Business owners are optimists. They have to be...without optimism, they'd never take the risk of opening their doors in the first place.
But sometimes, that same optimism becomes the thing that blinds them to reality. It allows them to rationalize losses, excuse inefficiencies, and keep going when they should be making tough changes.
I once met a couple in Southern California who owned a specialty retail store. After conducting a business makeover evaluation, I had to deliver hard news: based on their financials, they would make more money by closing their doors than by trying to fix their mounting challenges.
The wife was stunned. Not because the numbers didn't make sense - they did - but because they had been rationalizing their way through months of losses. She summed up their thinking when she said, almost casually, "You have to lose money to make money."
Here's the reality her husband quickly understood: they had been losing as much as $11,000 a month - for 18 months. In total, nearly $200,000 gone. And yet, they didn't feel the urgency to change.
So I tried a different approach.
"Think of it this way," I said. "You are throwing away a brand-new Mercedes-Benz, like you have parked outside, every four months. You don't even get to drive it... you just toss it in the trash."
That got her attention.
When you put the abstract into something concrete, when you take the loss and hold it up to the light with a real-world comparison, the reality lands. Losing $11,000 a month didn't sound catastrophic to her, but throwing away a luxury car? That hit home.
The Before: Comfortable Denial
This couple's situation wasn't unique. Many owners only look at gross sales and stop there. They take comfort in the fact that customers are still walking through the door. They assume that as long as money is moving, everything must be fine.
But gross sales are only the tip of the iceberg.
Underneath, hidden from view, are labor percentages that are too high, rent that eats away margins, and discounting practices that bleed profits. For this couple, their "before" was a cocktail of these issues. Month after month, they were working harder, but their store was sinking deeper into debt.
They didn't sleep well at night, but instead of making changes, they doubled down on hope. Hope that things would magically turn around. Hope that the next promotion would make the difference. Hope that grit would be enough.
The After: A Shift in Perspective
What shifted everything was not another spreadsheet or financial report. It was a comparison - a personal metaphor. The waste wasn't hidden in accounting language anymore; it was visible in their minds as their vehicle being thrown away.
Once the waste was undeniable, they began to face reality. They could no longer dismiss the problem or ignore it. They had to take action.
I call that leverage. That clarity showed if they don't fix it, they'll be throwing even more cars away. Even more sleepless nights...
Without leverage, change feels optional. With leverage, it becomes necessary. This couple began asking the right questions:
- How do we raise prices without scaring customers away?
- Which expenses are habits, and which are necessary?
- Where are we working harder instead of smarter?
- What can we do to increase average ticket size, not just traffic?
From there, they were able to create a plan that wasn't based on blind hope, but on decisions and a shift in mindset.
How Retailers Hide From Reality
The $11,000 monthly loss was obvious once I showed them the numbers. But most retailers don't lose money that way. They lose it in smaller, quieter ways that are easier to ignore.
You notice that when John works, average sales are down. But you tell yourself he's still learning, or that he's great with customers even if he doesn't close as many sales. Meanwhile, every shift he works costs you money in lost opportunity.
Or you see that your units per transaction (UPT) have been declining for months. Customers are buying one item instead of two. But instead of addressing it, you blame the economy, the weather, or the season.
You don't ask why your team isn't suggesting add-ons or why your displays aren't doing the work.
These aren't dramatic problems. They don't feel like throwing away a Mercedes. But over time, they add up the same way. Or worse...
A store that averages $100 per transaction instead of $120 because no one is upselling? That's $20 left on the table with every sale. If you have 50 transactions a day, that's $1,000 a day. Over a month, it's $30,000. Over a year? A third of a million dollars in lost revenue.
That's not one Mercedes. That's three.
And if you're not tracking it, you don't see it. You just wonder why the year feels harder than it should.
Making the Invisible Visible
The couple in Southern California didn't wake up one day and decide to lose $200,000. It happened slowly, one rationalization at a time. The same thing happens with declining UPT or underperforming staff. You don't see the cost because it's not a line item on your P&L.
But it's there.
If you're struggling to make that leap, try this: translate your numbers into something real. Ask yourself, what am I really throwing away? Is it a Mercedes? A child's college tuition? A family vacation every month? When you see the opportunity cost clearly, you'll feel the urgency to act.
And if you'd like help with that, remember, the Retail Doctor makes house calls.
