Business Structure

The Devil in the Details: Why Strong Branding Works

From Brand to Bustle: A New Course in Maeva’s Community Business Series


I’m thrilled to be compiling my tips and tricks on business branding into a new Community Business Series Course premiering Aug. 21st at Maeva’s Coffee. From Brand to Bustle: Building a Business People Want was inspired by the frequent questions asked in my Business Plan Basics course. This course addresses the biggest area of neglect I have seen while helping dozens of small businesses clients succeed. If you’re ready to hone your business’ identity and craft a dynamic marketing plan to find your best customers, join us! $27 Pre-registration ends this Monday, Aug. 1st, at midnight, $45 before Aug. 19th.


During a recent meeting, my copy editor made the observation on how all Chinese take out businesses- small town, metropolitan, west coast to east coast- look the same. From the chop stick wrappers, the collection of decorations, signage...even down to the 90’s clip art on the menu. We had a good laugh about there being a mythical warehouse somewhere through which you could order “One Complete Chinese Restaurant” but really, doesn’t every industry have its share of cliche?

For example, how many coffee shop logos have a coffee cup in them? It’s easy for new business owners to rely on long-standing industry standards or to copy someone else when it comes to creating a brand. A business’ brand sends a message to its market, setting expectations on the sort of quality, price, and service they are likely to receive by stepping through its doors. Plugging your name into a Vistaprint template and ordering up 5,000 cheap cards is really the entrepreneur’s version of another cheap Chinese takeout restaurant. Lazy branding tells potential clients to expect average quality at a cheap price point.

 

On the opposite end of the spectrum, St. Louis’ most respected independent coffee shops- Sump, Blueprint, and Rise to name a few-  all have resisted the temptation to include some version of a little steaming clipart cup in their logo. None of these shops have a name that features the word “coffee” or makes use of cute coffee-related word play. By the name and logo alone, we are setup to expect something original.

 

With everything demanding your attention as you start or run a business, you may be tempted to put your brand on the backburner. When it comes to reducing risk of failure, your brand is the most important aspect of your business. Here’s why:

 

 

Targeted Brands Attract the Best Customers

Choosing to depart from industry norms attracts a different type of customer: one who is willing to pay you what you’re worth (or more) because they anticipate your product or service will match the attention you’ve given to your brand overall. These are customers who don’t lowball you, who aren’t attracted by BOGO sales, and who crave the type of service or product that will inspire them to create loyal relationships with your business.

 

Honest Brands Build Relationships

With strong branding, growth becomes less about selling and more about building a relationship. Weaker brands have to shout, beg, and undersell themselves to attract attention. Businesses with weak brands attract customers are only interested in what sort of deal they can find.

 

By creating a brand that draws quality clients, you rely less on “Now 25% OFF!” Facebook Adverts and more on natural, honest relationships. Strong brands know their client base and organically grow a deeper connection with their market. As an entrepreneur with a honest brand, you have freedom to focus on your business without having to run sales that cut into your profit, spend money on wasteful advertising, or beg for attention.

 

Timeless Brands Create Longevity and Lower Upkeep Costs

Every time another pallet wood bar is installed in the St. Louis area, I die a little inside. If you think that’s harsh, check out this article on Industrial Chic design from NPR.

You cannot build a lasting brand on an existing trend.

It’s ok to be inspired by other amazing brands- but directly copying core elements from industry or current design trends makes your business dull and dated. Fresh or timeless branding interests dedicated clients for the long term and naturally attracts enough attention provide steady growth over several decades. Dropping thousands of dollars to rebrand and remodel every ten years is only something large corporations can afford. As a small business owner, you will find that a brand woven with original fibers will have superior longevity and cost far less to maintain.

 

A Business You Inspire Inspires You

Building a targeted, honest brand unique to your business will play a critical role in your personal success as a small business owner. Creating a brand you love will motivate you to own it, share it, and to be enthusiastic about your business even during the rough days you’ll face.

Maeva’s Coffee does not embody every element of my own style or personality, but there is an immense pride and happiness from having co-created such a beautiful place. After 2+ years of operation, I still find myself falling in love with her just as I had at the start. That feeling is one that stays with me through unexpected equipment repairs, staff changes, and the hectic pace of a high volume shop. Without that connection to the brand, I would’ve quit many 80 hour-work-weeks ago and would not have made it to the point where she is successful and strong without my constant attention.

 

If you are starting a business and want to see it making money, or your current business now has become stagnant, you need to take a closer look at the strength of your brand.

The course I will be teaching in late August covers the how-tos of all of the above, plus the logistics of putting it into practice by creating a targeted low-to-no cost marketing plan. It is specifically designed for small business owners and aspiring entrepreneurs, with a class size is limited to 10. Because I adore helping small businesses in my hometown, I always stick around for as long as you want after to discuss the specifics of your situation.  Check out the details here!

 

Working Yourself Out of Your Business

When we dream of beginning our own business, we envision the freedom of having creative control over our lives. We imagine working on our terms, spending days doing what we love and working for our dream rather than someone else’s. We get excited about the beginning and look forward to its success, imagining the years ahead in which we will be happily making a living doing something we love.

