This transcript was generated from the episode audio and may contain minor errors.
Why do struggling businesses keep their doors open? How do some retail stores, in fact, stay open for years without making a profit? If you have ever walked past a shop like a store that never seems busy, and you kind of wondered like, "How is it still in business?" Well, you're not alone. It's a common experience. And today, we're going to unpack it a little bit.
Question comes from Adam in Minneapolis. He is curious about how some of these retail shops, sometimes even in prime locations, managed to stay open despite low foot traffic or even reported financial losses. Are they surviving from outside funding, tax advantages, something else? It could be both those situations or others. Let's break down a couple of surprising reasons why some businesses keep their doors open even when they aren't making money. Going to give you
a couple of resources as well, including a blog that I think is really, really helpful. So stay tuned for Adam's question and my answer. Hey Chris, this is Adam from Minneapolis. I walk by a lot of small retail stores in my city. And sometimes I wonder, how are they still in business? Some of these places are in prime locations, don't seem very busy. And I've even
heard of businesses that operated a loss for years. How is that possible? Are they getting outside funding, using some kind of tax loophole? Or is there another reason why a store can stay open even if it's not making money? So on the surface, it seems strange that a business could lose money year after year, or just not be profitable, just kind of like break even forever and still exist. But it's really not that uncommon. There's actually a few different reasons. I want
to recommend a sub stack newsletter that I really enjoy. It's called storefront revolt. You go to storefront revolt.com or on sub stack storefront revolt. The author of this newsletter has written a post, well, someone must be making money. And she owns a retail shop, I believe in Tacoma, Washington. And she kind of broke down this whole process about why sometimes it's just what you do.
Like if you're a small business owner, you think, you know, if I just kind of stay around for another year or two, then I will make a profit or you're just kind of stuck in something. And so it's hard to get out. I think that's actually one psychological reason. It's not the only reason, of course, the business might be a loss leader for something else. Like not every store is designed to be highly profitable. Some stores are more like a billboard for something else or could be a
multi location business like a chain or a franchise may keep certain underperforming locations open because they help maintain a presence. So there could be kind of a reason that's not obvious. There could be tax advantages and real estate advantages, as mentioned, it could be some sort of property investment play or write off or tax benefit. Or there might be external funding that keeps them afloat. So sometimes a business, especially a small business in a retail location, it can be more of a passion project for the owner. So they're not really reliant on it for income.
And if somebody has outside funding, even from themselves, so it's it's kind of inside funding as well, they might keep a store open simply because they like doing it or just because they have been used to it. Another reason is the store owner could keep their business running just long enough to sell like they're holding out for a buyout of some kind. If this business has a good lease agreement, it might be hanging on because they have a locked in low rent and are waiting for the right time to negotiate a sale. So those are a few reasons, not all stores that look dead are actually struggling as well. Sometimes there's something that is unseen to the general public, but it actually makes sense to the business owner. I hope that helps listeners. Let me know if you
have a question, sidehustleschool.com/questions. We'll continue to feature them throughout the year along with updates from listeners as they launch and grow their projects. Hey, thanks so much for being out there. I make the podcast for you every day. My name is Chris Guillebeau. This is Side Hustle School.
From the Onward Project.
