How running a small business can be a benefit to big business - Women's Agenda

How running a small business can be a benefit to big business

I found a window in my week’s schedule and completed my July to September Business Activity Statement (BAS), due yesterday. As I filled out the form for the fifteenth time since becoming a small business owner, I pondered the learnings I have accrued that have been so different to the skills generally required for the larger corporations I have primarily worked for.

I have been running a coffee shop on the side for nearly four years. It’s been rewarding on a number of levels but the time I need to devote to working on the business when I am not working in the business has limited my ability to tick off the many other professional and personal experiences that I am keen to have.

My foray into the world of small business ends in about eight weeks. Retail is a tough business and in this time I have managed two cafes. My current coffee shop is a Gloria Jeans franchise in Westfield Bondi Junction.

I bought the first cafe from the then Deputy Chair of the Franchise Council of Australia in 2009. It was the Gloria Jeans inside the Borders bookstore. My acquisition of the cafe roughly coincided with the Red Retail Group’s takeover of my former favourite place to buy books. Two years later Borders sank into administration. The tragedy is that I saw it happen and although I spoke up, there was nothing I could do about it. The new owners of Borders turned the book shop into a variety store with tables at the entrance full of cheap homewares and popular cook books.

The marketing strategy had changed dramatically. Virtually overnight Borders became the most expensive place to buy books. I noted that a particular new-release hard copy book was priced $20 higher at Borders than it was at the Dymocks store directly upstairs, for example. I can only assume the new owners thought the cheap gadgets would bring customers in. Who goes to a bookstore for homeware and over-priced books? If they understood why the Borders customer was special and why they would choose Borders over any other store to buy their books then this never would have happened.

My cafe was positioned on the mezzanine level of the store which was why it was such a great business when Borders was on its game. As soon as Borders pushed their customers away, my customer numbers halved. My customers were Borders customers who wanted to enjoy the atmosphere of the bookstore. When they ripped out the intangible reason for going to Borders, the business started to die. It’s a classic example of what can happen when those in charge have no idea about their customers. We have seen examples of this time and again in a number of industries, including once great media companies.

At the time the Internet was blamed for the demise of Borders, as it is for the decline of newspapers and magazines. Certainly book publishers have had to expand their distribution into online stores but as I experienced this disaster from the inside, in my opinion the actions of this particular retailer made sure of it’s own demise.

When my cafe closed I took over the management of the other Gloria Jeans cafe in WBJ and I had to re-learn the motivation of our typical customer. The people who frequented the new cafe were not necessarily choosing the coffee chain for the same reasons as our previous customers. This was such an important revelation for me. The ‘how’ and ‘why’ are as important as the ‘what’ for any business, large or small.

I also learned a number of useful skills from running this small business. I am now more familiar with MYOB than I ever wanted to be. I understand the impact of the government’s Fair Work laws on small business. I also know the delicate balance of the cost structure of a retail business.

But above all else, this experience has confirmed the importance of understanding why customers choose a particular brand over another. It’s often not the reason you think.

Have you had a small business experience that has informed a decision you’ve made for a larger business? Or vice versa?

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