Is Your Growth Limited By Resource Constraints OR Lack Of Focus? [Case Study]

Before I ask you this question, let me share a story of a tea shop near to Pi office.

I frequent this tea shop almost 7-8 times a day and a peculiar thing about this tea shop is that even though its located in a noisy area, the nearby surroundings (30 m radius)of the shop is quite peaceful (as it’s a bit secluded).Curious Dude - Lateral Thinking

And even though the shop has a good space for itself, the owner hardly uses 15% of it for products. There are old computers etc stacked in 50% of the area and in general, the shop looks quite shabby.

I prefer this place as its peaceful and I generally call up friends/business partners while sipping my tea (dual tasking).

Now coming to the most important part – the shop doesn’t sell much. In fact, I suspect that their monthly sales is not more than INR 15,000/.
One day I asked the founder if he is satisfied with the sales (he does a lot of other stuff like real estate brokerage/insurance selling etc to support his family). Of course he wasn’t happy and he said that this entire shopping complex is lying barren as its too secluded for the general public (most of the other shops in that complex have been abandoned). Moreover he didn’t have enough resources to resurrect the shop and in short, he was ready to accept the status quo.

But here is an opportunity he was probably not looking at – college/class 12 kids. Whenever I went to have tea at this shop, I’d notice a bunch of Class 10th/12th/students smoking near the shop, as the shop’s location provided them the necessary privacy (the shop is a bit secluded from the main road).

Leaving the evil affect of smoking aside, I suggested the shop owner to keep lots of Maggi/eggs/burger/samosa etc (apart from cigarettes, which is still his topmost selling item) – i.e. stuff the shop with crunchable snacks. Lots as in lots. Most of these kids are from rich families (they have bikes/sport latest Nokia phones) and spending is no big deal for them.

In the first 3 weeks of this experiment, the shop sales has improved by 2.5X – in fact the owner now plans to get rid of the old computers and use the entire shop space to sell variety of snacks. He tells me that he plans to stop chasing those real estate/insurance selling businesses as they were too difficult to convert (he is not a real estate guy, after all) and instead he sees a good opportunity in the shop itself.

So why was he not looking at this opportunity (I mean this is common sense and you don’t need an external eye to figure this part out)? It’s not that he had a resource crunch, but he was too blinded by the current (lack of) sales and most importantly, swayed away by too many different options that were simply adding incremental revenue to his business (i.e. real estate/selling insurance).

He was chasing too many unrelated businesses and honestly, just didn’t have a focused approach to grow one business.

And same is true for a lot of startups as well. That is, lack of focus to grow one business. In fact, sometimes saying NO is also a part of the business plan (i.e. we will not do <X>), i.e. process of elimination and then take up whatever (good) is left.

What’s your opinion?

Coming back to the tea shop, here is a massive disastrous attempt by a government policy (though its good for society in general). There is a school near this shop and as per the latest Government guidelines, you cannot sell cigarettes within 100 meters of a school premise. While the rule has been around for some time, government has started implementing it now and the shopkeeper has been asked to stop selling cigarettes by the local authority.

Cigarettes was the magnet that brought these customers to his shop. So what would you advice him now?

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