• Jerry

Stay True to Your Revenue

I believe something like fifty percent of small businesses fail in the first year. Maybe ten percent make it to five years. I now get why.

I’m not a fan of statistics. Numbers can be used to support almost any argument. So I’ll rephrase the above. Most small businesses fail early.

I had my doubts about The Coffee Shelf in 2016. And that, my friend, is an understatement. Especially toward the end of summer, which I touch on in the article Percent of Revenue to Advertising.

The fall season rescued me. As January 2017 dawned I was feeling pretty good. As if I had emerged from the other side of the dark forest. From the brink of extinction in September 2016, to a profitable 4th quarter.

“Now that revenue is picking up nicely, I will begin focusing on the book side of the business,” I decided.

Sound like a good idea?

It was not. I was making one of the mistakes many new business owners make. I was forgetting what had fueled my recent success.


My business model centers around coffee and books. Yet that is merely the draw to bring customers to my store. Espresso based beverage sales is what drives revenue at The Coffee Shelf.

In 2016, espresso based sales equaled 59% of total revenue. Book sales? Barely over 9% of total revenue. See the mistake yet?

You might be thinking, “What mistake? Your book sales were clearly lagging espresso based sales. Great idea! Focus on the books.”

Walk into The Coffee Shelf, and perhaps this mistake becomes more apparent. The retail space is small. While it might be the average size for a coffee shop, it is tiny for a bookstore. Most veterans of business probably would have recognized my folly. Book sales were never going to equal espresso sales. My revenue driver is, and always will be, espresso based sales.

Mistakes by small business owners have lag. It can take months before you realize your direction was a poor decision. By April of 2017, as my credit lines once again extended toward their maximum limits, I knew for certain I made a monumental mistake. I had diverted attention from my primary revenue driver.

This was a common sight in February 2017 as I focused on increasing my book inventory.

In April of 2017 all advertising for books was placed on hold, and the primary focus returned to espresso based beverage sales. After the slow summer in 2016, my anxiety began increasing as the summer of 2017 approached. It turned out to be a successful summer by all measures. The refocus of my advertising campaign had paid dividends.

As we near 4 years in business I am again trying to drive book sales higher, but through a different lens. Coffee remains my primary focus. I’m pursuing online audiobook sales, and adding used books to my shelves. Hopefully book revenue will pick up, but the focus remains to drive customer traffic into my storefront in order to increase espresso based beverage sales. Book sales, like food sales, will remain in a supporting role.

The lesson for me was not that I can’t advertise books. I’m doing that now. I also often highlight our pastry options. All the food we offer is baked fresh on premises. It would be foolish not to advertise this. But again, the focus remains on my primary revenue. Pictures of books will usually include a coffee beverage. Same thing for the pastries.

  • Note: I’m fortunate I had a clear revenue driver to refocus my efforts in April 2017. Other small businesses have trouble finding that revenue driver. Another one of the many challenges small business owners can find themselves confronting.

It’s a Learning Process

If you are considering opening a new business, especially if it will be your first, you are going to make mistakes. In my articles I’m just beginning to touch on mine.

  • I was under-capitalized when I opened the doors (as I would discover by August).

  • I initially did not have a clear marketing strategy.

  • I had no real idea how to run my baking operations, which led to hiring mistakes, and a poor decision on how baking would occur.

  • I did not have a clear direction on the kind of work culture I wanted to establish, which led to more hiring mistakes.

For me, I think, the key was being able to recognize my flaws early on. I removed my ego from the equation and fixed those mistakes. My employees were counting on me to figure it out; I had to set my ego aside.

And this was just the first year. I encountered other challenges, which I will also write about in future articles.

  • Not being ready for a sudden increase in business after a key competitor closes in early 2018.

  • Poor inventory management.

This touches the surface on why it would be difficult for me to write a “how to” book on running a small business. So I’ll continue to write articles. If I can ever catch up to where The Coffee Shelf is now, no problem. One thing I’m certain of; my mistakes are not done. As long as I can find ways to recognize and fix them, hopefully The Coffee Shelf will remain open.


Fingers crossed.

I wasn't superstitious before I opened The Coffee Shelf. Now? Maybe a little.

#revenue #smallbusinessstrategies

This book helped to influence me in the running of The Coffee Shelf. I still think about some of the things from this book, and I plan to re-read it soon.

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