Business in Trouble? Tell Your Customers
Many entrepreneurs have an almost instinctive reaction when they are in trouble: They clam up, particularly around customers. Fueled by equal parts pride and fear, they pretend that all is well--too often up to the date that they lock up shop, maybe leaving a sign in the window saying that they won't be back.
But what comes first to mind may not be what is best for the business. Chris King, co-owner with his brother Bruce runs Mocha Maya's, a cross between a café, bar, gallery, and performance venue in Shelburne Falls, Massachusetts. The two found themselves in deep financial trouble this bleak winter and were almost ready to give up. But some sound advice and frank honesty may have helped them turn the corner.
The two started the business after Chris moved from upstate New York to the area and fell in love with it. He took a job in a local café and then decided to open one of his own. (He had previously started a janitorial business in the Syracuse, New York, area.) He persuaded Bruce, who had years of experience in the fine-dining industry, to partner with him. Chris ran the daily operation while Bruce did the bookkeeping and booked bands for the spot.
Almost immediately, they found a problem in trying to run a business in the area. It received significant tourism in warmer weather, as people traveled to see the glacial potholes at the base of a waterfall, an old trolley bridge that had been turned into a giant planter for flowers, and other local features. But in winter, transactions dropped off by 30 percent. "We lose 99 percent of the tourists from summer to winter, and you lose a lot of the local people who don't go out for the winter," Chris says.
The past few years have been rocky. Business grew by about 50 percent from 2005 to 2008. And then the economy tanked, and by 2009, Mocha Maya's lost half of that growth. Things built up again, and by 2012, the brothers saw steady growth. And then January 2013 hit. The business suffered its usual winter drop but then saw another 30 percent drop in sales on top of it. Meanwhile, expenses stayed the same. "It's not like you're setting anything aside," Chris says. "You're just trying to get caught up from the past winter."
Unfortunately, they had no cushion, because they started the business on a shoestring: $25,000, rather than the $250,000 consultants told them was necessary to tide them over during the slower months. "We've been playing it so close to the line for [a long time]," says Chris. "Had we had a big cushion of money there, it might not have been an issue at all."
A Counterintuitive Move
It looked as though they would have to close. Then Chris spoke with a customer who he says is a fundraiser for documentary filmmaker Ken Burns: "She said, 'You have to send a message out to people. If they know you're struggling, they'll come in.'"
He put a note into the café's newsletter and on its Facebook page. The word went viral in the local community. Suddenly customers were showing up. "A lot of people said, 'Sorry we haven't been in. We've been caught up in our routines and hadn't thought about it, but we'll try to come in more often now,'" Chris says. Even more surprisingly, people had assumed that business was good. In this part of Massachusetts, winters can be harsh, so everyone assumed that Mocha Maya's must be selling a lot of hot drinks and figured that they didn't need to brave the cold.
The area's daily paper ran a feature. Customers lobbied local radio station WRSI to promote a cash mob--like a flash mob, only one organized by people to support a business in need. It turned into their best day ever. Some musicians donated their time for a benefit.
People bought coffee and stocked up on gift cards. Others simply donated money, which Chris and Bruce plan to eventually pay forward to another local business that might need a hand.
"Even that first day after the announcement, I think we probably had three times as many transactions as we had been seeing over the past two to three weeks," Chris says. "It's down a bit, but our numbers have pretty much doubled."
Chris does worry that the momentum could stop, so he keeps talking to customers, encouraging them to return frequently. The brothers are also looking at ways of expanding the business that will fit the local culture. For example, they're trying to build a fundraising program for local organizations with a concert at the local hall and a special blend of coffee for each one. "Our goal is to tap into their different spheres of influence" and get a broader reach of people as customers, Chris says. The organizations will benefit, as will Mocha Maya's.
The main lesson? Improve communication with customers. "If you use the same signals over and over, people start tuning it out," says Chris. "That's why we tried to be totally honest. If you want us here, you have to come in and support us."
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.