It’s been a couple of weeks now that I have been at home for Christmas holiday. It gave me a lot of time to think and reflect on what I have learnt since the beginning of the course. It’s been a great experience so far, and I can see and compare how much has my thinking changed within the past few months. As an example, I’d like to talk about my aunt.
For a while now, she’s been thinking of opening a cake shop in my hometown. She shared this idea with me last August (that’s just before starting the course) and instead of encouraging her I advise her not to do it. My reasoning behind that was that there were already quite few cake shops in the area and that people might reduce sugar intake dramatically since it’s a well-known fact that it’s unhealthy. Basically, I suggested she should come up with an ‘amazing life-changing’ idea, which doesn’t exist.
Fast forward six months, and we’re here now; it’s December 30th. My aunt has dropped the idea of opening the sweet’s café even though her passion is baking and she is fantastic at it. I know that I might be partial (she is my aunt after all!), however now I’ve learnt how I could try to be as objective as possible. Moreover, having studied the Design Thinking for Start-ups module now, I see that this idea is actually quite feasible. Additionally, I believe there’s quite a lot of room to make it better so that selling cakes isn’t just selling cakes. One of the criteria for MACE business is that it either has to be new or done better. And I’m sure that this could be achieved even through operating a hospitality business.
First of all, I’d visit every single cake, pie, biscuit shop or confectionary café there is in my hometown. Then, I’d buy a bit of nearly every kind of biscuit, cake, etc. This would enable to really understand what sort of products are out there, how tasty are they and whether the price matches the quality; ultimately I must find out whether I can do better, or different. So that’s a market research and, let’s say, it turns out that my aunt can do better or different. Now that we think my aunt makes them better let’s move onto the next step.
Secondly, I find out when are town events or food festivals happening so that I could book a stall to introduce the goods. I had had some to offer for tasting which would help to attract more customers. Moreover, I would do what Innocent did before starting their smoothies and fresh juice company. I’d have two bins next to my stall with slogans above “go for it” and “don’t bother” and would ask people to use an appropriate bin after having the tasting of the product. This would provide me with some feedback. Also, a different kind of product would be on a different coaster to help me identify which piece of confectionary received most noes and vice versa. Let’s assume this step went well, and we got a ton of yeses.
Now I am confident to have a pop-up. That’s how a steak restaurant Flat Iron started so let’s take a leaf from its book and open a pop-up. We may have gathered some contact details from people who encouraged to open the ‘cakery’ by throwing coasters away to the appropriate bins during fairs. I’d contact and invite them to come and visit the pop-up. As you can see, I’m already gathering customers before even having my first café opened. Pop-ups are for a limited period of time, they’re fun, and that helps to create a buzz which is important for a new place. It’s also free. So let’s assume that went well.
At this stage, I already know that I’ve done the market research, the product is viable, I already have some loyal customers. Everything is going the right way, however, now I need money which i don’t have. Hence, there are two options – either a bank loan or turning to a venture capitalist. Either way, we’ll need to have our financial forecasts done. No one will lend money unless you prove them that their money will start turning the profit at some point. To predict sales, I must know how many potential cafe goers there are. So I go the similar profile cafes again and see how busy they are in numbers of people, and observe orders per customer. This will allow seeing the spend per head and how many potential customers I could serve a day. Now for my own business, I calculate all of that to forecast, alongside net and gross costs. Having all of this finance analysis done I can go ask for a loan.
Having gone through all of these steps not only will have provided clarity, but also insight into how this business could and are you really happy with it. It’s the time to listen to your potential customers, get to know them and start a conversation. It benefits all the parties. It’s clear that my thinking of opening a business changed 180 degrees since starting MACE. And yet I am extremely curious where it will take me the next semester.