Joe’s Coffee: A Diversification Story

There’s a famous ice cream shop down by the beach…one that’s been there for over 20 years. One day, as I rolled in with my 2 children, I ran into the owner– an unassuming, portly gentleman named Joe. I’ve seen Joe numerous times over the years, and while we have always been cordial, we’ve never had any in-depth conversation. But, today, was a little different.

Joe walked over to our table, and he said, “I know you’ve been a customer of ours for many years, and I wanted to say Thank You. You see, I’m retiring next month, and I’m not going to be around any longer.”

I promptly thanked him, as his little ice cream shop had become a routine stop every day when my family was in town. I told him that I’d miss seeing him and saying hello. And then, I asked, “What will happen to your shop?”

Joe smiled and said, “It’s in good hands. My daughter is taking over…now that she gets it.”

“Now that she gets it?” I asked.

“Yes. For the longest time, she thought we were in the ice cream business. I had to teach her that we were in the service business.”

“Ok Joe, you gotta break this down for me. As a business owner myself, I am always up to learn from others. What exactly do you mean?”

Joe began telling me the story of when he first opened his shop 25 years ago. He was the only ice cream shop near the big pier, so business was booming. As you might expect, being an ice cream shop at the beach, customers were not hard to come by. Joe found himself working long hours and hiring staff to try and keep up with the demand.

But, then Fall and Winter came. Sales took a nosedive, and Joe experienced his first slow season. The peak season for the beach ended, and many of the visitors returned home…kids returned to school, etc. What would he do? Thankfully, he’d saved some of his profits, so he had enough cushion to last a few months before it would get really lean. In the meantime, Joe began to think…

The locals that live around the beach all love to socialize and get together during the slow season, so what would work well for them?

Joe had his first lightbulb moment. He decided that he would begin offering coffee as well as ice cream. His shop was a great gathering place, and the locals could come get together for coffee and snacks during the colder months at the beach. And of course–when it was rainy (and ice cream wasn’t really appealing), people could stop by and get a hot cup of coffee.

Joe told me that he couldn’t believe how great the coffee idea went over. Sure, it took a few weeks to get up and going, but once people knew of the new experience at Joe’s, he was back in business.

“So, it was that simple?” I responded.

“Not quite…that was only the beginning,” Joe said.

Joe’s new shop was working great until he began to see some patterns in his business. He realized that most sunny days, people didn’t really come into the shop until after 11am, and on rainy days, it was usually hit or miss. So…he thought and thought….then had another idea.

The shop was located right by the pier, so it was a prime location for many beachgoers. Joe decided that he would stock sunscreen and sunglasses in custom made stands near the front of his store.

“People are always forgetting their sunscreen or sunglasses, and who wants to drive back to the drug store after they’ve made it out here?” he thought. Now folks would have a reason to pop into the ice cream shop first thing in the morning, and of course–they could grab an iced coffee to get their day started.

“That wasn’t all…I had one more addition to go,” Joe said with a grin.

You see, one of the troubling things for folks at the beach is rainy days. Sometimes, rain comes unexpectedly, and folks are left out here with nowhere to go…and no umbrellas. So, Joe decided he would put a small space in the shop that would hold various umbrellas and ponchos…for beach goers who got caught up in a sudden rain shower. While they ran to the ice cream shop for cover, they could grab an umbrella too.

“Makes perfect sense to me,” I said. “You seem to have it all figured out.”

Joe smiled and replied, “Well, it’s never been perfect. There’s been times where we hardly sell any coffee or sunscreen…and then there’s times where we almost run out of those items. Then we have rainy seasons where ice cream sales fall flat…but coffee keeps us going. I guess the key for us has always been looking for ways to serve our customers by having many different reasons for them to visit and keep visiting.

I guess the key lesson I learned was that ice cream alone wasn’t enough. Sure, I’d have amazing seasons…but it would almost always be feast or famine. The bad seasons could wipe me out if I wasn’t super careful. So, I decided to find a way to always be in the game. And that’s been the secret—run the business in such a way that I can always be in the game.”

I smiled and shook Joe’s hand one more time. I was grateful for his willingness to share some of his life lessons. The best part was looking at my 3 year old after Joe finished his story—I asked him, “What did you learn?”

He smiled back and said, “Always be in the ice cream game.”

I suppose diversification is something like that. There will be times when you wish you had more coffee or more ice cream. But, the goal is to make sure you’re positioned so you can stay in the game…and like Joe, retire on your terms one day.

 

A note to readers: This story is fictional in nature. I read somewhere years ago an analogy of diversification using sunscreen and umbrellas. This is my take on that story/analogy. I do not remember where I read it…so if you know, please remind me so I may give credit where it is due. Cheers.