An old lesson that continues to hold true: in most village centres, whether they are in suburbs or country towns, there tend to be a coffee shop where people queue to order and the workers are flat out keeping up with demand in peak periods.
In the same village, there will be other coffee shops that are largely empty, giving the owners plenty of time to complain about the economy, the government, wages, landlords, unreliable staff, tight customers, power bills, the local council and everything else that makes business hard.
Both the busy and not-so-busy shops operate in the same village and provide the same key service – coffee. It’s a fair guess that it’s not the economy or government or any of the other things that are responsible for their different performance. Obviously, the thriving shop was doing the job better and the market was reflecting that.
I was reminded of this lesson by a conversation with an old-fashioned senior banker recently. While talking about how various regional centres were faring on his watch, he brought up another coffee shop parable.
Meanwhile, back with the banker, he asked a rhetorical question of what a coffee shop owner should do if he or she wanted to grow the business, particularly if the economy was less buoyant than it used to be.
“You’d think they would naturally try to do one of two things, or both: increase foot traffic into the shop or sell the people there an extra cup or something else,” the banker said.
This is a long way from rocket surgery, as the saying doesn’t go, but it’s surprising how many small businesses overlook the obvious.
The point of the banker’s story was that too often he saw people doing just that – overlooking the two basics. The best businesses never forget it and, no matter how successful they are, they’re always looking to be more so.
The big growth jumps are all very good, but the basics have to be right first and last. The best way to get more foot traffic is to have the best product, which should lead to the referrals and repeat business that are gold.
The coffee shop example is, again, handy: I can’t believe how many coffee sellers either don’t know or don’t care if their coffee is good. Many seem to be happy to be “okay” – which is why they won’t have a queue of customers and the opposition does. Some don’t seem to care if it’s less than “okay” – which is why they are going out of business.
I also don’t know why or how you could spend your life making and selling coffee if you weren’t interested in it. I suspect it would be very hard to do a job well if you’re not interested in the product, or wanting to be good at it.
The reality of an increasingly competitive world is that “good enough” fails. If you’re a tea drinker but for some strange reason find yourself in the coffee shop business, hiring a coffee aficionado has to be your first priority.
Once the product is right, success should breed success. As you might have guessed by now, I enjoy a good cup of coffee. If I’m in a country town looking for a morning flat white and I look down a street and see one coffee shop busy and another that’s not, I’ll go to the busy one. Ditto a restaurant.
We tend to be creatures who follow the crowd, who suspect they know something. And when you have no knowledge of a local market, it’s as good a system as any for making a decision.
To grow the business further, it helps to tell people about it. Word-of-mouth is the best advertising (and why keeping every customer as happy as possible is important), but local radio, event involvement and the internet are worth investigating, experimenting with and scientifically testing.
If you can’t measure the results of your advertising, you’re probably wasting money. For businesses with a shopfront, the look of the place is itself a very expensive advertisement that has to be right.
Selling extra service once the customer is in the door is basic gold for any business. There’s a very good reason generations of kids working in Maccas have asked if you want fries with that.
Never miss the opportunity to tell a customer what new or improved offering you have, what value-add is possible on a service. And if what you have is really good, something like Haighs dark chocolate roasted almonds, learn from heroin dealers: give a free taste or two to get your customer addicted.
The business that looks for what customers want, before the customers themselves think of it, are ahead of the game.
I sometimes use the explosion of coffee shops as an example of how our spending habits have changed without us noticing, of why we might be earning more but feeling no better off.
A decade or so ago, if you worked in an office and wanted a cup of coffee, what did you do? You went around to the kitchenette, scraped some of the dust out of an industrial-sized tin of dirt into a Styrofoam cup, added hot water and that was it, give or take some milk and sugar.
Now you walk out to your very own favourite barista, not just any coffee-hand, the one you’re sure does it best, and he’ll concoct your preferred skim-soy-mocha-latte-double-shot-not-too-hot sensory experience for a number of dollars. And you’ll do it two or more times a day, never adding up how much the indulgence is costing. If someone suggests you could be spending $1,000 a year on coffee, you’d be shocked.
That’s what happens with good businesses – customers are prepared to pay for what they really want, when it’s the best. And maybe even tip.
One of my preferred coffee shops has a tips jar, labelled “Please help – my mother thinks I’m a barrister”.
Michael Pascoe is one of Australia’s most experienced and thoughtful business commentators, with more than four decades in newspaper, broadcast and online journalism.