarch 22, 2014   •  By Dennis Beaver

Note: This is the second installment of Dennis Beaver’s  March 8 column.

“Your readers, Dennis, who want this to be the year they go into business for themselves, must have a very good answer to this question: If I fail, what will this mean to our family, and to our way of life?”

One of America’s foremost business turnaround consultants, Lake Oswego, Oregon-based Gary Goldstick, had to answer that question for himself some years ago, when the technology company he founded collapsed.

“Experience is a great teacher, if we pay attention, and discover what we have done wrong. It was in figuring out what I had done wrong that enabled me to help others avoid my errors.  Call it chance, call it something more, but it was the devastating experience of losing a business into which I had poured my heart and soul that turned on so many lights which still burn brightly today. My business failure was a gift, as corny as that may sound.”

We spent time with Goldstick, author of Business Rx, How to Get in the Black and Stay There, and  Romancing the Business Loan,  walking away with a common sense understanding of what leads to the failure of start-up business.

But right now, anyone care to guess which start-up has one of the highest rates of failure?

I’ll have a side of bankruptcy with my burger

“So many people open a restaurant,” Goldstick observes, “encouraged by friends because they or someone in their family are a really good cook. But one bankruptcy judge in Fresno offered this recommendation for anyone who starts a restaurant:

The day you to take out your business license is the day that you should fill out your bankruptcy filings.

“A restaurant is really a manufacturing operation in real time.  The customer service experience depends on everyone doing a good job.

“The chef, the manager, waiters, bartenders, everybody has to be at a high level of service, because if there is any break in the chain, the customer experience will be negative.

“When someone walks out unhappy, they know it, all their friends will know it, and now the world will read negative internet reviews.  Once clientele are lost, an Under New Management sign is the only thing that might save the restaurant.

If I build it will they come?

“Often the same location has seen many restaurants come and go. Unless you know why they failed, your ‘new concept’ could easily be the next disaster. Lack of easy access, parking, unreliable food quality, surly employees, and terrible ambiance are the usual reasons. But you have to know and understand why the previous occupants of the location failed so that you don’t repeat them!”

“For any restaurant to have a chance of success you want to be where there is maximum foot traffic, ease of access and parking. Never believe ‘If I build it, they will come.’

“Locate your restaurant in a place with foot traffic similar to the successful restaurants in town. That means spending time at your desired location, at various times a day and counting how many people walk by the restaurant during the time intervals they would tend to eat.”

When you’re in trouble, admit it

“While the odds for success in virtually any business are not good, failure is not necessarily written in the stars,” Goldstick maintains, “If the proper steps are taken, often a business can be saved, but the owner must first recognize they are in trouble.

“But it is difficult to be our own business analyst, and the reluctance to bring in a consultant—outside, fresh eyes—has been the torpedo which sunk many companies,” he points out.

“Why? The owner doesn’t or won’t see it.  He is invested in the concept. He had the insight, believes in it and that it should succeed. If not, it is because people are screwing up, employees are not doing a good job, your wife is not supporting you, everything under the sun.  You just know this business is going to be successful. You came up with the idea. You’re certain!

“But you are often the biggest enemy because of things you are doing. Others might know, but will never come forward because they fear losing their job. If they have made comments, the owner typically gives them little weight.

“Normally, within a week or two, a consultant can see the primary reasons why it is failing and things that could be done to give the business a fighting chance to succeed, and finally, whether these things can be accomplished so that the business is viable,” Goldstick concludes.

For anyone in business or thinking of starting a business, You and the Law recommends a visit to Goldstick’s website where you will be glued for hours.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.