An idea for personal independence needn’t be complicated


We all know the start up stories. Apple, starting in a garage. From diddly-squat to billions almost overnight, thanks to technology.

Maybe you’d like to look at Nimblebit LLC, the creators of the fascinating game Tiny Tower. The game is free. It does not go out of its way to get you to spend anything. The two creators still have earned more than $4 million in the first year from this little gem for iPhones and iPads.

Well, if you think that the only kind of start up that pays off is in technology of some kind (there’s just as many biotech, cleantech, etc. stories out there), then you’re artificially limiting your horizons.

There’s a start up opportunity waiting wherever you can open up a strategic gap.

Let me tell you about my neighbourhood, to illustrate the point.

Like most neighbourhood shopping streets these days, mine is littered with coffee shops. But the ones that make up the neighbourhood are old-style espresso joints from when this area had a wave of Sicilian immigrants. Most are labelled as “social clubs”.

You can get a very decent espresso, cappuccino or latté here for $2-3. That’s right, half the price of the green mermaid (who seems to be everywhere). Admittedly, none of these places are particularly exciting, they don’t do fancy pastries, leather chairs are nowhere to be seen. Older men, smoking by lighting their next cigarette off the last one, gesticulating about football (soccer) while the television shows you European matches: that’s the scene here.

There isn’t a Starbucks in the neighbourhood — period. For the rest of the neighbourhood’s coffee needs are met by the brew companies. Tim Horton’s and McDonald’s capture most of the rest of the business.

Yet, in the past two years, two proper upscale places opened and are doing well: CakeTown, and Red Rocket.

Both sell at Starbuckian prices — a medium vanilla latté at $5.55 (taxes included) and a cheese danish at $2.80 (with tax) — but with the ambiance and vibe of a place where the owner is behind the espresso machine. Both make sandwiches on premises, do their own baking, have their own unique offerings. Both are constantly full. Yet they’re also different from each other (and everyone else): there’s a reason to choose one of these today for this, and the other tomorrow for that.

In other words, both recognized the opportunity by answering with different business strategies. Their success isn’t just “location, location, location” or built on minimum wage rotating staff complements. Both answered the question: “what difference would make us successful”.

Most people use the term strategy when they really mean planning. Planning, in turn, is often not much more than budgeting: and, in many start ups, most of that starts by thinking about expenditures, then a revenue “projection” is put in to justify writing all those cheques in the early going.

Strategy, on the other hands, knows what outcomes are desired, what measures let you know how you’re doing, how to tell if you’re racing ahead too quickly, etc. It is a tool for constant adjustments and course changes.

Remember that both of these are succeeding in the hardest of all spaces to succeed in: food services. Neither is surrounded by lots of working people (my neighbourhood has no industries, very few offices, and most people leave to go to their jobs during the day as opposed to work from home). Despite that — and without a sidewalk filled with strollers (although both cater to children) — both places are packed morning, noon and (in Red Rocket’s case; CakeTown closes) night.

Both of these have made innumerable small adjustments during the time they’ve been open. Their owners are constantly trying new things — “if we add soup, will it sell?” — and are unashamed about staying away from things they either don’t do well, or can’t make a living from. (Red Rocket, for instance, does not do well enough from its tea business to make stocking tea varieties and specialized tea paraphenalia worthwhile, so it eschews that piece of the market. It does, on the other hand, sell enough beer and wine in the evening, and enough coffees with liquor in them, to make having a liquor licence and stocking a few varieties of what’s needed worth the effort.)

These are businesses where the average start up fails within five years. (As Nicholas Nassim Taleb pointed out in his book Anti-Fragile: Things that Gain from Disorder, the total number of seats at eating/drinking places in a neighbourhood remains relatively constant, although the players keep changing.) Yet both are earning their owners (and in Red Rocket’s case, there are four families in ownership, plus another ten or so staff being paid at this one shop) a living, a life, and a return.

The bottom line: sound advice, good mentoring, and working through an apparently “been done before too many times” idea can provide a level of security no job can in this era of endless management buy-outs, downsizings, offshorings, mergers and vicious internal politics.

At PDD, we are equipped to help you explore this route to reducing your personal risk. Call or write to know more.

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