For businesses to thrive today, entrepreneurs need to know they’re dealing with smarter, savvier customers. Sure, upfront costs will always be vital and licenses need to be up-to-date and valid—but to come out on top, every business has to have a bottom line that accounts for its customers.
From corner delis to neighborhood bars to wineries, every small business has a secret to starting and running it well. So scoot a bit closer—this gossip’s good.
During the economic downturn, bars saw their revenues slashed by 10% according to MarketWatch. But fortunately, economic outlook has improved today. “Neighborhood bars” stand apart from their competition, not only by serving food as well as drinks, but also by acting as a home away from home for patrons. If you’re going to be the neighborhood bar, you need to know your neighborhood. Consider reaching out to the local chamber of commerce to get a more thorough demographic on who you’ll be serving. For instance, are you catering to blue-collared workers or college students?
Case in point is Beverly’s, which serves as “a platform for all different kinds of creatives and like-minded people” in New York City’s Lower East Side—an art-meets-fashion kind of neighborhood—founding partner Gabe Schulman told us a few months ago. The dive bar, known for its retro vibes and hybrid bar/art space, gained popularity among its patrons for hosting art shows every few weeks. According to Schulman, it’s the art community that makes the place what it is today. Additionally, Beverly’s keeps its decor minimal and bar simple with one beer on tap, a few bottles to choose from, and basic mixed drinks. Consequently, the success of the bar is all about the environment instead of beverage offerings. Just the way the neighborhood likes it.
Since opening its kitchen nearly six months ago, Timna has joined the big leagues. The cozy Middle Eastern restaurant has received rave reviews in The New York Times, New York Magazine, and The Village Voice, among others. While the restaurant scene is risky—a widely-cited study by Ohio State University finds that 60% of restaurants close within their first anniversaries—Nir Mesika, the 31-year-old chef and co-owner of Timna, says balancing the front of the house with the back is critical for success.
“It’s very important to me that the whole experience is the product,” said Mesika. “We try to create a balance all the time between service, food, and the atmosphere, because diners in New York… They know what they pay for. Not only that, we respect our profession. We want to create the right balance, the right place.”
Timna’s co-owner and manager, Amir Nathan, told us he trains his waitstaff to listen to cues in order to engage in just the right amount of conversation with customers.
Mesika added: “It’s not that you’re just coming for the food. When you come in, you need to get everything. Good service. A good wine list. Good atmosphere. And of course, good food.”
In 2012, the craft beer industry made up 10% of the nation’s total beer sales and in 2013, craft beers enjoyed a 17.2% increase in overall sales, according to the Brewers Association. There were more than 3,000 breweries operating in the U.S. last year.
In an era when breweries are bubbling up all over the map, there are two critical factors that play into success. First, breweries are all about location, location, location. Because locality is a big draw for breweries, it’s important to find a location that’s convenient for tastings and other events.
Jennifer Royo, co-owner of the small independent brewery No Label in Katy, Texas with her husband Brian, told us: “I think people want to be able to visit a brewery and see the beer coming from that location. It makes it more personal. Homebrewing has grown lately as well. People are wanting to learn how to brew and by doing that, it interests them to visit their local brewery. Local is important to people.”
Once you find a good location and you’ve given yourself adequate time to brew good, quality beer, you have to know how to sell your beer. Sure, this might sound simple enough, but not everyone can communicate why the beer they make is worth drinking. While making and sharing your beer can be satisfying, business owners need to know how to market that beer to large groups of people. Competition is fierce—but success is delicious.
Americans love pizza. See: the 93% of Americans who buy pizza at least once per month. Or: the 350 slices Americans eat every second. Or: the 100 acres of pizza devoured every day. (That’s about 23 pounds of pizza the average American eats every year.) So naturally, pizzerias are popular eatery joints. For a chance of success, there are a few things business owners can’t compromise on.
First, fresh ingredients should never be sacrificed, especially in today’s health-conscious society. Rob Veltri, owner of Pizza in the Square in Yonkers, told us recently: “What I’ve seen in the last few years is that people have turned back to quality. If it’s a little more expensive, they understand. With the news, social media and everything, [consumers] have learned how things like the costs of goods have increased. They’ll accept the good quality if they have to pay more for it.”
