Published on 13/02/2020 by Any Business.Com.Au

Why do so many businesses fail?

The collapse of celebrity chef George Colombaris' Made Establishment Group was huge news in both the entertainment and retail food sector this week.

A number of Colombaris' restaurants and eateries were immediately closed following the much publicised repayment of wages owed to underpaid staff and the subsequent appointment of administrators.

While the revelation of Colombaris' predicament was undoubtedly a surprise, unfortunately his situation follows is a familiar one for the bricks and mortar sector over the last 14 months.

Brutal 2019 for the Retail Sector

Last year was headlined by the collapse of a slew of Aussie businesses, with some international players also folding in recent months.

Last January, menswear retailer Ed Harry went into voluntary administration, and a week later, Aussie sportswear favourite Skins also revealed it was on the brink of failure after applying for bankruptcy in a Swiss court.

At the end of the month, the Napoleon Perdis beauty empire announced the cult make-up chain's 56 Aussie stores had closed for stocktake. Administrators were appointed, and scores of stores have since closed.

Footwear trailblazer Shoes of Prey also met its demise in March last year along with British fashion giant Karen Millen, which in September revealed it would soon shut all Aussie stores, leaving around 80 jobs in peril.

In October, celebrity chef Shannon Bennett's Melbourne burger chain Benny Burger was also placed into administration, followed by seven Red Rooster outlets in Queensland just days later and then Aussie activewear sensation Stylerunner, which has since been sold to Accent Group Limited.

In November, it was revealed that popular furniture and homewares company Zanui was in trouble after it abruptly entered voluntary administration.

Later that month, Muscle Coach, a leading fitness company, was put into voluntary administration after a director received a devastating diagnosis and the company racked up debts of almost $1 million.

Then it was the famous Criniti's restaurant chain's turn to enter into voluntary administration, with several of the 13 sites across the country set to close for good. It was closely followed by discount legend Dimmeys.

Australian department store Harris Scarfe was also placed into voluntary administration in mid-December.

2020 Has Begun Much the Same

Although we have only just hit mid-February in 2020, no less than 160 (approx.) popular Australian retail stores are already earmarked for closure.

It started in the first week of January when it was revealed department store Harris Scarfe was set to shut 21 stores across five states over the course of just one month after the retailer was placed in receivership in December.

Just days later, McWilliam's Wines – the country's sixth-largest wine company that has been run by the same family for more than 140 years – announced it had also appointed voluntary administrators.

Then it was popular video game chain EB Games, with the business confirming it was closing at least 19 stores within weeks, while fashion chain Bardot is also planning to shut 58 stores across the nation by March.

It has also emerged Curious Planet – the educational retailer previously known as Australian Geographic, which is owned by parent company Co-op Bookshop – would pull 63 stores across Australia after failing to find a buyer for the brand.

Most recently Jeanswest entered voluntary administration, leaving 988 jobs at 146 stores in doubt, with parent company KPMG blaming "current tough market conditions and pressure from online competition".

As a Retailer How Do I Avoid the Same Fate?

It's important that retailers continue to understand and evolve with a constantly moving market.

Business owners should understand how innovation can contribute to their business, where to find help to be innovative and how to connect with the right resources.

Check out 5 things you can do to ensure your business develops a competitive advantage and creates a culture of innovative thinking and problem solving.

1. Review your market research

When you start to develop your innovation strategy it's a good idea to review your market research to help you identify:

• key gaps in the market which are opportunities for you to be innovative

• how other organisations are being innovative

You may also like to:

• ask your customers for feedback to gain insights to improve your processes, products or services

• ask your employees for ideas based on their experience with customers

2. Understand your opportunities

Opportunities for innovation occur in 2 ways:

• internal business opportunities through changes to processes
• external business opportunities through collaborations and product or service offerings

Identify innovation opportunity for your business

Consider the below as a guide:

• Export of import products or services
• Invent a new product or service
• Streamline your operations to reduce cost
• Seek out tenders or contracts
• Collaborate with others
• Expand your business online
• Social Media to extend your customer reach

3. Decide on open or closed innovation

Once you understand your opportunities for innovation, you must decide if you will use an open or closed innovation model.

Open innovation means that you:

• actively seek collaboration with external partners

• recognise that no business has all the expertise nor owns all the best ideas

• understand that solutions may already exist in other industries

Closed innovation allows you to:

• control all intellectual property and profit within your organisation
• maintain strong boundaries of a project

4. Find support and guidance

You may like to connect with a business adviser or find a grant or assistance program to help drive innovation in your business.

5. Update your business plan

An innovation strategy is just one part of your business plan. Make sure you update your business plan to reflect your innovative ideas and processes.

AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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