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(Anyone who is here was there – Atlantic City Coffee Fest), so e-mail me bob@1cafe.com with questions or call me at 800-652-5282. I have lots of experience at multiple stores and will gladly spend the time with you at no charge.) If you want a word document, e-mail me and I will send it to you. Bob Johnson TopIntroduction, Know Yourself, Who are You?, Fear is Good, The Audience, Be Flexible, Talk to Sales People?, Objective of Presentation, Rule #1, Rule # 2, Growth, Your First Store: Is it Successful? Understand your First Store, Are you Making Enough Money?, Strong Home Base, Difference Between 1 and Multiple Stores, Elements for Success, Goal Setting, Strategy, Planning, Concepts, Locations, Money Top Good Morning All, Thank David Heilbraun for a good show again. (For those who wrote down the notes on the wall: Tinstaafl means: there is no such thing as a free lunch. ETDBW means: easy to do business with.) Top Hope you all had a
great cup of coffee this morning. See
David’s Story in the local paper:
As David is quoted in the paper, the East Coast is tough…. Not just for
shows, but for finding a better cup of coffee. As background, I
have been in the coffee business: -Since 1990 at the Seattle Show
-Really since 1950 with parents at A and P where my job was to get the
Eight O'clock Coffee and grind it. I
have a vivid memory of the grinder by the check out count.
The aroma is still in my memory banks. - I have been very serious about the coffee business since 1988: Top I
walked into a Barnies Coffee and Tea franchise in the Galleria Mall in
Philadelphia and knew instantly that this was a business for me.
The aroma, and the role coffee plays in American like were instantly
apparent. Since then the
Specialty Coffee business has continued to get better.
More stores, more coffee, more quality, and more conversions from the old
commercial grades to the new specialty grades. Our challenge
(Kaffe Magnum Opus and you are retailers) is to make East Coast as good as the
West Coast. (More sites, more
conversions and better quality.) You are all
here:
Atlantic City
9:10 AM
Topic is Second Store or Multi Store
You must be serious or you would be in bed sleeping In. (At
this point the audience was polled and there were more people just going into
the business than with existing stores, so I changed the tone of my remarks a
bit. Latter, as more people
arrived, the mix returned to more people interested in second stores – so I
changed the tone back). For those of you
with existing successful stores, you know how to do it.
You have done it, so by all means please do it again.
If you can repeat your success you will learn the management techniques I
will speak about latter (that are necessary to be successful in a second and
multi store operation). So, by any
and all means, get to it – open the second store. Expand, have fun
– bring good coffee to the east coast. Lets take on
Starbucks, Wa Wa (explain Wa Wa – they are a local company that has a broad
appeal to the largely blue collar market that dominates the New Jersey,
Maryland, Delaware and Pennsylvania area) It’s not
that big a deal. You have a
successful first store. Repeat it. Get
to it. Go do it. Reminder: (No
matter where I go or what I speak about I like to remind the audience that
brewing strong coffee at or near the SCAA recommended weights will hasten there
success and build body memory in customers.
Brew Strong Coffee - 3 or more ounces to a pot. To be successful
in Business
-
You have to know
yourself o
You have to have your
own balance sheet §
Personal Assets,
Personal Liabilities §
Energy, emotional
currency, time, money o
Know who you are (the
question is: do you have the assets needed to open and operate successfully a
second store. Second stores add
measurably to the complexity of business management) Do a Woody Allen:
he was 17 years in psychoanalysis. Are You: -
Hippies or old hippies -
Entertainers -
Good with people? -
Financially sound? -
Risk takers? -
Work hard? Go home and write a one-page analysis of yourself. Top
Can you, or, do you want to go for Gold Ring- Expand?
What keeps you awake at night? What
are you afraid of? Can
you tame these tigers? Can you harness the energy to build a better coffee business?