Thinking about retirement or selling a business at the start sounds terribly unromantic. However, when we plan for the eventual transition of ownership a business will undergo from the beginning, we create a business with a strong investment value and a structure that will live beyond its creator. This article is not about crafting an exit strategy, but implementing a framework that will allow a business to become a legacy.

Unlike most coffee house owners, it has never been my ambition to own a coffee shop. Our patrons often ask why we have built Maeva’s and I know they are looking for that beautiful story in which a life-long dream has blossomed into success. The reality is I knew nothing about coffee when we decided to undertake this venture. My passions do not lie in owning or operating food service businesses like the grand restaurateurs that dazzle me in every city I visit. We built Maeva’s because it was a sound investment; because The Milton Schoolhouse needed a business with heavy foot traffic to support our other start ups and our neighborhood needed a gathering place to grow.

As Maeva’s continues to blossom, I already look forward to new ventures beyond this beautiful shop. From the beginning, my business partner and I have had a plan to transition Maeva’s to a new owner (or to a full time operations manager) within five years- allowing us the time to dedicate to new ventures in our community. Whether you are hoping to start and sell your business quickly or wish to be involved for decades, one of the greatest things you can do to ensure the longevity of your work is to make your operation attractive to its next owner and do everything you can to enable their success.

 

 

Paperwork

This is an essential part of creating a seamless transition to an Operations Manager or new owner. When someone buys a franchise, they are given months of training and hundreds of pages of information outlining everything from sales techniques to pricing strategies to safety processes. If you’ve built your business from scratch, you know the ins and outs of how you make decisions for your company- but does anyone else? The pieces listed below are essential for not only selling your business but peace of mind if you were ever to face a crisis in which you were required to be on hiatus from its operation:

 

Employee Handbook:

This is a personal manual outlining the expectations and general rules of conduct for staff. Each staff member should be briefed on this manual and sign a written statement of their understanding. This manual should cover your company’s sexual harassment policy, dress code, any employee benefits, job expectations, and other general conduct policy. Keep signed records of any modifications you make to your manual to show that staff have been briefed on evolving policies. Don’t forget a signed release of name/voice/and likeness if you intend on using photos that include your staff for promotional purposes. If any financials, recipes, trade secrets, etc. are available to your staff, a signed statement of confidentiality should also be included.

While there is no law regulating the requirement of an employee handbook, having a clear handbook of policies can provide some legal protection in unemployment and workman’s comp cases.

Most corporate handbooks are available online. Instead of starting from scratch, find handbooks from companies in similar industries to your own and use them as a template for your business’ handbook.

 

Process Manual:

This manual should be essential information available to staff and managers. It’s exactly what the name implies; a detailed outline for every possible thing someone may have to do in the general care and maintenance of the shop. The Maeva’s Coffee Process Manual includes stated methods for sanitizing the ice bin, how often food is ordered and in what quantity, technical manuals for trouble shooting our equipment, maps for emergency water/electrical shut offs, and basic shop troubleshooting. Include MSDS sheets for any chemicals used in your operation and the appropriate response for potential accidents. Check this link if you are unsure whether or not your chemicals require MSDS sheets to be made readily available to your staff.

 

Operations Manual:

This manual is private information, reserved for an operations manager or owner. It should include account information for each of your suppliers, up to date material cost sheets, contacts for subcontractors or people you often work with in your local business network, hiring and termination guidelines, information on scheduling and payroll, as well as contracts and outstanding leases. This manual may also include trade secrets such as exclusive food and beverage recipes.

 

Brand Management Manual:

This manual may be reserved for an operations manager or released to the entire staff depending upon the openness of your business structure. It should be a brief description of your company’s history and influences, the core principles of what you represent, and guidelines for how that brand is kept fresh. Our brand management manual outlines how often and when seasonal specials are released, how often and what types of events are hosted in the shop, and information on how and what to post on our Facebook, Instagram, and Website.

 

You should also have your tax records, annual P&L and Balance Sheets, any past or current business plans, and staff files in order as well.

 

Having a Strong Internal Culture

Creating a culture of internal collaboration will keep your business from becoming stale. When you hire staff who work together and cultivate an environment that encourages communication, new ideas and better processes will become a constant in your business. Staff you are able to trust and who can facilitate projects without constant management are a valuable resource when a business undergoes a change of ownership. A strong culture can easy the rockiness of leadership change and prevent your company’s growth from stalling. Whether your business is six months or sixteen years old, vivacity, clarity, and strength in a business’ culture will make your business attractive to prospective buyers and increase the chance of its survival once you are gone.

 

Becoming Unnecessary

The start-up phase is thrilling. As an owner, you have your hands in everything. You and your first few staff wear a thousand hats, taking on responsibilities defined by necessity and circumstance, not necessarily skill. There will be a point in your company’s growth where and honest evaluation will show that you do not have the talent in your current team to grow further. It can be a difficult situation to face but at some point in your wild success you will no longer be able to wear all of the hats.

Accounting is my weakness. It’s taken me twenty months of operation to admit it, but as much as I want to be able to do everything for Maeva’s, the day to day numbers don’t come naturally to me. Accounting is stressful; it’s something I dread. I put it off and cripple my ability to calculate decisions when I can’t readily access current data. This year, I’m resolving to hire a local accountant to handle our books so that I can concentrate on strengthening our business in the ways for which I have a true talent. You can’t be an expert in everything; use your energy to be a better expert in areas in which you naturally excel and hire an expert to take care of your weaknesses.

