BEING involved with Shark Tank and my friendship with startup guru Steve Baxter has inspired me to seriously engage with early stage businesses.
At last count, I'm actively engaged with, invested in or mentoring nine fledgling startups. My interest in this space recently drove me to attend the launch of Innovation North Queensland (INQ) in Townsville as part of a panel of speakers to help inspire the local business community to support early stage entrepreneurs.
One of my old business mates runs a bar-café in Townsville that has been going strong and is popular as ever after 22 years in business. This is despite the fact that hospitality businesses are in the top five likely businesses to fail in the first five years after opening. I suggested that it was his duty, as a successful businessman, to wander down to the startup factory and mentor some of the young entrepreneurs in his local community. He could not see the relevance of his business to these 'new age' startups but reluctantly agreed to take up the challenge to tell his story and be available to help prevent some of these young entrepreneurs from making rooky mistakes as they navigate through the early bootstrapping days of a young business.
My view is that a café owner - especially a successful one that has 22 years under their belt - is the perfect mentor for new startups. It doesn't matter if they are starting out in tech, biotech, digital, media, retail or services.
With so many cafes, bars and restaurants in the marketplace, a successful café owner knows they have to be different and better than their competitors and reset their business on a regular basis. The relationship they have with, and the authentic feedback they get from, their regular customers in real time means they can stay on trend be it with decor, ambience, menus or whatever else the customer dictates.
Once a café owner works out why and how to add value (great food, great service, great atmosphere, great execution) to the lives of their patrons, they simply need to market themselves in a simple and compelling way to drive traction and foot traffic to their business. Where the rubber meets the road (customer/business interface also known as product/market fit), the customer outcomes are all that matters. The only way to know is to engage in deep conversation with the customer on a regular basis and use that to refresh the business strategy.
Finally, the biggest and best lesson a café owner can teach a startup is about fiscal disciplines. Cash is king. Eateries are all about managing cash flow, driving revenues (right offer to customers), holding down costs, maximising margin on cost of goods (food and beverage), managing employee costs yet delivering exceptional service, and ensuring that the focus is always on a profitable, optimised business model in the face of a fast changing and competitive market place.
So back to the start of the conversation.
Successful business owners and entrepreneurs from all industries - be it veterinarians or café owners - have a responsibility to the next generation of business owners and startups to tell their story and engage in active mentoring and coaching in our local business communities. Everyone has a story. It is time to tell it if we are serious about creating vibrant local entrepreneurial ecosystems.
Dr Glen Richards joined Steve Baxter (internet pioneer), Janine Allis (Boost Juice), Andrew Banks (Talent2) and Naomi Simson (RedBalloon) for season three of the Network Ten series Shark Tank Australia. .
Here's the exact framework Dr Glen Richards uses to judge whether a startup is worthy for investment.
Read previous articles here for Dr Glen Richards' views on everything from private equity to IPOs and politics:
- Bringing an investment to life
- The clock is ticking, time to act
- Should you ever whack-a-mole?
- How I pick tech companies
Join us for breakfast with Dr Glen Richards, the founder and executive director of Greencross Limited (ASX: GXL) and Shark on Shark Tank Australia, at Customs House on Wednesday 2 August 2017.
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