I
bet you can. If you are here this
morning, and you have a successful first store, then you have basis to bring
good things to the coffee business. You are here, so I would think that many of you are concerned – trying to decide to open a second store or not. (Concern or anxiety) Top - I remember 1991 and my first store -
Signed a lease on Nov 4th
– opened on November 14. - Anxious – Fearful - Are they going to like me, like the store? - Will they buy? Lattees? (make a joke mispronounce) - California Visitor – told us how to make drinks. -
Frank Amari – Hey you got
brown sugar? You must have your
own stories about worry in retail. And now you are going to do it again? You must be courageous. No doubt you are successful and you love the business. I love this
business, I work at it all the time, and I love not just the coffee aspect, but
also the business aspect. I love
business. It is what I do, and if
you have this ingredient, go to it. Open. Just so you know: in my opinion the second store is harder than the first. But the third to the 20th are easy. The 50th you may not know actually opened if that is where you want to go. Top I am proud to be
here with you entrepreneurs. -
Distinguished -
Accomplished Group - Successful stores opened - Now adding more - Movers - Shakers - Builders - Creators CEO’s
– owners- you make today an easier task for me because in a sense you only
have to repeat what you have done. All have different
styles: - Some are type A’s - Some are type B’s - Some are delegator’s – some are do it yourselfers - Some are take charge people – some are passive These
different styles make my job a bit harder: Why?
You will hear what I say in the context of your style.
I ask that you
listen today. Become a student.
Contribute. Break some of
your habits. Listen. Be
Flexible
Talk with: -
Vendors -
Suppliers Sales People - Teachers Examples: -
Bubble Milk Tea?
What the heck is that? Stay current. -
Fair Trade Coffee?
Stay current, expand your line or not. -
Bird Friendly Coffee?
Stay current. -
Organic Coffee?
Stay current. - All Social Spending – yes it goes on: DINKS
(double income no kids – demographic) Web
sites? Have one yet?
The world has changed enormously. Business strategy
– ever change it? In my case:
Banker for 23 years – decided to change .
Then my plan was: -
In one mall: both an
ice cream store and a coffee store so I could move people around seasonally. -
Then I moved to coffee
franchisers o
Beanery for 8 stores o
Barnies for 8 stores Then retail on my
own Then wholesale Stay current and be flexible. Change will happen naturally. Must be flexible
Old customers we met at the
Beanery just Friday Evening. Swivel Hips – dancing – moving – changing with the demands and the busineTopss environment. Must be flexible. 1.
Help you think about opening multiple stores. Just Think about it 2.
Raise some questions that you may want to consider before you open or
move on your plan. 3.
Create a short list of things or items you need to be successful.
We already have a couple on the list. a. Know yourself b.
Embrace fear c.
Be flexible and open to change 4. If we have time I will also just through out some ideas on the different roles we have to play as leaders and organizers of work and people. And no
matter where I am or what I am talking about: Rule
#1: The unwritten and unstated purpose of business is to stay in business. Rule
#2: Cash is king. The way to
stay in business is to keep cash growing. Is
your cash account growing or falling. Is
it level? Are you making money?
Are you paying your bills on time? Are
you paying yourself enough? Are
you spending more than you make? Or, do you make more than you spend? Which
brings us to growth. Why Grow? -
Uncle Bob in the
Woodstock Flea Market at age 65. He
was done growing and satisfied with his life. -
Some people like small
– manageable -
Other people like
large – driven, build, create I think growth in
a natural event. It leads to good
health. Growth is healthy
in people and in business. Life cycles
Birth
Maturity
Pass A Long Growth extends
life. Complacency – inactivity
shortens it and hastens the end of the cycle. Understand you Current Operation Before you open the second store:
or continue opening more stores – lets examine briefly your existing
operation. 1.
Are you happy? 2.
Are you smiling? 3.
Are you coping a.
With tasks? Do time cards
bother you? b.
With the people? 4.
Paying your bills on time? 5.
Building cash account? 6.
Do you cringe when the telephone rings? 7.
Do you panic when you get a registered certified letter? 8.
Did you pick a good location? a.
If not, you can improve this: are
the other aspects of your business still ok?
If so, keep going. 9.
Are your customers returning? 10.
Are your sales increasing? 11.
Are you building a base of customer information?
Central information file? (Mailing or direct marketing list) 12.
Do you get returns? 13.
Do you get complaints? A
lot? 14.
Are your vendors happy? 15.
Is your staff happy? 16.
How’s the turnover? 17.
