Wednesday, April 30, 2014

The Starbucks Business Model

I keep finding Starbucks referenced on top business blogs as the model of how to turn a small business into an international mega-company.  I think it's important to take some time away from creating to read, and become inspired, by other companies that are apparently getting it "right".

Starbucks began in Seattle Washington in 1971 and currently is a multi-billion dollar company with cafes in 64 different countries.  In fact, there is one right down the street from me here in Mexico.  How did they do it?  I have been able to narrow down through my research two key points that aided Starbucks in their massive success, and the reasons might surprise you.

This is the Starbucks near my apartment in Mexico.

1.  Mission and values
Starbucks mission statement is "to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time."  Sometimes you see statements like this and you think it's a load of crap but Starbucks puts their money where their mouth is according to Jackie Huba.  Starbucks doesn't only take care of their customers, they take care of their employees as well.  So the question is, do you want to be a Starbucks or a Walmart?

Starbucks takes a stand on issues, even extremely controversial ones like marriage equality, and they don't back down, even for investors.

Starbucks has made the list of the world's most ethical companies for 7 years straight.

I think we become so cynical when we see large, multi-billion dollar companies.  We believe they are only where they are due to corruption, greed, and ruthlessness.  It's comforting to know that a company at the top has ethical values and stands by them.  The lesson here is that it is possible to build a hugely successful business while still retaining the positive values you wish to impart on the world.

2.  Starbucks knows their brand
I'm not positive where I read this, it might be in one of the articles I already mentioned, but the story stuck in my mind.  Apparently when Starbucks began selling breakfast sandwiches they found that heating up the sandwiches smelled up the cafe.  Instead of smelling like coffee, the cafes began to smell like ham, cheese and eggs.  Immediately they decided to stop heating the sandwiches until they could find an alternative heating method.  Why?  Because the sandwiches stopped the cafes from smelling like coffee, and Starbucks wants their customers to only smell coffee when they walk inside.  Coffee is their focus, and they want it to remain the focus.

Starbucks knows how to get you to shell out more money for coffee.  By all accounts Starbucks coffee is expensive, and yet their success is proof that people are willing to pay the price.  How do they do that?  Atmosphere.  They sell you an experience.  Read more about creating an atmosphere, as well as selling an expensive product, like Starbucks, on

What can we do with this information?  How can you apply it to your business?  Well for me, I need a mission statement.  I'm struggling with it though.  I think I have heard so many false business statements over the years it is hard for me to write something that is both honest and also vague enough to encompass all my future plans should they come to fruition.

For example, originally I wanted my mission statement to say something about handmade, but then I realized if I start manufacturing my dolls I won't be able to boast handmade.  At this point I'm still not sure how I plan to go about manufacturing my dolls, but I don't want to close any doors before they are opened.  The statement can't be too vague either otherwise it isn't really taking the definitive stand you want to express.

About point two, knowing the brand, I think I do a pretty good job of keeping my shop cohesive and focused on the look of my BeBes.  However, when it comes to convincing potential customers to spend a little more on a BeBe than a plastic doll from China, I think I could use some work.  It's no secret that sellers of handmade products struggle to pay themselves a fair wage and still compete with mass produced products sold at stores like Walmart.  Some of this is a cultural problem, but there are things we can do as handmade sellers.  So what can you do?  Tell your customers in your packaging, Esty story/about page, product descriptions or anywhere else your customers read about you.

Here is what I wrote on my Etsy "about" page:
"Why should you buy BeBe Babies?  Here at BeBe Babies I know you are looking for something unique for yourself or your child.  I know quality is also important to you.  BeBe Babies are special because they are made with love and attention.  You could buy mass-produced dolls but the personal feeling you get from BeBe Babies makes all the difference!  Your BeBe Baby will be treasured for a lifetime and many generations.

I love my customers, especially the happy children. I see myself in their little faces and I experience the joy I felt as a little girl all over again. Experience the joy for yourself and adopt a BeBe baby today!"

 My goal this week is to finish a mission statement.  What's yours?

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