This stage in your business’ growth may be just as difficult for staff. Bringing in outside help to evolve your business can create friction among veteran staff who may view it as intimidating or insulting to their efforts. Our first autumn of operation, Maeva’s was growing faster than our infrastructure could handle. Our lead barista was appointed as a stop-gap Operations Manager to help manage ordering, scheduling, and shop duties. The position was set out at the start as a temporary one and she disliked the responsibility overall. And yet, when it was time to hire an actual Operations Manager- her feelings were mixed. Going back to her position as lead barista sounded as much a relief as a demotion and our shop dynamic was never the same

Just as an owner should understand if not be able to perform all aspects of a business, there should be an outline, if not a staff member trained, to perform the vital processes the owner oversees. If you intend on selling your business through traditional avenues rather than coaching someone to operate it in your stead, make sure you not only have a process manual in place but have trained your staff in how to take care of each of your responsibilities.

 

Instilling a Vision Beyond Yourself

The first time a business changes hands it takes an incredible risk in failing due to loss of direction. Great companies are built by great leaders; you’ve worked to instill your passion in your work and your staff. Corporate examples abound- Apple’s struggle with the loss of Steve Jobs or Starbucks bringing back Howard Shultz after the company was on the verge of failure. Small companies face the same challenge.

Create a vision for your company and coach your staff to follow that vision- not you. The vision of your business should be a permanent, core reason for its existence, the foundational value supporting every decision made during its life. Maeva’s vision is to bring quality coffee and revolutionary community to our neighborhood. The strategy for achieving this beyond my time of leading her is highly entrepreneurial; I seek to create a culture of collaborative staff, teach them how to listen to the needs of our community, and give them the confidence and power to make decisions regarding those needs.

 

 

Like every small business, Maeva’s Coffee has been a deeply personal venture. More than just time and money, she is a product of the talents and personalities of its owners, staff, and the community she serves. It’s my responsibility and privilege to do everything possible to ensure whomever comes after me steps into a strong culture and every available resource to take her beyond my own abilities. This duty guides my current operating decisions but also insures her financial stability and success- ultimately allowing her to fund the creation of new ventures in our community.

 

Creating a Culture from Nothing

“Success is a science; if you have the conditions, you get the result.” Oscar Wilde

 

In my “Business Plan Basics” course, I emphasize the importance of building an overarching plan to help you reduce your risk in starting a small business. I firmly stand by that, with enough foresight and honest assessment, you can reduce your start-up’s risk of failure to nearly nothing.

My other two businesses, and most of my clients, have been sole-proprietorship with, at most, a single employee. Opening Maeva’s Coffee, and currently leading 7 full time and 2 part time staff, has given me a LOT of perspective on where I got lucky…and what I would have done differently.

The most unanticipated challenge we faced opening Maeva’s was how to create a business culture out of nothing. “Business culture” in this case is comprised of the overall attributes and standards celebrated by your business and projected to your client base. The owner of a new business with even a handful of staff faces a huge challenge: how to cultivate a culture among your staff that strongly reinforces your brand when your business hasn’t even begun to operate.  

 

 

When Hiring a Fresh Team of Employees

The most uncertain thing about creating a new team of staff is how they will mesh. Finding the right people to help you establish your business’s culture is more complicated than just finding a reliable and competent employee. It’s about hiring an ambassador for your company.

Here's what we did right:

Define who you want to work with: As a small business owner, you’re going to be working many hours with whomever you hire. Before reviewing applicants, set out a basic framework for what matters to you and what doesn’t matter to you. Stick to it! Never hire someone out of pity- your brother-in-law or college roommate might be a nice person who just needs a little help, but if he doesn't fit your exact requirements for your dream staff, don’t open that can of worms! Don’t do it! Run!

This was my thought process in hiring our first round of staff:

Things that didn’t matter:  Race/Religion/Sexual Orientation or Identity/Outward Appearance but variety in these aspects did.  I knew the people I hire would be essential in ultimately creating the client base of the shop. Coffee shops are naturally a congregating grounds for all types of people, and I didn’t want to hire a staff that lacked diversity. As Maeva’s launched herself into an unknown market, I wanted everyone who walked through that door to feel welcome and find someone they could identify with.

Things that did matter: I purposefully pulled applicants that had a wide variety of interests and hobbies. My hope was, again, to hire a diverse staff that would be welcoming and have something in common with everyone who walked through our doors. I looked for people who seemed interesting, quirky, and lively on their applications. More than previous employment in food service or coffee, I looked for dynamic people who would be an integral part of the overall experience our customers would have when they visited the shop. Our first round of applicants listed interests like “Music”, “Table Top Games”, “Raising Bees”, “Permaculture”, “Engineering”, and “Reading Tarot”.

In general, I also looked for people who seemed slightly nervous (which I see as a sign of eagerness), who smiled easily, and who walked/gestured/spoke with humble self-confidence.

 

Time- We left ourselves plenty of time to find the right people, interviewing several weeks prior to the opening of our shop. This helped us honestly review how we thought each person would work behind our bar and with other candidates. We ended up conducting a secondary round of interviews because we didn’t find four candidates we thought would work well together and compliment each other the way we wanted in the first round. 