Are you happy with your hours? Do
you have excess Energy? Do
you want a bigger car? A bigger
house? Which
brings us to the biggest question of all????? - For you - For your store -
Will your income
support a second store o
If you need $50,000
personally, and you need $50,000 per year for the second store, it is generally
better to rely only on the existing operation to financially support the second.
Banks look at you like that for good reason: is it is a measure of
strength and far less risky if the existing operation can pay the bills even if
the second hiccups. The net of this is make sure you are making enough money because: Expansion requires
a strong home base. 1.
Operationally 2.
People wise 3.
And you – can you handle more responsibility and work? If your current
store or operation is successful or is doing ok – then I would urge you to
move on and add to it. Grow.
Expand. If you have issues
with the first store, then I recommend that you fix the things that need work,
and then move to the next store. The exception to
this is that the existing store is not living up to your expectations for uncontrollable
reasons. A big employer closes for
example. This is not you or your
operation. It may be your location
picking, though, so don’t ignore it, but on to the next site. (For
example, did you miss something in the press that may have given you a heads up
on the closing of the plant. I.E.
in 1982 IBM introduced the PC – it was the beginning of the end of the main
frame, and the 5,000 jobs in Kingston New York where main frames were
manufactured.) Make sure you are
making enough money in store one to support store 2. The
difference between 1 store and 2 or multiple Each store may be
the same. But the big
difference is the size, the intensity of your new operation. So you will have
to learn how to cope with a longer span of control – and to manage your
business through other people. Everything is
bigger: - Payroll- taxes- over 10 people more regulation -
Things take longer to
communicate, to change, to implement, so you have to plan over longer horizons. o
Lets say you want to
change the espresso by a few seconds, or make the compaction tighter. o
Now you go out and do
it. o
With more stores you
need to communicate with more people and it may not get done. -
Turnover is more by
shear numbers and therefore you need to hire more -
Accounting is
different and you may have a few sets of books. -
You need more money
– so your relations with the banks are different. -
Quality is threatened
because your supervision is different. Sales: if a court
stenographer comes in today to order 100 baskets for all the attorneys in your
market – you come out and take the order.
With two stores that person may be told you are in the other store!
Or – oh she’s not here. You have to find a
way to deal with these things. For Sales: cell
phones for easy contact. Fast cars. Supplies: some
people deliver the supplies to each store every day as a method of keeping in
contact with each store daily. So
be the delivery person. This way you have
contact, and you manage by walking around.
Stay in touch. Observe. This
gives you a better feel for the quality of the operation and the staff and it
gives the staff an opportunity to speak with you. Size can bring
economy of scale: this means lower
costs because they are spread over larger volume.
But you may incur more overheads (for example – you need a vehicle to
carry supplies – so make it your SUV). Key elements so
far: 1.
Know yourself 2.
Back up 3.
Embrace fear 4.
Be Flexible: become a student 5.
Cash: make sure it is growing 6.
Management by staying in contact. 1.
Set goals: repeat them daily. (more
on this in a minute) a.
For example: In three years I will have 5 stores each doing $400,000 in
sales. 2.
Focus your attention on a few things at a time.
Stay organized. 3.
Get good bankers. There
aren’t many. Most are pretty bad
today. Do your best. 4.
Develop your real estate skills and take your time.
Pick you spots well. 5.
Let people solve their own problems.
Don’t be a fireperson. If
you let them work they will eventually get it. 6.
Pay yourself enough. Take
time off. Rest. Your business needs you rested and making good sound
decisions. 7.
Develop good coffee skills. 8.
Look for allies. 9.
Habits: Break the bad ones develop the good ones.
If you have a knack for picking good sites, keep going.
If you don’t – get a good realtor. a.
If you hire well – keep hiring. If
not, get a good person who can hire. The following sections are the
ones we did not get to cover in the session. Set Goals – next section on this. Write out your
strategy - more Write out your
plan to implement the strategy Have enough money Keep it simple Fun – Fame –
or Fortune Goals work to
focus your attention on what you want to achieve.
No more than one page triple spaced.
Keep it short. Cover only 1 year. Goals help you organize the work and organize the staff to achieve the goal. If you set goals
you will also help yourself develop the strategy to reach the goals and plans to
implement the strategy will follow naturally. Examples: I will have a man
on the moon by 1970. John F.
