Majority of the entrepreneurs put their sweat equity to their start-up. Later, specifically in the case of Starbucks, they use their retained earnings and debt to expand the business and operations.
Starbucks do not franchise. The first Starbucks coffee bar is at Pike Place Market, Seattle, Washington, United States. So, Starbucks mainly used joint ventures to grow their operations all over the world. They always rely on local expertise, for example, contracting with Tata in India.
In order to understand market demand, you have to look at where the pain is. The miracle happens when it exceeds the customers’ expectations. That’s why focusing on the niche market will always bring value.
One of the important soft skills for entrepreneurs is to have an open mind.
Three main values for start-ups: money, vision and self-actualization. Self actualization is the experience of creating something.
3 main failures Starbucks had:
The coffee in the supermarkets: sub brand: unforeseen problem happened: they didn’t see it coming. Supermarkets pushed them to lower their prices. Within 18 months, they sold their company’s sub brand alongside with locations and equipment. They couldn’t play the price game.
The 2nd failure happened with the sales forecast. According to the forecast, 15-20% of sales had to come from tea leaves. But the actual number was 2.5%, it never reached to 3%. So, they sold their inventory.
The 3rd failure lies in the grey area. In 1972, they were sellers to coffee places/bars. Not in 90’s, but Starbucks could have opened their bars in late 70’s.
His thoughts: More people with more opportunities, not to the degree that we have now – people with privileges. Persuade people with power to help people without power.
Many thanks to EU Business School, who gave this opportunity to all its community to have a chance listening to such an important figure.