Open your business with a bang

May 28, 2012
The Age

Don’t start with a whimper – create loyal customers from the get-go.

After waiting 30 minutes for my meal at a new Japanese café last week, the owner belatedly apologised for the delay, confessed they had run out of cooked rice, and asked if I would choose a noodle dish. Sayonara to that, or recommending the café to friends.

Yes, it’s hard to believe a Japanese café could run out of rice. But the owner told me they never expected so many customers within a week of launch. They were badly short-staffed, had only one person cooking meals, and a roomful of patrons wondering if they would ever be fed.

The café made a terrible first impression, precisely when it should have wowed customers. It is far from alone: many small businesses muff their first 90 days and alienate new visitors. Poor word-of-mouth recommendations spread and the mistake becomes fatal.

To be fair, many small businesses struggle at the start because they are undercapitalised out of necessity.

Their owners need cash flow from the venture to survive and build the business, and have to watch every cent. Or they learn on the go as the business grows, or struggle to estimate and plan for customer demand, which can be harder that it looks. Sometimes, they are just unlucky.

At least the Japanese café’s problem was having too many customers. Its excellent store fit-out, menu and value proposition attracted people in the first place, so it clearly has the makings of a good business, provided it understands that first customer impressions are everything.

I’m always surprised when new small businesses start on their worst, rather than best, foot. They have little fanfare in the lead-up or at launch, dull customer offers, and no “zing”. Often the store is poorly stocked and the service is haphazard as teething problems are addressed. Customer goodwill when trying a new store evaporates, and potential repeat visitors are lost within days of launch.

Maybe the weak economy will turn more people off opening small business, even though exciting new ventures in flat markets often stand out and attract much more interest from customers who are tired of the same old shops and cafes, and companies only ever reducing their service. Nevertheless, consider these ideas when starting a small business:

1. There is no such thing as a “soft” launch
Get your systems and processes right before the business opens. Budget to have practice runs. Don’t let paying customers be your guinea pigs while you figure out how the business should work. Don’t let your venture have a “soft launch” mentality or make excuses because you are new. A vibrant, confident new venture gives customers the confidence to return.

2. Find the razzle dazzle
New business should have a sense of excitement, yet so many start with a whimper. They just open and hope people come. Market the business before it opens. One I saw recently had signs telling customers an exciting new business was coming, a band when it opened, and provided cake samples on the footpath. The business was packed. I’ll bet the $1000 in launch marketing was the best money it ever spends.

3. Give, and give some more
An opening-store special offer for customer is a no-brainer. So why do so many new businesses have stingy, unimaginative discounts to excite new customers? And why are so many offers one-offs, when they should be designed to create repeat business, for example, “buy one and the same item is half-price next time you visit” or loyalty cards. Again, it comes down to smart planning, marketing and budgeting.

4. Surprise them
Nothing is more effective than surpassing customers’ expectations on their first visit. Smart businesses do it all the time: a restaurant brings diners a small appetiser, compliments of the chef, or a fashion stores provides a small free accessory when a customer buys a certain amount. It’s a good lesson for new small businesses: think about how you can cost-effectively surprise and delight first-time customers.

5. Pamper them
It’s easy to say, but if a business is ever going to pamper its customers it should be right at the start, when new clients rate the business, decide whether to return, and recommend it to others. Budget to have slightly more staff than you need upon launch, so you give customers surprisingly good service and fast product delivery, and can respond to strong demand. Quickly cut staff hours if the extra service proves unnecessary.

6. Plan, don’t hope, for the best
What happens if your service business is wildly successful? I bet the Japanese café mentioned never asked: what if we are packed on day one? Would we cope? Could we maintain service quality, and surprise and pamper our new customers? And would we have enough cash flow to fund extra food and staff to meet high demand? Do simple scenario planning before launch: what is your base-case scenario for expected customer numbers, and what happens if they are 20 per cent lower or higher?

7. Make a personal connection
The venture’s launch is a great time for the owners to introduce themselves to new customers, ask if they live in the area, thank them for coming, and say they hope to see them again. It is no time for owners to stay behind the scenes and leave all customer interaction to staff. A friendly, passionate owner is the venture’s best advertisement and a great reason for customers to recommend it.

8. How was it for you?
Smart companies are incredibly responsive to customer feedback when they launch. They seek comments, address problems quickly, and adapt. They know one lost customer at the start means one less repeat visitor and potentially dozen of lost customers through word-of-mouth marketing. They also know that new visitors are often willing to provide feedback, to help the business, and that souring their opinion can in itself create a bond with the customer.

9. Make up, don’t break up
All new businesses make mistakes. It’s how you respond that counts. Ensure you have a make-good process, to give customers something extra when there’s a screw-up. Don’t let a happy new customer leave as a cranky one. In my case, the rice-poor Japanese café said sorry, but offered nothing extra.

The whole experience was like a chop stick to the head. Even so, I’ll probably return: you have to give hardworking small business owners a second chance, and I always feel for floor-staff who have to deal with unhappy customers, through no fault of their own. But it takes a lot to build a connection with a small business when the first impression is dismal.

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