Kennedy. Simple straightforward,
but incredibly bold. I will have five
stores each doing $400,000 by 2005. My profits will be
10% to 15% of sales, after taxes. I want to have
$100,000 in personal income in three years and enough income to support my
stores. Probably need four stores. For Kaffe Magnum Opus our goals stated in 2001. 1.
To be doing 1,000,000 pounds of specialty coffee in four years. 2.
To be the specialty coffee roaster of choice to the specialty coffee
trade. This is tough to measure. What we are trying
to do is come up with items to consider when you are considering opening more
stores. We now have a set
of goals and we need to develop a strategy or a method that will enable you to
reach the goals. Lets pick the
first goal: I will have five
stores doing $400,000 by 2005 Decisions to make:
1.
If you don’t like sales people 2.
If you don’t like to sell 3.
Stay retail In retail: they
come to you, your sales growth following the timing of opening new stores.
In wholesale, sales growth is very time sensitive.
It can take a long time. If
you don’t take calls from sales people, you probably won’t like wholesale. Nothing happens
unless you sell something. A last word on
growth strategies: We have assumed
that more locations are the path to follow.
There are many more options: 1.
More sales to existing customers 2.
More products in existing operations 3.
New methods of selling – web 4. Different Price strategy to expand customer base 5.
Higher volumes from existing stores. 6.
Web, web, web, web, web (Example
of Strategy: 2001/2002 Kaffe Magnum Opus Strategy to reach 1,000,000 pounds. 1.
Move to new plant (done 9/15/2001) 2.
Install new larger batch roaster enabling roast to order (done 9-15-2001) 3.
Trademark Europe (underway) 4.
Expand the sales force and customer service staff (done 2-2002) 5.
Expand web presence to support the sales force (registered 1000 domain
names 2-2002) 6.
Expand product line to include Chai, Fair Trade Coffee, Organics and
Natural Flavors (done Feb through May – 2002)) The two key
elements of planning are arranging the tasks: -
Sequentially – which
is easier since you do one at a time. Could
also be less expensive since you have more time to accomplish. -
Or, concurrently –
which can be maddening since it puts more demands on you – but things happen
faster. And they are definitely
more expensive. Business plans are
for you. Not for the bank. So keep it short
and sweet. No more than a page or
two. You have to do the
implementation, not the bank. A
couple of key items will suffice. I have to admit
that I do most of my planning in my head, and I constantly change it.
Times change. Events change. So I try to keep it simple. A single line: I
will open a new store on September 1, 2002 is a simple plan (also a goal), but
you know what it means. It involves
a ton of work. So keep it simple. Practice
Planning: (all of
the following activities require good planning.
Set the goal, visual the future, and put the things in place or acquire
the goods needed to reach the goal). -
Chess -
Golf -
Sailing o
Smooth o
Heavy weather §
Perfect Storm was bad
planning §
No weather fax §
Ran for home o
Docking o
Leaving the dock o
Food for the trip Commerce
Bank: in
our area this bank has grown to very large size very fast.
Buildings are identical. Great
concept. They have coin-counting machines in the lobby!!!! Wa Wa – I
mentioned before. Great concept.
The stores are identical and colorful, bright, with lots of parking.
They are good locations. Lousy
coffee. Starbucks vs
Manhattan Bagel (two stores with $700,000 my friend has two Manhattan Bagel
stores each doing about $700,000, but he still worries about the headquarter
problems) Wal Mart vs.
K-mart You can see plenty
of examples of good look, fit and feel. Visualize your own. Develop your
concept either in advance or as you go. Remember
flexibility. If you like what you
do, keep it. If not – get rid of
it. In a single
community
Hub and spoke
Distance is easier
Saturation
Find DINKS
Distance
Malls
Demographics dictate
10 richest communities in America Type of stores you
want
Drinks
Beans
Food/café
Coffee Houses
Mall gift stores and drink bars
If $250,000
$500,000
$1,000,000 Take your time.
Take care. This is the most
important thing you will ever do in business.
Pick you spot well. Make
sure it fits your personal goals. I can’t believe
I have gotten this far and not talked about money. Have enough.
Don’t skimp. If you are
disciplined, then stick to the budget. If
you are not disciplined, make sure you double what you think you need. Cash is king.
If you run out of cash, you are in deep water. |
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