Time also allowed us to have plenty of training and a mock opening before we opened to the public- essential investments in representing our brand to our clients when we opened the doors.

 

Involvement- Before opening, we had two previously trained and accomplished baristas who we knew would be essential to our start. These two were invited to participate in interviews and have a say in selecting the other hired staff. I appreciated the perspective the two brought with them, having previously worked in similar coffee shops.

 

Being Upfront- All of our employees have been told upfront, “Hey, you have thirty days as a trial in the shop. You might be an awesome employee, but if for some reason you just aren’t meshing with our other staff or customers- we’re going to let you go. No hard feelings.” Has it helped? Very much! Partings are always difficult, but many of our staff who have moved on from our shop still come back to visit.

 

 

What we did wrong:

Organization/Structure- Our shop lacked clear structure in staff hierarchy from the very start- a problem that wasn’t solved until well into our second year of operation. By the time Maeva’s opened, I was exhausted from the final pushes of construction and the seemingly endless behind-the-scenes unknowns of operating my first brick-and-mortar business. My  lack of food service and management experience compounded the issue and, without clear structure, staff began to split into factions over who had the final say on everything from drink recipes to cleaning processes. Vicious fights exploded over whether basic cleaning lists violated the free-spirited nature of our brand. As baristas tried to outperform one another, making drinks by different recipes and creating a situation in which it was impossible to calculate costs, customers began to side with certain baristas over who made drinks better than whom- creating a hurtful environment when they would walk in and express their disappointment that “so-and-so wasn’t working today.” It was chaos.

This was an uncomfortable reality of our start up. From the first time I issued a written reprimand to a staff member for not attending to basic cleaning tasks to our latest tip sharing system, processes have slowly emerged.

As an entrepreneur with an enormous independent streak in my personality, I naturally resist framework and organization. But structures- like standardized drink recipes and cleaning lists- provide clear outlines for basic operating expectations. This has allowed staff to settle into a rhythm of workflow, knowing what is expected of them and what they can expect from their teammates. When the day to day becomes a well-oiled machine, staff aren’t spending time bitching about each other not taking out the trash or stocking cups. They’re spending time learning their craft, creating together, and investing in relationships with our clients.

 

Navigating The Honeymoon Period

The first three months of employment are essential to imprinting your culture on a new employee; but, in Illinois you only have 30 working days until you become responsible for unemployment insurance as an employer. That’s not much time!

This has been my biggest challenge in growing as a leader. Here’s what I’ve been learning in hindsight:


Be direct with staff: New staff need a lot of direction in your processes, which can be a challenge if you’re still trying to put it together. For example, our dress code is just about as minimal you can get and still keep in alignment with the health code. It  vaguely reads

As for clothing, for safety reasons, no shorts or short skirts (above the knee) are allowed. Hand jewelry is not allowed (Madison County Health Department).

Clothing must be:

inoffensive

clean and free of odor

tidy; not ripped, dirty, or damaged

Branded tshirts (printed or embroidered) may not be allowed during special events, holiday hours, or catered events. Open toed shoes are not allowed on shift.

Wear clothing that makes you feel good, is easy to work in, and accentuates the style of the shop.  

Facial hair, tattoos, piercings, etc. are permitted as long as they don’t interfere with the health, safety, or brand of our shop. Hair longer than shoulder length should be tied to prevent contamination of food or beverages.

I purposefully left a lot open to interpretation because I had gone out of my way to hire staff members with their own sense of style. I wanted staff who felt their appearance wasn’t regulated beyond their own self-confidence, who knew their expression was something I appreciated. Our dress code has worked well to create an individualistic, inviting atmosphere in our shop. On occasion though, someone wears something that just doesn’t flow with the shop.

You think it’d be easy as a leader to just say, “Hey, that outfit isn’t up to par with who we are here- please don’t wear it again”. I was so nervous to approach staff, especially if there wasn’t anything technically wrong with an article of clothing...it just didn’t fit our brand. Two years has taught me to take ownership of my brand. When I review the handbook with new hires, I’ve found stating to them- right off the bat- that I have the final say in what is worn at the shop makes it much easier to approach possible brand conflicts later.

If you have something to say, just say it. You are responsible for your brand and your staff will appreciate your directness.

 

Be honest with yourself: In general, I like and I’m able to work well with most people. In a less formal workplace like Maeva’s, you get to know your folks quickly. I know their aspirations, their home situations, their car troubles, their roommates, their romantic interests…and more than once, sympathy and compassion have kept me from not addressing a staff member's poor behavior even though I knew it was hurting our culture.

Be honest with yourself and remember your responsibility to the longevity of your business as well as crafting a good environment for your staff as a whole. Err on the side of being overly critical in the first thirty days of employment and let people go if you have any thoughts of finding someone better for your staff. Ultimately, trust your instincts.

 

 

Take time to cultivate new staff: New staff members are tingling with excitement in the first weeks of employment. They are sensitive to criticism, eager to do well, and on top of day-to-day processes. Evaluate their overall presence, work ethic, and maturity. Do they fill their time with movement? Can they naturally prioritize which tasks are most important?

