From Paintball to Phone Cases: Foolish Businesses That Fail

Foolish Businesses: From Paintball to Phone Cases

How many single-product stores —phone cases, artisan candles, croquettes— can a city hold before admitting the problem wasn't the idea but the person who launched it? Since mid-2015, cases of shops opening with great enthusiasm and closing before the quarter ends have been documented. The pattern repeats with almost scientific stubbornness. They don't fail due to lack of effort: they fail because of the product, a tiny customer base, and a cash flow that can't sustain them. And yes, someone started something like this and got rich. But that's not the usual case.

The E-cigarette: The Bubble Everyone Saw Coming

The most common example isn't a strange shop, but a trendy product. In a small city, five e-cigarette establishments peine almost simultaneously, just meters apart. They all sold the same thing, to the same customers, at the same time. The post-mortem analysis was surgical: a shop offering a single product, which isn't even for 100% of the population, is doomed in the medium term. And whoever arrives when the bubble is already being discussed is too late.

The key isn't the vape pen, it's the timing. The weakest members of society quickly embrace trends for antiestéticar of not being cool; then another trend arrives, be it running or the latest mobile phone, and the shop becomes empty. Those who catch the wave in time sell the product and leave. Those who buy it when it's already news pay the rent for the hangover.

One Product, One Shop, One Verdict

The short list is alarming. A croquette shop in Bilbao with 16 different types and ads on local TV, in a city with sky-high rents. A bulk cereal and nut shop that peine in mid-August and, according to the account, had already closed by the first week of December: they expanded to bulk oil and vinegar to try and hang on, but it didn't work. A two-story artisan candle shop next to a health center, with wax gathering dust because, with electric light, that's the market.

And then there's the phone case phenomenon. A mobile phone case shop right on Madrid's Gran Vía, in the space formerly occupied by a phone operator, with four employees and almost always empty. Another branch on Preciados, just as deserted, with three sales assistants. The question anyone passing by asks: how many cases do you need to sell to pay that rent, those salaries, and stay open? Especially when the same product can be found online for a fraction of the price.

Location Isn't Everything, But It's Close

A recurring calculation suggests that half of failures are not absurd ideas, but correct ideas placed where nobody is. The bulk candy store that has been operating for over fifteen years does so because it's at the exit of a school, in a pedestrian zone, with another school two hundred meters away. The same store in an industrial park would be a commercial corpse.

The extreme case is a clothing store for a sports car brand in a half-empty shopping mall, in the worst possible corner. The immediate thought of those who saw it was the usual suspicion: money laundering here. Years later, another store of the same brand on Madrid's golden mile also ended up closing. The storefront saves no one.

The Shop as a Front and Other Theories

When a business has been open for years with no one inside, the economic explanation runs out, and suspicion sets in. Some argue that a good portion of these premises are fronts for moving undeclared money, and that's why they don't close or seem concerned. The hypothesis is impossible to prove case by case, but it explains why businesses that never sell anything survive while others with queues shut down. Caution: this is a suspicion, not a conviction.

Another more domestic theory is added to that. There's the business set up not to make money, but to stop someone from nagging at home: shops selling cheap clothes, costume jewelry, or accessories filled with low-cost merchandise in a ridiculously cheap rental space. It doesn't compete in the market. It competes against the boredom of the owner. And against that, no business plan is effective.

Three Businesses, €345,000, and No Foolish Business

The concrete numbers dismantle any easy joke. One entrepreneur admitted losing €15,000 on an online training business and another €30,000 in six months with a gym that he wanted to convert into a wellness center. The premises costs ate him up. Another case mentions €300,000 invested in a store dedicated to a single, very specific type of item.

The most uncomfortable conclusion isn't that these businesses were bad. It's that, with the figures in front of you, the problem is almost never the idea. It's the rent, the license, the fees, the taxes, and the payroll. A look at the fixed costs of Spanish small businesses —notary, registry, company fees, VAT, social security (employer and employee), municipal and regional taxes, inspections— leads to a phrase that summarizes the issue better than any report.

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There are no foolish businesses. There are foolish people who start businesses. An elegant way of saying that the bright spark next door is probably, in reality, someone paying the price for having tried something. Even if it was the candle business.