Uncovering money-making opportunities

In a recent visit to a reader’s retail food store that was not mall-based, I was asked to give tips on how to increase revenues. Instead of giving tips, I kept asking fundamental questions that were meant to identify opportunities to increase revenues. The entrepreneur knew the answers but, just the same, we went through a series of questioning to uncover the opportunities.

Q. What is in the vicinity of the store?

A. Right in front of the store is a hospital. Beside it is a grade school and a high school. We are part of an office building that is surrounded by offices.

Comment: Your immediate vicinity is a natural market. If you have a product or service that people buy or avail of, your neighbors must be a prime source of customers.

It is nice to have people walk the extra mile to be in your store. But if you are not patronized by your immediate neighbors (even if you are convenient), something is not right. Something is negating your convenience. If you are in the retail food business, your immediate neighbors should patronize you. If you are a bank, the immediate vicinity should be your source of deposits and loans.

Look near before looking far. If you are not being patronized by your neighbors, there can only be two possible explanations: one, your neighbors do not know you exist; or two, you are doing something fundamentally wrong that your convenient location cannot make up for.

Q. What percentage of the medical staff of the nearby hospital patronize you?

A. Some doctors come over either before or after they do their rounds. Some of them even ask us to deliver to their offices. Nurses and other stall owners also drop by. But I do not know the percentage they would represent. Incidentally, many medical representatives also come in and use the place for their meetings.

Comment: It is best to know the magnitude of your market and be familiar with your immediate terrain. Knowing the habits and the numbers of the doctors, nurses, other hospital staff, medical representatives, students, teachers and school administrators allow for better understanding of the magnitude and needs of this natural market.

For example, the medical representatives, who meet in your store regularly, can be a new market. Your place can be a preferred venue for meeting people from the area. They certainly need a place to meet before and after their hospital or clinic visits.

For sure, there are many medical representatives sent on hospital sales calls. You can offer a special meal package for their meetings. Get to know the area and its people more, to allow the discovery of opportunities to increase both customers and revenues.

Q. What is your best estimate of the percentage and do they know you exist?

A. It is likely to be a small percentage. I send many of our store fliers to the hospital staff. Some have actually dropped by.

Comment: The small percentage indicates that the fliers might not have worked out. Many use fliers these days and, chances are, people might have gotten tired of them. They are considered junk mail and often disposed of without being read. You may have to find another way to let the natural market know you exist.

I suggest that you plan a different way of letting them know you exist. I am sure that the hospital is on a 24-hour operating schedule. Find out what the shift schedules or patterns are. Is it from 6 a.m. to 2 p.m., and then from 2 p.m. to 10 p.m. and then from 10 p.m. to 6 p.m.? How many people are there per shift? What kind of people are they? Nurses, doctors, interns, office staff?

You may want to offer a "happy hour" deal that most bars do as a matter of practice. The "happy hour" is usually between the offices’ closing time and going home time.

In effect, the message being conveyed here is that it is not yet time to go home and that the rush hour traffic should be allowed to subside while having a snack at a special price.

Here is an opportunity to offer a two-hour special three times a day. One can catch the incoming shift and the out-going shift. Let the two hours straddle between the change in shifts. The hospital staff may want to come an hour earlier and stay an hour later. Observe the behavior patterns of the people. Opportunities for increasing sales exist by increasing the number of people coming to the store.

Ask those who know of your store but have not come over to patronize it. Why have they gone elsewhere? Where do they eat instead? Why do they eat there instead of at your store?

In a situation where your share of market is low, it is better to find out why customers do not patronize you rather than why your happy customers patronize you. Your happy customers will tell you things that you already know. The others will tell you what you do not know. Find out the answers. Use the answers to define opportunities to increase the number of customers.

Q. In terms of those who drop by, are you happy with the amount of revenue you make per seat per day?

A. I’m not happy with it. How I wish that the seat turnover increases and the revenue per customer also increases! Some customers use the place to meet but order very little. Some of these are students who study together during lunch time while others just wait to be fetched by their "sundo" after class.

Comment: We have another issue here. Earlier, it was increasing the number of customers who enter the store. This one is to increase the revenue from those who are already coming to the store. This is another source of revenue increase.

How can an entrepreneur increase the sales per customer? How can an entrepreneur make them come more often and buy more per visit?

In this case, students have a budget constraint. But this is individually determined. Collectively, the amount available may be big. You can offer groups of students a group meal. This can be in the form of several food items packaged as a barkada meal.

It is much like the set menu in a Chinese restaurant but it is on one big platter. The group can share the variety and, at the same time, share the cost. You will release the individual budget constraint by offering a group meal. This may also work for non-students.

Before doing this, I suggest that you find out what are the preferred combinations. Make sure that, in their eyes, it represents better value. Give them a reason to return more often and buy more.

Final comments: When entrepreneurs want to increase revenues, there are two standard sources. One is more new customers and the other is current customers buying more often and buying more per visit.

On the first source, my advice is do not look too far for customers. Look near first. If your neighbor does not buy from you or does not use your service, something is fundamentally wrong. Something must be outweighing the inconvenience.

But do not get me wrong. It is good if your customers walk the proverbial extra mile to have you satisfy their needs. But it is terrible-if your convenient location is ignored because of a fundamental customer "dissatisfier". This process is also known as increasing the share of market.

On the second source, my advice is to first find out why they are not coming more often and/or buying more. The object is to increase the share of pocket. The pocket already entered the store. The object is to get more money moving from the pocket towards the cash register. This can be done by offering products or services that are value adding to the customer. It can be in the form of up selling, combo meals and/or group meals.

(Alejandrino Ferreria is the associate dean of the Asian Center for Entrepreneurship of the Asian Institute of Management. For further comments and inquiries, you may contact him at: [email protected]. Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at http//: www.aim.edu.ph).