During our first year of operation, I had my hands so full with keeping the business operating that I did not invest enough time in new hires. Our current lead barista will laughingly admit to making pretty bad drinks for a couple of weeks, having been thrown quickly onto shift with catch-as-catch-can training. Now, people hired as baristas are trained 25+ hours on the espresso machine and drink making, required to pass a base level of standards set out by our tip share system, and need the approval of two trained baristas and either Joel or myself before being put on full shifts. Even at that, they won’t be given the opportunity to work full solo shifts for several months after hiring.

Set aside funds to account for extra payroll when hiring new staff. Pay the extra hours to have them trained by your best staff and take the time to schedule yourself around in the first few weeks to observe them yourself. Invest in new staff upfront before making a long term commitment.

 

 

Allowing Culture to Evolve

Maeva’s Coffee has been operating for just under two years and I still feel like our business culture is rapidly evolving. In any given day, first time visitors can represent up to 20% of our customers. Without direct competition for the goods and atmosphere we provide to our community, our culture is very broad. Our recurring customers continually define our brand.

 

Know When to Say ‘No’: Congratulations- your business is so beloved by its community that now everyone has a suggestion on what they’d like to see it do. A common tragedy of new business owners is their desire to please everyone, which can lead to costly expenditures, over extension, and decrease of quality.

Two things I’ve said ‘no’ to in our operation at Maeva’s: We don't have sandwiches/meals and we don’t host live music.  Every week, I receive several requests for these things that people often expect in a cafe. Could I accommodate these things? Sandwiches would require equipment and kitchen storage, more staff, and would direct our attention away from our true focus: coffee. I’ve decided it isn’t a good option for us. And live music? Well, Maeva’s is a small place. As a musician myself, I know how inherently egotistical cafe musicians are, turning up the music beyond the point of comfortable conversation. I’d rather Maeva’s be a reliable environment for refuge, connection, work, and solitude. Making our shop a place of escape was central to our plan from the beginning.

It certainly isn’t easy to look at customers every day and say, “We don’t have sandwiches, but we *do* have…”. Know who you are and don’t be pressured into being something you aren’t. If your community is clamoring for a service you don’t provide that isn’t a perfect fit for your business model, save it for another start-up.

 

Know When to Say “Yes”: We opened Maeva’s Coffee in a community that hadn’t had a true quality coffee shop in a decade. The first year of operation was a balancing act of offering caramel white mocha frappes with whip cream and sauce- knowing that our end goal was to cultivate a culinary love of quality coffee in our community.

Knowing when and how to evolve your business is vital to your long term success. Find where your current market and your future ambitions intersect and watch for ways to draw those two into alignment.

It is your responsibility to continue your education in your field to anticipate trends and desires of your customer base. Subscriptions to trade magazines or frequent participation in online forums will keep your thoughts fresh. I’m fortunate to employ at least one truly fanatical coffee lover on my staff who actively reads coffee industry literature and participates often on forums, interacting with baristas and experts from around the world. He spends about an hour a week informing me on all things coffee, from scientific discoveries, menu trends, to emerging extraction methods and economics. I’ve taken on the responsibility for continuing my education in food culture via Feast Magazine, Instagram, and field trips to ethnic markets in St. Louis to merge coffee and food trends for menu advancement at Maeva’s. This constant attention to progress has made way for a phenomenal success if our privately developed and handcrafted drink specials. We’ve also seen a blossoming demand for pour overs, unique single origin special roasts, and unflavored beverages in more traditional sizes.

 

 

I’ll be writing more on how to evolve your brand and strengthen your existing culture soon. You might also find this blog on leadership vs. management or our process of collaborating with staff through open communication helpful.

 

Maeva's Coffee: A Chess-Inspired Tip Share System

“I’ll be on shift with (long term employee) and she’ll disappear for thirty or forty minutes. I’ll be left by myself without any back up. I just don’t think splitting tips equally is fair.”

 

 

“When I’m on shift with (new employee) she just hasn’t been here long enough to really have things down. I have to work harder to make up for it.”

 

 

“When I’m on shift with (fellow employees), they don’t even try to know what specialty coffees we have or answer the weird questions. They just refer the customer to me- and I’m in the middle of making drinks. It’s stressful.”

 

I’ve made it a practice to periodically sit down with our staff individually just to get a feel for how things are going. Taking time out to speak to staff and creating an open dialogue at Maeva’s has been essential to our growth- read here (link) if you would like to know more about creating a collaborative environment in our shop.

Working with people you enjoy in a positive environment is worth it's weight in gold, but being among friends is a double edged sword: small issues have a habit of festering, and none of them wanted to risk creating confrontation in a predominantly positive environment. When half of my small staff expressed unhappiness in their work relationship with other staff, it fell on me to resolve the issues my staff couldn’t with each other.

The issues presented appeared to be training or policy related.  I took the opportunity to meet with our staff on an individual basis again and remind them of the responsibilities that had been falling by the wayside. When verbal communication failed to create a real result, I issued written warnings for offenses and suspended one of our staff members for a week in accordance to our written policies.

Our best-performing staff became increasingly frustrated, as did I. I have always felt my role at Maeva's should be one of a leader and not a manager (link).

 

“We have to do something they pay attention to- it needs to be about money.”

