Her cup overflows

My Coffee Shop entrepreneur Carmelina Pascoe tells AMANDA GOME how a strategic change of thinking saved her enterprise. Some readers also ask her for tips, on search engine hints, how to wind-down, and more. See inside…

It has been a hard slog for My Coffee Shop owners Carmelina Pascoe (right) and her husband Mark Pascoe.

But Carmelina says revenue is now $1.4 million and she goes to work with a smile on her face.

She also tells readers how a strategic change in direction and web marketing saved the business and what it’s like to work alongside her husband and with a young family in tow.

Carmelina says she would love to take some questions online. Just email feedback@smartcompany.com.au with your questions (see below for readers’ comments and Carmelina’s replies).

 

Amanda Gome: What was the hardest part of the start-up phase?

I was 33 when I started the business with my partner Mark. I had worked in management at large companies but came from a small business background and the ebb and flow of small business was normal. We saw a niche. With a passion for coffee and a passion for business it was a marriage made in heaven.

Australians were developing a maturity in their taste for coffee. But the office market was not being serviced properly by the existing players in the marketplace.

You have the large coffee companies whose expertise is in the supply to the traditional market (restaurants and cafes). They are not specialists in the automatic equipment that offices need, and can’t provide the appropriate back up and support.

Or they were very small companies that couldn’t service larger clients adequately. We decided to provide coffee machines to offices and homes that could make great coffee easily, and provide a full back up service that takes care of any service issues.

What was the low point?

The lowest point is when things are invested heart and soul, and made sacrifices with personal life, and it doesn’t seem to be progressing, The emotional drain of believing in yourself and your idea but not being able to see it realised. Faith can only take you so far.

What was the hardest thing you had to do to keep the business going?

The hardest thing was sacrificing time with our family and time with each other. When the business doesn’t seem to be coming together, you can’t spend time with family and you’re irritable and on edge all the time, you start to wonder why you are doing it at all. It was at this point that we hit our lowest point. There were quite a few days where you would just run on auto pilot.

What was the biggest strategic mistake?

We had a plan at the start but it was big picture and didn’t go into any detail. Because of our small business backgrounds (Mark also came from a small business) we learnt to do first and plan later. Towards the end of the first year we met with an accountant Anthony Bell. That made a big difference and helped us break out of that way of thinking.

We learned to focus on the market not the product. Instead of saying we have product X, who is interested in buying it, we asked who is interested in buying a product at this price – because it was a premium product.

We started to look at everything in terms of the customer – and we found they wanted a complete package. They were more interested in the back up and service than the best price. They wanted to deal with a company that would be there when they had problems, not just someone to sell them a box. So we worked on a daily basis to improve it.

We moved from selling coffee machines to a complete service package. We had free installation and training, 30-days money-back guarantee, two years parts and labour warranty with the option of a five year extended warranty at no extra charge, free lifetime help support desk, support loan machines for use when machine needs servicing, a cleaning service for those clients that want a hassle free coffee machine, a $150 gift certificate for next purchase – everything we thought those type of customers would want.

We encourage potential clients to discuss their needs with us. We usually spend 20-45 minutes discussing their needs. We may not have something suitable for them and if we don’t we will tell them.

We learned to plan better, in all areas of the business. Our two biggest issues were cash flow, as you would expect from a rapidly growing startup, and staffing. There is no talent pool out there that we can pick from. It takes three to six months to train a technician to a basic standards and 12-18 months before they are fully operational. We now factor both of these (as well as others) into our plan and growth pattern.

In the start up phase you suffered from lack of resources but suddenly found your clients wanted to be serviced to death. How did you cope? Did you hire more staff?

No. We didn’t sleep. We worked and worked and collapsed when we could find the time.

We also learnt by being very responsive to clients. We were about to lose a large client once and asked them why. They said they wanted a well known brand of coffee beans – so we began to supply them.

We learnt about cash flow, getting money in the door and putting in place shorter credit terms. We also made companies fill in account application forms agreeing to terms which helped get money in the door on time. We send statements and also reminder letters mid-month. We also accept credit card payments, which makes it easier for our clients to pay.

Then growth took off and you grew over 100%. That bought its own problems…

That growth almost killed us. Then last year we grew by a further 20% and so at the moment we are trying to contain the fallout from growing. We project ahead for upgrades in IT and fixture and fittings; inventory levels, staffing, and down time. Yes, we actually take holidays now!

How did you market the business on a shoestring?

It’s amazing but we don’t have an outbound sales team. All business comes from the web or referrals. We focused on the target market for the equipment, which was the office market – clients that understand the value of service and relationships.

The first place to look for them was the web. So we started with a site for $1500 from Taten, and added a shopping cart. Unfortunately, ‘if you build it they won’t come’ – it sat there doing not much at all, people couldn’t find us.

It was six months before we started pay per-click advertising and we were so fearful thinking we were going to pay for clicks that wouldn’t give us sales. But we were wrong. We instantly got sales inquiries and it generated traffic to the web site. Now about 75% of all potential clients come from the website.

