The tale of a failed small business

The case study is about a small business in regional Australia – a café that failed in the space of four years after inception. The café was a buy-out business established in a shopping centre. The factors that led to the failure were revealed by the owners as their experience. There were some financial factors such as premium price paid to buy the shop, premium lease fees paid, and mandatory GST payment though there was no operational profit and lack of additional funds from bank loans which acted behind the weakness of the business. Some unfavourable operational factors such as poor service provided by inexperienced Barista, the poor performance of the operating manager, and higher number of employees than needed added to the poor performance of the business. Microeconomic factors such as the introduction of new competition in the form of the new shopping centre, new shops and new vending machines with cheaper products, and higher parking fees at the shopping centre posed serious threats to the café. Additionally, macroeconomic factors such as the global financial crisis worked behind lost opportunities due to change in the spending patterns of customers.