 

 

As disgruntled staff increasingly took longer to complete basic care and maintenance tasks in the shop, our payroll began to climb. My business partner suggested cutting all wages down to minimum ($8.25 in Illinois) as a wake-up call and to set up some system for re-earning their current wage rates ($8.50-9.75; augmented by tips).  However, he is not the day-to-day operating of the shop and his solution put me on the front line of managing a foreseeable disaster. There had to be a better solution that didn’t involve me mitigating an all-out mutiny in the wake of this “let them eat cake” resolution.

I continued to search for a solution after exhausting the options outlined in our employee handbook. Two of our senior employees suggested tip sharing as a way to ease the stress of the knowledge and experience gap between veteran employees and new hires. I began to toy with the idea of creating a tip sharing system which would also work to refocus energy away from negative behaviors and reinforce the efforts of staff who truly invested themselves into our business.  All of our employees are paid above minimum wage, allowing us the freedom to create and experiment with a system with these goals.

I needed to create a system to distribute tips that also fit the following criteria:

  • Based on completely objective achievements

  • Valued book knowledge and actionable skills equally

  • Emphasized continued learning and allowed growth over long-term employment

  • Fairly distributed tips based on time spent on shift

  • Incentivized new employees to learn quickly, allowing them to catch up to veteran employees

One weekend, I puzzled over a game an acquaintance was playing on Chess.com. It occurred to me how optimistically Chess.com ranks new players at a 1000 level strength out of 3000 point scale. You have to start somewhere, they’ve chosen 1000. As you play more games, your rating deviation is lowered and your resulting level more accurately describes your strength as a player. I began to write out how the Gliko chess ranking system could be adapted to tip sharing. Admittedly, the result looks far from the original, but understanding the Glicko system led to a fair and elegantly simple tip sharing method.

Nine weeks after our staff first voiced their discontent we held a full staff meeting implementing our new tip sharing system. These are my observations after three weeks.

 

 

The new system pays 50% of the tips based solely on hours worked in the shop and 50% on weighted rank. Our staff voted that tips would be distributed weekly. When they are available in the shop, the spreadsheet above is also published to ensure transparency.

The first set of numbers disperse half of the total weekly tips among staff per hour.

The second half is dispersed via weight, with total distribution the end. (Note: Justin was a new hire this week and hadn’t yet entered the ranking system- receiving only tips based for his weekly hours in shop and the nominal residual points entered in the ranking system to track seniority).

The second set of numbers show distribution of tips based on ranking weight, which is determined by the following:

 

Calculating weekly tips takes little effort. The spreadsheets are interlinked so the only values I need to update are the hours each staff member has worked and the total amount of tips being distributed. All of the equations have been built in.

One of the most difficult tasks in creating this system was assigning a point value to different skill levels. With the written/knowledge based exams, I have weighted what information is most important by placing it the lowest exam levels where tests have a higher point value. The first two levels of exams have very little to do with coffee and place an emphasis on directly applicable food safety practices for our business. They include questions such as:

“What temperature do you heat a quiche to before serving it to a customer?”

“How do you know when to change the sanitizer water in the dish sink?”

“At what temperature should the milk be stored?”

 

The higher level exams dive into the science and history of our industry, encouraging employees to cultivate a solid foundation of knowledge furthering their ability to passionately communicate to our customer base and add to the collective growth of our community’s love for coffee. However, it’s more important to me that our staff isn’t inadvertently giving someone food poisoning than their ability to locate Bali on a map- so lower level tests have a higher point value than higher level tests.

Knowledge isn’t everything. The ten yellow levels are all written exams and comprise 1,190 of available point value. The remaining points are predominantly skill based. Latte art, speed, ability to use a variety of coffee brewing equipment, and the thoughtful cultivation of palate- among other skills- are also weighted into the system. I had hoped to make a system that would be similar to the Gliko chess ranking in which 3000 would be a maximum point allowance, but I did add some categories for obtaining points that may accumulate beyond this.

Some points continually accumulate (i.e. hours spent in shop or tasting entries) while others are only available at certain intervals (i.e. speed testing occurs quarterly).

In the short time we’ve had it in place, I love these three things about this tip sharing system:

 

It’s completely objective. You either know something or can do something…or you don’t. There is absolute transparency in what you are getting points for and what you can do to improve your score (and therefore your share of the tip pool). There are no subjective points assigned, which takes all of the pressure off of me to evaluate which of our staff are pulling what degree of weight and how that should be rewarded.

With the exception of the speed testing, none of these skills are directly competitive. No one is being pitted against each other. Ideally, everyone would be 10th level ultra baristas, in which case all tips would be distributed equally with only hours worked per week in shop accounted for in difference.

 

Tracking of tips. Before this, only credit card tips were tracked and, even at that, I didn’t have an easy way of doing so unless I went into each day’s worth of reports via our POS system. Since both credit card and cash tips are pooled together and dispersed, I now know how much our employees are making per hour. This week, our least trained staff member made $11.27/hr and our highest trained staff member made $13.40/h with an average wage of $12.34/hr in shop. This information, as it is collected and averaged over time, will be useful to me as an owner when hiring new staff down the road.

 

Staff are in control of their wage. With this system, our staff is given a method for improving their skill level, directly affecting their pay in both the short and long term.

