Background
Starting your own business always involves risks and economic threats; there is never a guarantee of success, no matter how effective the leader is. The initiation and profitable existence of a commercial project depend not only on the personality and skills of the leader but also on a combination of factors, including the external and internal environment. Nevertheless, many people have once thought about starting their own business. Interestingly, one of the main reasons people turn to start their own business is the desire to bring something new to the marketplace or qualitatively improve what already exists (Beckwith, 2021). This need is the crucial reason for expanding competitiveness, leading to either business development or business suppression. This paper critically examines an example of a business project proposed by a friend of mine to assess the viability and potentiality of this.
A Brief Introduction to the Idea
Several years ago, a high school friend of mine talked about his idea for business development. It was a decision my friend produced the moment he saw an ice cream truck in a movie. So, the essence of his proposal was to use the same van, which would be re-engineered to sell coffee. The route of the car would be planned, which means there is a specific schedule that would help consumers know exactly where and at what time to buy freshly brewed coffee. The van is driven by only one person, who moves from the steering area to the barista area during stops, opens the hinged doors and turns on jazz music to attract all those who want to buy drinks. The coffee van menu would be classic for any coffee shop: it would include anything from espresso to caramel and creamy latte or “Frappuccino”: the friend thought it would expand the target customer audience and increase sales. In addition, the menu would include some snacks, whether croissants, sandwiches, or sweets.
SWOT Analysis
The main strength of this commercial proposal was the novelty with which the coffee truck was supposed to gain the interest of the townspeople. People love coffee, and statistics show that one in eight people globally drinks coffee (Djurovic, 2021). In the U.S., for example, more than 65% of the population drinks at least one mug of coffee every day (NCA, 2020). In other words, this drink is widespread, and the coffee shop format can be profitable. The coffee truck presents more opportunities: it is essentially the delivery of coffee to some city regions, even where there are no coffee shops. Knowing the exact time, the consumer can go out and buy coffee with little or no effort. In addition, unlike real delivery services, this coffee is guaranteed to be hot because it was prepared in front of the buyer.
Among the disadvantages of the coffee, the truck stands out the need to spend extra money on fuel, which, although it may be cheaper than renting space, still affects the capital. In addition, if there are too many people who want to buy a drink at a particular location, the route schedule can shift, affecting customers’ confidence. Being tied to a precise time leads to another problem: The coffee truck will not be able to maximize the customer base because it loses customers as it leaves from one point to another. Not every consumer will want to wait for a specific time, which means they can choose to go to a regular coffee shop, delivery, or make their drink.
There are three areas of opportunity for further growth. The first is an increase in the number of outlets that the coffee truck covers. This is expected to bring in more customers. The second is an increase in the number of machines that are on the line. Finally, expanding the range of menus is also another opportunity for growth. Threats to this business project are any traffic and equipment issues. In particular, traffic congestion and accidents affect the coffee truck schedule. This may also be due to weather conditions, as rain and heavy snowstorms will bring the functionality of the coffee van to a halt. In addition, the machine may not be able to park to sell drinks if the parking spaces are occupied. Finally, the breakdown of a piece of equipment, whether it be machine parts or elements of the coffee machine, puts the business out of business for a while.
Business Model
The design of this business model is based on direct sales, as all interaction takes place between direct consumers who want to buy coffee and the salesperson-driver of the van. The critical profit parameter, which allows increasing the margin repeatedly, is to sell the beverage itself at a moderately high price because the production of coffee using a manual coffee machine is not so costly. For example, the average gross margin per cup of coffee is thought to be as high as 80% (Jimenez, 2018). Selling food products by a small margin focuses on engaging customers in the purchase of coffee with the additional purchase of a snack, which has the effect of increasing sales. Otherwise, the coffee truck provides free sugar, cinnamon, and cutlery for drinks and food.
Target Audience
The base for the target audience for this business is coffee and coffee drink lovers, and by expanding the menu offerings, the quality of this audience is growing. However, it should be understood that not all coffee lovers will be among the possible customers of the coffee truck, precisely because of the time constraints in the movement of the machine. More specifically, the audience can be represented by office workers, under whose windows the van stops, freelancers who do not want to leave home to the coffee shop but can walk to the road, and casual passers-by, on the way which happened to be a coffee van. Children under 16 will not be able to buy coffee or coffee drinks without their parents’ permission, but the van will be able to serve them with cocoa, hot milk or fruit teas, which are also available to an adult audience.
Personality Analysis
The friend who proposed the idea is an enterprising and bright person, which is probably why the idea of combining coffee and logistics came into his head. In terms of ideological inspiration, this individual is highly productive and can create business projects almost instantly. However, for technical implementation, developing financial planning, and thinking on deeper topics related to organizational details, a friend should be better trained. In addition, any criticism of the business project, especially when weaknesses or threats began to be discussed, led to resentment on his part; this highlights a personal inability to cope with criticism and perhaps some infantilization.
It is very likely that one day he will be able to put some of his thoughts into practice, especially since they seem quite interesting. For example, the coffee truck does address the needs of people who want to drink coffee and can tolerate it but do not want to leave the house or mess with courier delivery. However, a friend will need the help of an organizational nature because it is highly anticipated that he will encounter problems and difficulties that he did not think of beforehand.
Recommendations and Value Propositions
As a small business consultant, I am willing to consider your business proposal as a promising way to bring profit and fulfil your objectives. I see great potential in this idea, but I need to discuss several critical aspects with you, all possible problems and threats and get a complete understanding of it in order to develop it fully. Among the key recommendations for this idea is the need to invest in a quality vehicle that will not break down after a month. It is quite reasonable to take a rental van for a while to assess the profitability of the business in the first year without having to pay for the entire vehicle. I would also like to advise you to initially choose the right suppliers who will not delay the goods, and coffee beans, dairy products, pastries and sugar from which will be quite tasty and of high quality. So, if a customer comes across the taste of cheap coffee beans, it may discourage them from using the coffee truck service in the future.
Before launching your first coffee truck, I recommend launching a marketing campaign to warm up your audience. This could be a social media ad or a contest for a free drink (Zavicar, 2016). In the first few weeks of operation, it is also recommended to build customer loyalty with free gift stickers or other paraphernalia that not only act as a gift but also as additional advertising. All this combined makes for a great project with huge commercial growth potential. I offer you my services as a small business consultant: for yourself, you have received an experienced partner in my person, who is deeply familiar with the key aspects of business models and the problems that cause many entrepreneurs to fail.
References
Beckwith, S. (2021). Top reasons people start their own business. LegalZoom. Web.
Djurovic, A. (2021). 33 coffee statistics: what all coffee drinkers need to know. DealsOnHealth. Web.
Jimenez, A. (2018). Wake up and smell the coffee: gross profit margin for a cup. Coffeeshophub. Web.
NCA. (2020). NCA releases atlas of American coffee. NCA USA. Web.
Zavicar, C. (2016). How to warm up your audience before pitching your services. Web.