As a consultant in a down economy, I get several questions about how to ‘save’ businesses that are feeling the squeeze. These are the ones not afraid to ask for help. That means there are lots of others that need the help and don’t even know how to ask. This article is for anyone looking to improve their business, but especially for those that NEED to get control.
I have been EXACTLY where you are and I hope that this simple advice might trigger an idea for you so you can break your cycle of ‘hanging on’ and move to one of prosperity.
There are only two ways of increasing revenues for your store:
1) Sell more to the people that are already coming.
a. The metric that people use is ‘dollars per transaction.’ If you can increase the amount you sell to each person that comes in you can quickly see a big change. A cookie, a box of mints, a cup of soup, a pound of beans, etc.
b. If your average ticket is about $3 right now and you were to increase that by only 50 cents, that is a 15% increase in sales. That starts to change everything.
2) Get more people through the door. This is harder, but essential. If it can’t be done, start looking for an exit strategy.
a. It almost always can be done, just not the ways you have tried.
b. Word of mouth is cheapest and produces the best results. Find a way to reward your existing customers if they bring in a friend who has never been to your place. “Coffee on the house for your friend’s first visit!” The advertising cost to you is about $3 to get a new customer that might spend $10 per week or more. That is cheap!
You also have to stop being you. YOU are the one that is stuck, not your store.
You are taking the first step; ask anyone and everyone what THEY would do in your situation. No one will have the whole solution for you, but everyone will have a piece of the puzzle. You are now the puzzle master and will find the path that fits your style and shop. I asked friends, customers, even competition. After about 25 responses I started to see the path.
So top puzzle pieces for me are listed below. They may not be the same for you but they may trigger an idea.
1) Reconsider the hours of operation. Look at the peak times for your store and consider closing on the slow times to both reduce employee costs and to free you to work on the business and not the espresso machine.
2) Add non-perishable food items to the menu. Powerbars, cup-o-soup, candy, etc.
3) Discover what your existing customers would buy if you offered it. Survey them.
a. I made a sign that said “Free Coffee Friday” and did not tell anyone what it meant. On Fridays I handed customers a short questionnaire that gave them a free coffee or $1 off an espresso drink if they filled it out. EVERY Friday, sales went up instead of down AND I got valuable information!
4) Reconsider your loyalty program: Are you using one? Can it be tweaked to help increase sales of other products? Instead of ‘Buy 10 Get 1 Free” try “Buy 10 get a logo mug free” as a way to increase hardware sales of items already on the shelf.
5) Trade coffee for flyers from a printing company and then post flyers on every house and business within 1.5 miles of your shop.
A good next step is to stop working IN your business and start working ON your business. If you are behind the counter, you are not out there asking people to come to your shop. If you are mopping floors, you are not finding that new cookie or box of mints. To get there you must improve the systems of your shop so it runs without you. I know that this means you might have to bring on more staff but it might be the only way to get you free enough to grow the business and it will then pay for the new person.
Thinking about your business differently is essential, and I was able to do it using the book The E-Myth Revisited by Michael Gerber. This book guided me to do all the things above. I discovered what my business really was and I turned everything around in three months. IT WAS NOT EASY! But coffee house owners are not afraid of hard work so work hard on the right things!
I had a ‘lucky moment’. When I figured out that I needed to ‘not be me’, I had no way of paying someone else to be me. At the same time my brother was laid off at his job. I told him to move in with me and I would supply food and shelter if he would run the coffee shop until I could get it straightened out. He accepted and I was able to dedicate myself to working ON the business. After three months I was able to pay him and me and we grew the business. Who could be your lucky person to help? Retired grandparents? Un-employed customers that might work for tips part time while they look for other jobs? Be creative! Finding some free labor will help on lots of levels!
I also learned to design an exit strategy. I built the business up and sold it for a profit. I then took my experience to the ‘next thing’ and have been even more successful. No matter how this shop turns out for you, you will have gained an education you can’t get in school and you will be able to apply it to your next step in life.
Now go solve your problem! Add my advice to the pile of puzzle pieces and put together a solution. AND buy a copy of E-Myth. It is worth every cent.
If this advice works, and has value to you, my fee will be a cup of coffee the next time I am in your town! I really hope to collect so knock ‘em dead and let me know how it goes for you!
Rocky Rhodes started as a coffee lover, became a coffee roaster, evolved into a coffee educator and is currently serving time as a coffee addict. He loves telling other people his opinion so being a consultant suits him well. Rocky can be reached at rocky@INTLcoffeeConsulting.com