If you start a business does it put other out of business?

[jsmoke]

Basic economics I believe, something I never studied any of till about a few years ago.

So if you were to start say a restaurant, or any other business, does it take business away from other restaurants. I believe it centers around whether you take out a bank loan to pay for it and if so due to fractional banking the money supply actually increases?

Otherwise it's surely a case of limited money in with the customers and they choose who to spend it with?

Anybody know how it works?

 

[Caracus2k]

In stating a business you may somewhat diminish the demand for other similiar services available locally but you also add a little demand via offering new employment to people who will themselves the be potentially better placed to generate additional demand for local goods and services.

There is a fixed anount of goods and services whereby its all a zero sum game. Economies can both expand and contract with the same anount of people in them as supply/demand for goods and services both increases and decreases.

There are definetly some constraining factors for example the availability of a suitable trained workforce, planning/ zoning restrictions and availability/ price of materials but these are often not the factors that limit businesses

 

[wesimmo]

There's no single right answer to the question, there are far too many variables.

Just for starters you need to know whether the business is a new thing to the current market or not.

E.g. the recent explosion in vaping shops would initially have taken some business from newsagents etc as well as created new business. Now it seems a pretty saturated market with most shopping hubs local to me having 2 or 3 of them so anybody starting a new one would be fighting for the same business.

 

[mattyg]

I've just bought 2 restaurants so can conclude I'm spending lots more than the previous owner on wages and supplies etc. So i'm quickly depleting savings. Or in other words I'm pumping funds back into the economy

 

[Roland Butter]

Well, it certainly doesn't apply to barbers, a occupation that cocks a snoot at the theory of supply and demand
There used to be 2, now there are 5 in my small town, all of which seem to garner a living.

 

[Rroff]

Well, it certainly doesn't apply to barbers, a occupation that cocks a snoot at the theory of supply and demand
There used to be 2, now there are 5 in my small town, all of which seem to garner a living.

It is a funny one - there used to be loads in my town and suddenly demand plummeted and many went out of business around the mid 90s now they are opening up again in numbers and you'd be hard pressed to book an appointment they are so busy. I think part of that is more diverse options though - there are a couple opened by Polish people that offer very different services, another that focusses around the Italian experience, etc. when before they were all straight up plain old British barbers though saying that the British barbers seem to be growing again as well. I suspect partly it is thanks to grooming in general making a bit of a comeback with the instagram generation.

 

[AndyT]

Well, it certainly doesn't apply to barbers, a occupation that cocks a snoot at the theory of supply and demand
There used to be 2, now there are 5 in my small town, all of which seem to garner a living.

I always thought the same, but then I had a think about it after an acquaintance quit his job as an engineer and retrained as a barber. When you think about it, the demand is there and the supply is relatively slow. Say, one barber does a customer every half hour for 8 hours a day. That’s 16 per day. Call it 20, so probably 100 per week and 5000 per year. Almost everyone with hair gets their haircut. So if we say 50% of men and boys get their haircut, (the rest are perhaps follicularly challenged or do their own). That’s about 17.5million potential customers in the UK. Say each person gets their hair cut 10 times per year, so roughly every month, it’s 175million barnet crops to do per year, which is a demand that requires about 35thousand barbers to service. I suppose you could double that for women.

If you look at the list of jobs in demand on the immigration website of Canada and Australia, they will often have hairdressers on there.

 

[StriderX]

Currently two times as many shops as required on the High street currently, so if you start a business in that climate, unless you're literally the most amazing thing to have ever graced a street, you'll be out of business within 2 years, probably 1.

It's something i've quite literally noticed, things just do not survive long at all, which is a bit sad.

 

[Sparky__H]

Otherwise it's surely a case of limited money in with the customers and they choose who to spend it with?

Exactly!

Everyone is fighting for what's left of people take-home pay. Look at the disruption Aldi & Lidl caused to the established supermarkets.

A business can succeed in a saturated market but it better have something to set it apart.

 

[Raymond Lin]

There is a little village in Italy, a chef started a pizza restaurant there, words got out it was so good it became reasons for people from other parts to visit just to eat there, not just in the region but the world. It brought it so much money in tourism the village has turned from a little run down to thriving.

 

[jsmoke]

There is a little village in Italy, a chef started a pizza restaurant there, words got out it was so good it became reasons for people from other parts to visit just to eat there, not just in the region but the world. It brought it so much money in tourism the village has turned from a little run down to thriving.

But are you not just making other areas poorer and enriching your area?

 

[Raymond Lin]

But are you not just making other areas poorer and enriching your area?

Other areas like Chinese tourist? American tourists?

How exactly are you going to pin point who or where is losing money?

 

[jsmoke]

Other areas like Chinese tourist? American tourists?

How exactly are you going to pin point who or where is losing money?

But in principle - that's the macro scale. I suppose it's really just a Ponzi scheme and distribution of money.

So you need to take outsiders into the picture. Probably other things also.

 

[dowie]

There is a little village in Italy, a chef started a pizza restaurant there, words got out it was so good it became reasons for people from other parts to visit just to eat there, not just in the region but the world. It brought it so much money in tourism the village has turned from a little run down to thriving.

^^^ potentially this

If you start another restaurant/pub/bar etc.. and others follow then the net result can be that the area becomes attractive for people to go to on a night out.

The fact that more people opened curry houses on say brick lane in London didn't necessarily harm business for the initial curry houses to set up shop there.

 

[jsmoke]

So it depends on the nature of the business, if it was window cleaning services then it's a limited amount etc.

 

[Raymond Lin]

But in principle - that's the macro scale. I suppose it's really just a Ponzi scheme and distribution of money.

So you need to take outsiders into the picture. Probably other things also.

We don’t live in a bubble; well, we do but the bubble is the world, and how exactly are you going to pin point the source? Like money is “generated” all the time by borrowing/lending, it doesn’t mean someone else losing out.

Sure if the town on a closed island has one shop selling coffee and you open another coffee shop then share the customers but we don’t live in a bubble that small. As a business you want to gauge that demand correctly or generate that demand yourself.

This is that pizzerias.

https://katieparla.com/pepe-in-grani-franco-pepe-caiazzo/

Diners come from Naples, Benevento, Caserta, Rome, Milan and beyond to eat Franco’s pizzas. Their visits bring revenue to the town’s shops, bars and parking meters. Before Pepe in Grani opened, Caiazzo’s historical center saw two shop closures a month. Now, requests for business permits are on the rise and the town’s shops have extended their opening hours to accommodate the new activity. Employment rates have improved, as well.

 

[wesimmo]

My missus opened a shop about 6 years ago, she's expanded from a tiny unit in a dying shopping centre to a double fronted shop on a street in Whitley Bay.

The whole street is now full of little independent retailers, cafes etc.

It's transformed the place over the last few years, my missus claims some credit as she sells designer goods on behalf of people on a commission basis and says a lot of money she's giving back to people is then being spent locally too.

The street actually made the Guardian as a shopping destination tip.

https://www.theguardian.com/travel/...urg-st-petersburg-toronto-readers-travel-tips