How do you market the company on the web now?

We have optimised our site to allow us to show up well in natural searches. There is a fine line between writing for search engine optimisation and writing for potential clients. You need to be found, but it’s pointless if the person looking at your website can’t garner any useful information from it.

We also spend a significant amount each month on per-click advertising. Between the natural search and our pay per click advertising on which we spend thousands per month we receive over 10,000 unique visitors per month. Approximately half of these come from pay per click. It can get expensive – we got a Christmas present from Google last year, always a worrying sign!

We optimised our ads and cut our expenditure with them in half, while doubling our click rate. This means that the surfers clicking through were highly qualified. We are now back to spending our original amount but have maintained our higher increase in conversions. Business is booming.

We are still operating on our original $1500 web site and are in the process of upgrading to a new one shortly, it is a very exciting time – check back in September to see the new site!

How do the pair of you run such a demanding business with two young children (seven and 10)?

Occasionally the kids get upset. If Mark gets near a computer on a Sunday, John (7) will drive him away. They are empowered to demand more time! But they also know that sometimes we can’t do everything and we do work after hours. Deanna (10) has been known to throw some very interesting business ideas over the dinner table. Out of the mouths of babes… But if I was back in the corporate world I would be working at the same level anyway.

You work long hours? Do you ever wish you just worked in a large company with the security?

Never. Even though I would have the resources I wouldn’t have the flexibility. Working for a big company frustrates me. Duke, one of our technicians, recently approached us with a great idea for a marketing campaign. We thought it was a great idea and will be implementing it soon. You don’t get that free flow of ideas and implementation in a big company.

How do you keep the romance in the marriage?

What’s that?? No, we don’t work on the relationship like that. It doesn’t work for us to separate time out. We don’t say let’s not talk about the business at night, and we don’t ban home from the office. It is a symbiotic relationship. Our relationship is just as good now as it ever was – in fact it has been strengthened through shared struggle. Our focus is family first and then business – just don’t ask me to quantify the gap between the two!!

Comments

Sue Floate writes: You’re an inspiration and good luck with it. How do you unwind? (Also what coffee machine should I get for my office?)

Carmelina: Thank you. I don’t know about being an inspiration though. I’m just another business owner/mother doing the yards. There are many things we do to unwind. By far my most common way to unwind is a hot date with a comfy couch. Mark is a gym junkie and an ardent AFL supporter – go the Tigers! Spending time together away from the office, and spending time with our children, last weekend was spent playing Spy Academy. Spending time with friends and extended family and getting away from the everyday, even if it is just for a few hours. Anything that allows you to just be yourself and be in the moment, it’s not about quality time, but really living in the time you have away from work, that could mean making sushi with the kids, watching a DVD or completing a Soduko puzzle.

Back to work… When looking at a coffee machine for the office it’s critical that you get information on reliability and your supplier’s ability to properly support you after the sale. We sell Jura coffee machines because of their reliability and durability. We couldn’t offer extended warranties otherwise. Get the best that you can afford and look at the cost over the life of the machine. A cheap buy price could lead to expensive repairs down the track. Ask for referrals – a good supplier should be able to provide you with at least 3-5 names of clients with the particular model you are looking at, and feel free to call us on 1300 365 487, if we can’t assist we should be able to direct you to someone that can.

Len Cameron writes: Thanks for entrepreneur online. I wanted to ask Carmelina about search engine marketing. Do you pay someone to do it? If not how did you learn to do it? What works best?

Carmelina: We take care of our own search engine marketing. We learnt through a process of trial and error and tracking down information on the net. There are also books out there that while some may say are out of date, still have some really good basics. Believe it or not, the search engines themselves have a staggering amount of information to help you write better ads and increase conversions – it is in their best interest after all, they want to provide the surfing public with the most relevant responses. The biggest problem is that search engines are continuously evolving beasts, the search parameters and the listing requirements are always changing. SEO is not something you can set and forget. Mark monitors our pay per click ads regularly, at least every 1-2 days. If something is not getting a decent response it gets altered. And we are always making changes to the website that may not be noticeable but make a difference to the spiders.

You have to use a number of techniques in conjunction with each other. SEO has to be a complete process that encompasses all areas of your site, the design and layout the flow in the site map, interlinking between pages, titles, graphics, inbound links and of course content.

One tip… Try to focus on one keyword for each page. If you sell dining tables, have a page that specialises in recycled timber tables and another for new or plantation timber. Gear the language on these pages to the specific keywords you are trying to target. Your first temptation will be to put as much in as you can but this restricts the search engine’s options. If I am searching for dining tables made from recycled timber and you have a page that specialises in this, your page will show up higher in the natural search that one that lists 20 recycled tables, chairs, new timber tables, outdoor tables etc… The search engine sees you as a specialist in this arena and therefore more relevant to my search.

The most important thing to remember is that there is no point just optimising for search engines, you must ensure your site is user friendly. There is no point getting people to your site if they won’t stick around.