As our staff become more knowledgeable, efficient, and skilled they are going to be able to build deeper relationships with our community, attract a wider range of folks into the shop, and accommodate a greater volume of orders in a speedy manner. Logically, this would lead to greater appreciation for our staff’s ability to craft amazing coffee and a greater pool of tips. To put it simply- you want more money per hour? Know more and serve customers better.

 

Small business is all about being able to custom tailor everything. I’ve read a dozen books about listening and responding to the desires of your customer base, but the last few months have been an exciting challenge of reflecting on the needs of our staff and strengthening our business from within as we continue to grow.

The results: this system was initially met with skepticism and became the catalyst to  losing one of our long-term staff members. However, I’ve been approached independently by half of our current staff who have expressed relief at the decreased level of stress in the shop. When laying out the tip system to one of our new hires, he commented, “I’ve never worked anywhere that actually gave you a reason to learn- this is so awesome!” This overwhelmingly positive reaction was enough affirmation for me to believe that, even if it needed to be altered in small ways in the future, we’re on to something.

 

 

Stay tuned! I promise a six-month review later this year after more time has lapsed.

 

 

ARCHIVE: For Profit, For Good.


 This article was posted on July 24th, 2013 and may reflect a different time in our business cycle at The Milton Schoolhouse. 


There isn’t anything wrong with being for-profit.

Many visitors at Milton have been shocked to discover we are not a government sanctioned non-profit organization- and we don’t have any intentions on becoming one. Have Joel and I invested every penny and ounce of energy we’ve come across in the last four years to save the school? Yes. Is making Milton beautiful and turning it into a bad-ass business incubator our goal for this building? Yes. Then, since our main purpose is doing good stuff, the standard reasoning goes, doesn’t it make sense for us to become a non-profit? Well, no. 

I’ve defended this position to those who believe that a corporation created to do good things is a complete contradiction. I have received email and messages from people who insist that because we are an LLC we are really living a big lie about our true intentions. We make money from selling things on eBay and Etsy. We make money renting space. How on earth could we possibly be doing the good things we claim when making money is so….so…greedy. 

Back in 2009 when we bought the schoolhouse, we considered filing for non-profit status. I believe the whole “non profit” way of business was formed with the best intentions. For some forms of entities- like religious organizations- it works. But we don’t feel the Milton spirit of self-sufficiency, financial responsibility, and personal freedom to support yourself doing what you love fits well into an IRS approved non-profit model. There are many noble non-profits who walk the fine line of being financially responsible and they truly do meet non-financially motivated goals in an efficient way.  Far more are met with intrinsic problems in the way non-profits are set up that prevent them from doing what they set out to originally do. 

Setting up a business is a lot like preparing for a new child. To some extent, you can choose the environment in which to raise that child. We wanted Milton to have the best possible chance of growing into exactly what Alton needed. The nonprofit model ultimately seemed counterproductive to the foundational social goal for which we purchased the building. 

One of the biggest challenges non-profits face is answering to too many “bosses”; the first of which is the government itself. You get the perks of federal, state, and local grants- and yes, money is good. But grants come with strings attached, and it is tempting to adjust your original intentions to bring in a source of revenue. The trade offs of “free” government money are confinements on how it is used- and the immense amount of time it often takes to qualify for such funds.

The same goes in business when you rely on donor funds- that also often come with implied, if not explicitly stated, ways that money can be used. How is this a problem? Well, let’s say Mr. Jackson has donated $200,000 towards building out a new floor in your building for artist studios. He has always envisioned that sunny second floor bursting with creatively, and now has decided to give money to your organization because he loves your building so much. Other than using the space for artists, his only other requirement is to see it completed within the next five years. While his donation is generous, you find it will actually take $300,000 to build out the studios. In your research you also discover most artists typically don’t make a lot of money. To fill the studios with traditional artists alone, as Mr. Jackson wishes, you find the rental rate you’ll have to charge is significantly less than if you opened the studios for general commercial purposes- where artists and other folks could work side by side. Not only will you end up needing to raise or borrow an extra $100,000 to not loose Mr. Jackson’s donation, but also his donation ties you into a situation in which you don’t see a timely return on investment. The donation has also required you to designate the space in your building to something the community might not need 100%. By letting Mr. Jackson be the boss, you haven’t used your space to the best of its capabilities. 

Mr. Jackson isn’t the end of it. Management in non-profits also includes the dreaded subspecies: the committee. If you’ve ever tried to order a pizza among friends, you can imagine the difficulty of succeeding in making good decisions on more important, long term commitments in a larger, less amiable group. Mr. Jackson may feel very happy having given his money to a non-profit- an organization that by its very namesake implies that it isn’t out for greed, but for good things. He might even feel financially smug himself because he was able to take advantage of a significant tax write off. But is Mr. Jackson’s money really being used wisely? Now that the funds are acquired for building out the artist’s studios, a committee could be in charge of the details; how many studios to build, who to hire for the drywall, what type of coffee machine should be bought for the artist’s shared lounge. I have a hard time imagining in such a situation- when a group of people decide how to spend someone else’s money- there isn’t room for nepotism or convenient overspending. Will a strong voice on the committee push to hire a higher priced contractor because they are a friend of a friend? Will a committee member make a decision on lighting without research because it’s easier, even if the thing takes expensive specialty bulbs and will cost more money in the end? This last situation happened to a local non-profit in Alton not many years back. Committee decisions are often compromises and are seldom what is best, because of the differing tastes of the members involved.

