There are many disadvantages of being a brick and mortar agency in today’s technology driven marketplace. One of the main disadvantages is how much more money it costs a brick and mortar store to operate versus an online company. Operating costs such as rent, utilities, employee wages, and startup costs are substantially higher for the brick and mortar store. Rent can range anywhere from twelve to forty plus dollars a square foot according to smallbusiness.com. Depending on the location, whether on a busy road or in the center of a major city, rent can most likely exceed forty dollars a square foot. When you take into consideration that most retail stores are a thousand square feet and much larger, it is easy to see how this cost can account
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Investopedia lists these as generic startup cost: research expenses, insurance, license and permit fees, equipment and supplies, advertising and promotion, borrowing costs, employee expenses, and technological expenses. All of these are startup costs that brick and mortar companies incur every time the company opens up a new location. These costs can be allocated if the company switched to an online storefront. Insurance would be greatly reduced since the company would no longer need to need to be liable for as many employees, and all the customers when they are on company grounds. The company’s debt would be greatly impacted as well if it was an online business. Every time a storefront opens there are deposits and monthly rent to be accounted for, not to mention all the renovations costs that occur prior to opening the location. All this puts the company in debt before there is even a chance to make a profit. Also, every time a business leases a new location a contract for a predetermined time must be signed, without knowing whether or not the company is going to be successful or if the location works for the company. In an article about the disadvantages of brick and mortar businesses Robyn D. Clarke Ngwabi states, “Additionally, lessees may be under binding contract for years, even if the brick-and-mortar business goes belly up before the terms expire. These higher costs cut into potential profits and affect the rate at which goods can be offered to customers.” THIS NEEDS
Investopedia lists these as generic startup cost: research expenses, insurance, license and permit fees, equipment and supplies, advertising and promotion, borrowing costs, employee expenses, and technological expenses. All of these are startup costs that brick and mortar companies incur every time the company opens up a new location. These costs can be allocated if the company switched to an online storefront. Insurance would be greatly reduced since the company would no longer need to need to be liable for as many employees, and all the customers when they are on company grounds. The company’s debt would be greatly impacted as well if it was an online business. Every time a storefront opens there are deposits and monthly rent to be accounted for, not to mention all the renovations costs that occur prior to opening the location. All this puts the company in debt before there is even a chance to make a profit. Also, every time a business leases a new location a contract for a predetermined time must be signed, without knowing whether or not the company is going to be successful or if the location works for the company. In an article about the disadvantages of brick and mortar businesses Robyn D. Clarke Ngwabi states, “Additionally, lessees may be under binding contract for years, even if the brick-and-mortar business goes belly up before the terms expire. These higher costs cut into potential profits and affect the rate at which goods can be offered to customers.” THIS NEEDS