Since selling Coffee Nation I learnt that 9 out of 10 successful companies become so by doing something different to what they started out doing. What does this tell you about your chances of hitting the bullseye first time?
This comes as no surprise and was certainly my experience. Our beginnings were very shaky and I almost failed but ten years later we were a £20m company with 600 locations around the UK. There are so many entrepreneurs starting consumer businesses all hoping theirs will catch the zeitgeist and take off.
Here are ten pointers, based on my experience of how to improve your chances of success:
If you start off playing in a small market then your niche is likely to be very small indeed. Look for big markets, already established and profitable that you can enter.
Look for opportunities in our society to really bring a positive change to people’s lives rather than just being another item of discretionary spend – here today forgotten tomorrow.
I remember one of these from the early days of Coffee Nation. Hot chip vending machines in convenience stores. The difference between coffee and chips was simple. We could put coffee as good as a high street coffee bar in a small unmanned kiosk but re-creating the chip shop product in a vending machine was far more challenging. Also, people drink coffee everyday – it’s an habitual purchase. Chips are not.
Don’t make the mistake of trying to build a business until you have strong demand for your product or service. Initial consumer reaction is usually very near to what you’ll end up with – I started trying to sell instant coffee to takeaway. People didn’t buy it – trying to push harder to get them to do so wasn’t the answer. I had to change the product.
Take them where you are going. Creating a new category that doesn’t exist today but will one day become the norm is the ultimate expression of entrepreneurship. Vita Coco, Monitise, Innocent, Zipcar, easyjet and Zaggora.com all succeeded this way.
Coffee Nation succeeded not because we re-invented coffee or because ours was better than a high street coffee bar equivalent. We simply put great coffee in lots of places people visited daily and where there was a strong likelihood they might like a coffee to take away if it was available. It was our distribution model and execution that helped us to win.
Coffee Nation started small and stayed that way until we had all aspects of our offer right. Most consumer product categories start this way – word spreads gradually and demand then starts to grow. National listings in supermarkets can be dangerous for your prospects despite the temptations if consumers have not had time to get used to what you are offering.
Play to them – Coffee Nation had a rich marketplace of locations to exploit as convenience stores in the late 90’s were becoming the new area of growth for Britain’s supermarket chains. Coffee consumption was growing as coffee bars were the new high street sensation. Today that market alone is worth over £2bn. We only had to capture a very small percentage of this huge market to get a great result. There was also a move to better quality food and beverages in the UK. This was at the core of Pret a Manger’s vision when they launched some years earlier.
As the business grows professional management skills will be needed but guard against a shift away from the core vision of why the business works in the first place. At Coffee Nation we attempted to delegate finding new locations to a professional manager too early. At Starbucks Howard Schultz stepped back in to the leadership role when the original Starbucks values had been lost in a dash for growth.
We wanted to hear from our customers and never more so than if we let them down. If customers went to the trouble of emailing or calling to tell us we had a problem – we replied, took them serious and followed up.
Whilst all areas of the coffee market have grown in recent years in Britain – benefitting coffee machine makers and coffee suppliers and roasters alike we did something different. Nespresso is another great coffee success – bringing the coffee bar experience in to people’s kitchens and without the fuss. Fantastic!
Martyn Dawes is the author of Wake Up and Sell the Coffee: The story of Coffee Nation and how to start, build and sell a high-growth (January 2014, Harriman House)