Opportunities for disagreement make for rough sailing for non-profits when it comes to reconciling the motives of government, donors, and committees. That rough sailing often costs a non-profit the most critical thing of all: time. 

In a community-oriented business, such as the Milton School, time is crucial. Being for-profit streamlines the entire business process- each dollar that comes in must be invested in a way that directly makes more dollars to help us renovate Milton. A non-profit might be side tracked by Mr. Jackson’s donation- or a committees’ idea that tiny artist studios are the only thing Alton needs. The months spent discussing, deciding, and taking votes are circumvented by setting up Milton as a for-profit business. The only question we have to ask is, “Will this action (money spent) be the best way to make more money so that we can continue to renovate Milton and help others?” We ultimately answer only to our renters, our customers, and ourselves. Without multiple “bosses” with differing goals, we have the flexibility to adapt quickly to any economic changes or local needs.  

By owning a for-profit business, we have a greater control over our financial efficiency and the cost of renovating Milton. Joel and I have ideas, for sure. We have ideas to fill every inch of this 85,000 sq ft building. But if there isn’t a demand for our ideas- they don’t happen. We don’t start building something until someone who fits into the whole of Milton approaches us with a need for space. That’s why Milton is filled with so many different types of people- because we build Milton in response to Alton’s needs. To succeed, we are forced to listen to the community directly or the money we have personally sweated for will be wasted. 

Our rental income from Milton covers the basic utilities the businesses here use and the property taxes we pay to the city, meaning our endeavors are debt free and self-sustaining. We are usually left with between $300-700 a month over that to reinvest. That’s not very much. But we make sure every dollar of it makes a return of triple its investment by reusing and recycling materials, being wise with our purchases, and building out what is in demand at this very moment. We are in a constant state of reaction to trends and needs in Alton, jumping from project to project to accommodate artists and entrepreneurs who are ready to see their dream grow in a dedicated space. 

I recently received an outraged comment on Facebook regarding our Etsy and eBay sales:

You aren’t even a nonprofit. How can you claim this is fundraising? You bought that building for practically nothing and you make bank off of renting it out and selling this stuff.

It’s true. We bought the building for “practically nothing”. Then we invested four times the purchase price in start-up capital, on top of the enormous amount of sweat Joel and I have put in the last few years. $20,000 in dumpster removal fees alone in the first year? This building took quite a bit to get on its feet! I’ve already discussed the rental income of the building- enough to sustain Milton’s current state but not enough to significantly move progress forward. The sales from Etsy and eBay have brought in, on average, about $1,500 per month for the last three years. It is a blessing that has allowed us to build so much so fast. 

Have you ever done any improvements in your home? Maybe remodeled your bathroom- or refinished a basement? How far does $2,000 go in the remodeling process? Not very far, I’ve noticed. Not when you’re paying for labor. That is where the miracle of Milton comes in. Joel, myself, and Milton’s core of skilled volunteers generously give labor to the schoolhouse so that $2,000 per month can be invested completely in materials. That means we take the $2,000 we earn from sales, and that extra rental income I mentioned, and turn it into about $8,000 worth of progress every month. Month after month. Four years in a row. The $150,000 worth of actual dollar bills that have been independently invested- or made and reinvested from Milton- have turned into approximately $625,000 worth of improvements. There’s quite a bit you can’t even see: roofing, electrical work, mowers and gas, hundreds of rolls of insulation, and a work truck named Dorothy that has always threatened to die at the least convenient moment. 

Any “bank” we have comes from wise investing, good decision-making, and a whole lot of nights working late eating leftover Chinese take out. If we were a non-profit, we wouldn’t be able to work as fast, spend money as efficiently, or help as many people.

That’s right- “help as many people” is our reason for making money, but people don’t see that because we aren’t handing out money, we are giving a hand up to people who want to work hard to earn a chance at their dreams. If Milton is 100% for-profit but does good things- what are we? We are part of a new breed of entrepreneurs, a new breed of businesses- who believe that the more money you make, the more people you can help. We are a true “teach a man to fish” business, and the money we make goes directly towards the creation of new space for other artists and entrepreneurs to start their own self-sustaining venture. 

The best part is, our desire to help others support themselves through their talents not only has a circular affect in growing the schoolhouse as a building- but has a huge multiplying affect on the community. Our small business owners have a way to support themselves and their families. People in the area have access to a business that fulfills a need- and then spend their money in our city instead of online or in St. Louis. The city of Alton receives more revenue to make Alton a desirable place, which will in time attract more business to Alton citywide. Businesses grow- creating jobs, reducing unemployment, and reducing crime. Alton becomes a more attractive place to raise children and- ultimately, our entrepreneurs and artists model to their children a lifestyle of independence, self reliance, and a broader view of “what you can be when you grow up”.  

We truly do believe that creating small businesses now will impact the generation after us. That by setting an example of how, through hard work, you can be successful at most any crazy idea, we’ll be giving the next generation a world of possibility. 

Such high-minded and pretentious sounding goals aren’t meant to be weighed down in committee meetings, slow internal processes, and old-fashioned business models. Those goals take money and heart. Those changes are for us, and every other unashamedly for-profit entrepreneur, to bring to Alton.