Second, be experimental with what you offer. There was a time when people were more traditional with what they wanted on their pizzas, but the trend has veered away from the traditional. “Right now, you can put anything on a pizza,” Veltri says. “You really can. I think that’s one of the things that makes us successful. We’re always willing to change and make things different.” In other words—you don’t need to serve your grandfather’s pizza. But you do need to keep it fresh.
You know vaping is blowing up when Oxford Dictionaries names “vape” as word of the year. In fact, the industry is expected to reach $3.5 billion this year. That’s a considerable jump from the $1.7 billion it was valued at in 2013. As vaping gains popularity, it’s important that owners get to know their market well. Why? For the same reason that a customer’s visit to your shop differs drastically depending on where you’re located.
The website eCig One writes: “Equally important is the need to understand the tobacco sales climate in your area. Marketing e-cigarettes is easy in states such as New York and Illinois where the price of cigarettes exceeds $10 per pack. In states such as Virginia and Tennessee, you’ll need to present a more compelling case for the fact that your customers can save money by switching to e-cigarettes. Although we as e-smokers certainly hope that e-cigarettes can help to reduce the harm caused by tobacco, it’s the price that ultimately makes the sale. You’ll need to make sure that your product lineup can compete head-on with the packs of cigarettes that your potential customers are currently buying.”
It’s also important to keep in mind that acquiring funding will be a challenge, as the vape industry is considered risqué—along with the adult entertainment industry—and banks will charge exorbitant rates for loans.
It’s been decades since Starbucks took over the coffee industry and made it acceptable to fork over $4 for a cup of coffee. In recent years, America’s coffee industry has experienced another drastic change. A 2014 study from the National Coffee Association (NCA) found that daily consumption of gourmet coffee among adults in the U.S. has increased—why explains why we’ve seen an upward rise in independent coffee shops.
As hip specialty gourmet coffee shops continue popping up on every corner, becoming a favorite spot is tough. It’s essential to focus on customer service: regulars come for the caffeine but stay for the atmosphere and the people. But the most important factor might just be the quality of coffee. Coffee shop owners should take special care in training their staff to maintain that quality, no matter whether it’s in a normal order or something more demanding.
Last year, the CrossFit craze proved it really was sweeping the world when its 10,000th affiliate opened. Satisfying fitness aficionados and competing with all the other CrossFit Boxes—not to mention other fitness establishments—is all about the specialty classes you offer and the coaches you employ.
Since CrossFit thrives because of its community aspect, it’s also imperative to use social media to involve members and market your gym. Spend extra time and effort to post events, special deals, and updates on what’s happening at the gym. No pain, no gain, right?
They may seem temporary, parked on the corner with cheap tasty eats, but food trucks are a multi-billion dollar industry that’s here to stay. If you want customers to line up in front of your truck, you’ll have to work for it. Here are some factors the aspiring food trucker can’t ignore.
First, know exactly how you’re going to prepare your food in your tiny, limited space. The Food Truck startup guide advises preparing food ahead of time and making sure that the food on your menu can be repeated in large quantities while also tasting consistently good.
Second, make sure your food is easy to eat and can travel well. Few food trucks have the luxury of table service, so keep your customers and their eating habits in mind.
Third, since you don’t have a brick-and-mortar location, make sure you keep customers in the loop through social media, your website, and newsletters. To build that loyal customer base, make sure you’re going to the same spots as often as possible, and make use of Facebook, Twitter, and Instagram. Food trucks often have quirky personalities that lend themselves easily to social marketing.
Finally, if you’re in a city like New York with strict rules and regulations, make sure you know where to park so you’re not paying fines every month. Get the right permits and follow all the codes you need to, because getting shut down for a day or week can be a big cut into your business.
Mid-tier gyms and their memberships have been “hollowed out” of the industry, wrote Nate Hindman, CEO of One Day Gym Pass, in Forbes last year. Today, it’s all about budget gyms and boutique studios. If you’re going to successfully run the latter, which now makes up more than 20% of the market, it’s important to turn your studio into a place where people want to hang out.
