3 tips for growing businesses, from the co-founder of Boba Guys, Andrew Chau
Hi! We at Boba Guys are super excited to be invited back for FinancialForce’s events at Dreamforce 2016. We had a blast last year and were thrilled to meet new and old fans on the streets of SOMA! With another year under our belt, we are starting to learn how to scale a business. We know many of you are going through the same thing at your company.
We doubled the amount of stores from last year, so we are adjusting to the volume and intricacies of a larger operation. Whether it be digital or physical operations, scaling anything is hard, so FinancialForce asked us to give our top tips for growing businesses. Mind you, we come from the food industry but many of these principles should be universally relevant! Here are my top tips for growing businesses:
#1 Make Sure All Decisions Are Based on Your Core Values
When a business is growing (and growing fast), it’s very tempting to tackle the issues immediately in front of us. In the food business, we put out fires every day. It could be a broken point-of-sale terminal or intermittent internet — the universe throws you countless curveballs. That’s why we stick to our core values for every decision, even little ones. For us, our values are Quality, Transparency, and Passion (we call it Giving a Damn). That drives everything we do. If we are wrestling with a decision, we always bring it back to our core principles. When you scale a company, it will simplify your decision making.
For example, we often have to replace equipment and face a choice of going with a cheap piece of equipment or getting something commercial-grade. When we first started, we tried getting by on lower-quality equipment. However, the cost of service and replacement soon become a hassle. In a fast-paced business like ours, we could not afford any downtime. So naturally, we opted for the higher-grade pieces of equipment over time. It costs more in the beginning, but it pays it back in opportunity cost.
Another example is our commitment to Transparency. Earlier this year, we had to communicate a price increase to the public. It was one of the hardest things our young company had to do. We wrestled with various options which even included possibly implementing it under the radar. However, given that we are known to be one of the most transparent food companies around, we went full bore. Instead of laying lowkey, we took the exact opposite approach — we over-communicated our price increase and explained to the public exactly what was going on. We even made a video about it explaining where the costs were going, which essentially unveiled our business model. It was a risky proposition, but it felt right. It was easy to do because it was aligned with our values. Everything you do should go back to your core values.
#2 Do Things That Drive Incremental Benefit
Not all types of growth is good. We aim for incremental growth. We usually encounter this with choosing new store locations or adding a new item on the menu. We ask ourselves, “did adding X lead to incremental sales?” Otherwise, it’s just shifting demand. If we add a new drink on our menu, we make sure the cannibalization is kept to the minimum. Otherwise, you’ll get the same sales (or return) but with the added complexity of offering more products. Not good!
The hard part is deciphering what is incremental vs. cannibalistic. I used to deal with this when I was a general manager at various companies. If you add another module to an ERP solution, does it make the overall ecosystem better? Or does it just pass the buck to another team? A bright, shiny new product isn’t always better.
The best way to think about this came from my old manager. She said, “By doing this, does it make the whole ecosystem better?” If we open a store, does it make those around it better or will it simply take customers away from an existing store? If we introduce a new product, does it enhance the overall product portfolio or does it simply shift demand? All of life’s greatest mysteries answered by one question!
#3 Have a Team Built for Growth
There are an infinite amount of articles and books about building a team for growth. However, the majority of them talk about what structure and processes are needed. You often come across tips like “foster creativity through open dialogue” or “create working sessions to shorten the feedback loop.” While those are great tips for growing companies, I think the real challenge is building a team who excels in those environments. How do you build this team?
The individuals who display the best aptitude — and subsequently, set the foundation — for growing companies are usually home-grown. It’s a bit counter-intuitive or provocative, since we’re often told that you need growth specialists, seasoned veterans, or people who have “been in the trenches” before. I believe that’s only true for select industries or companies that require unique competencies– it’s not true for most businesses. In the food and beverage world, we’re rarely trailblazing in terms of technology. We’re not reinventing the wheel. Therefore, competency isn’t the top ingredients for success — the mindset and cultural dynamic is more important.
It all sounds very squishy and ambiguous, so there are tangible ways to think about it. It’s like assembling the perfect professional sports team to make a run for the playoffs. Rarely does a single free agent superstar launch you into the postseason. In most cases, it’s the foundation of young talent that makes it all possible. Only when you have an established team nucleus can a free agent become effective. That’s because the key to growth is about the mindset and culture. It’s about solving problems that will inevitably arise. It’s about injecting mojo in company morale when times get tough and people are stretched. A home-grown team, under the right leadership, is better equipped for growth. Only then, can a couple strategic free agents augment your team and get you to the next level.
That’s our two cents on growing a company. We hope some of this was helpful. Maybe you too will join the food and beverage world after Dreamforce! =)
Andrew Chau, co-founder of Boba Guys