For instance, Eric Posner, co-founder of Swerve in New York City, told us that the idea for the fitness studio sparked when Posner and his two co-founders, Chelsea Kocis and John Henry McNierney, found themselves taking clients to cycling classes instead of steak dinners and drinks when they worked as financiers. Posner said:
“We found this to be an unbelievable way to build relationships that were meaningful as opposed to the typical steak dinners and drinks. We were going to mostly cycling classes and what we saw about these classes was there were unbelievable ways to get an efficient workout in and do it with other people, but [these classes] weren’t capturing the camaraderie of going with a group or going with other people. It was very individualistic. So, that’s how we came up with the concept of a team-inspired indoor cycling workout.”
Once you’ve come up with a great idea and created an inviting space, then it’s time to specialize your services. If you’re going the personalized training route, don’t skimp on good trainers! Some customers schedule their workouts around specific leaders, so pump up the social engagement aspect of your studio to get the most out of this new fitness trend.
In New York, bodegas are part grocery store, part deli, part variety store. They provide New Yorkers with security, knowing that beer and toilet paper is just down the street on every corner. But bodegas aren’t what they used to be. In 2010, hundreds of bodegas closed down when big-chain stores like CVS took over and rent prices rose. For the ones still around, carefully thinking about layout strategy may be what’s saving them from closing down for good. As we said in an earlier post:
“If you’re going to run a successful store, you need to know that psychology plays a vital role in how people shop.
“Eye level always sells,” said [Nasser ] Mubarez, who’s been working in his family’s various corner stores for 10 years. “That’s a fact. We put the most expensive stuff at eye level.” Grocery stores are also known to place their highest margin items near the cash register since this area is most profitable as people make their impulse purchases.
Mubarez keeps staples, like bread, eggs, and milk in the back or in more obscure areas. “People are going to ask for that stuff any way,” he says, “it doesn’t matter if they see it. It doesn’t matter where you put it.” During the winter, Mubarez keeps gloves, scarves, and hats at eye-level, close to the cash registers. He suggests to ‘work around every season.'”
Additionally, if you’re going to be the neighborhood corner deli, you need to know your neighborhood and its residents well. That personal touch is the only way you’ll keep up with demand.
Before customers get to your doorsteps, you need to know that they’ve already done their research on customer review sites, with product ratings, blogs, and everything else in between. The modern consumer is smarter than ever before, which means standing apart from the competition requires you to be extremely knowledgeable. Where do your wines come from? What kind of gin would a specific customer prefer? How is bourbon made? These are legitimate questions you might get on a regular basis.
Also, keep in mind that you’re going to need a lot of money to cover inventory costs. After all, how else will you compete against big stores with the best brands? Here’s why “distributors hold all the power,” according to Justin Holman, who writes about the overbearing inventory costs on his blog:
“As a retail liquor store owner I am only allowed to purchase inventory from a licensed distributor. Seems reasonable to keep tabs on who’s moving liquor around the state. But, here’s the catch. Every licensed distributor has a complete monopoly on every product they sell. So, any self-respecting liquor store should have various sizes of Jack Daniels on the shelf, right? I think I’ll call around and see who has the best deal on a case of 750 ml bottles of Jack, compare prices/terms and place the order, right? Wrong. If you want to buy Jack Daniels or any other product whether it’s a brand of beer, wine or spirits, you have your choice of exactly one distributor who carries that product. So, negotiating price isn’t an option.”
For those dreaming of running their own vineyard and making their own wine, be prepared to lose a lot of money in the beginning. Not only have vineyard prices gone up—selling for around $300,000 per acre and in prime locations, like the Oakville region in Napa Valley—annual establishment costs needed to keep those vines alive while waiting for grapes to grow isn’t easy on the purse strings. And we’re not even talking about building a production facility and tasting room yet
So be financially prepared for the strains it’ll cost. Last month, we reported:
“A best case scenario, set forth by Jerry White of Cornell University, is that it takes five years to plan, order vine, and establish and develop your vineyard until mature yields are seen. Then it takes another year to produce the first vintage and two or three more years to get your marketing plan in gear. White says, ‘If you start with a vineyard, it takes a minimum of 11 to 13 years to get into a positive net income position if you are marketing only the wine that you produce from your own grapes.’”
Time is money, and money takes time.
Now you’re an enlightened entrepreneur who can start and manage any type of business successfully. You’ve got your eye on the bottom line, no matter what you sell. Don’t go around telling these secrets, though—let’s keep these just between us.
from Fundera Ledger https://www.fundera.com/blog/2015/11/18/the-bottom-line-for-any-type-of-business/