Thursday, August 31, 2006

CUTE AS A BUTTON

Dear Samuel,


I ran into a business last week that embodies synergy, or mutually reinforcing business ideas. A neighbor had invited us to her son’s birthday party. It was at this little store in a strip mall called ‘Cute As A Button’ – (CAAB)

CAAB is a thrift store similar to salvation army thrift stores, but with a focus on baby and toddler clothes. When I went through the door there were bags of donated items off to the side in the room. One major difference is that CAAB works very hard to show their merchandise in a way that normal retailers do. You aren’t going to see stained shirts, or anything smelly on the racks. Just quality, gently used merchandise, that any reasonable soccer mom would be willing to buy and clothe her kids with.

This is a good business model. I’ve seen this elsewhere, like in St. Louis where they have ‘The Scholar Shop” which is a thrift store that donates all its profits to scholarships for local high school kids. You’ve been to these kinds of stores before, and the fact that they’re around means that the business model actually works. I assume.

But I probably confused you a little bit at the beginning of this narrative. I didn’t start out talking about thrift stores. I was going to a birthday party. Well the back half of this retail space was decorated little city for small people where CAAB hosts birthday parties. We walked in and there were all these little shops with costumes. My 3 year old immediately dressed up as a fireman and walked around. Then he dressed up as an astronaut, then as a race car driver. There was a doctors office where my daughter gave little toy shots to dolls, and listened to my heart beat on a toy stethoscope. There were chairs for the adults to sit down and talk to each other while the kids basically entertained themselves. There was even a flat screen TV with the football game on so the non-attentive fathers could do something they enjoyed. After about 90 minutes we were shepherded into the back room which had wall decorations and tables set up where we ate birthday cake. The food was provided by the party hostess, not CAAB, and I don’t know if CAAB even offers to supply food for these parties. As soon as we were moved into the birthday cake area another party started in the play area. We ate cake, and opened presents. One of the CAAB employees wrote down the list of presents and who gave the present so the Moms and Dads could take pictures and whatever. Then we went home. Compared to the fairly stressful experience hosting a birthday party for my 3 year old, this was an extremely good party. I don’t know how much my neighbor paid CAAB but it was probably worth every penny.

So imagine yourself as the owner of CAAB. You’ve got a good business model of a thrift store. You can make decent money running a thrift store, but there are some drawbacks. Everybody knows what Salvation Army is, so there’s a name recognition that they have but CAAB doesn’t have. If you’re the owner of CAAB you’ve got to figure out a way to get people walking around inside your store. You’ve also got to pay rent every month so any way of increasing revenue will only help. Combining a thrift store for kids clothes, with a birthday party venue is a great idea! The birthday party revenue alone probably covers the fixed costs overhead for the operation each month. Think about it. If they charge $100 to host a birthday (they probably charge more) and have 3 birthday parties each Saturday that equals $1200 in revenue each month. And don’t forget that every invitee to each birthday party is one more potential customer on the thrift store side.

I’ve got another idea for CAAB. Sell personalized room decoration. The birthday party area was totally decorated with paint on the walls. The city had to be painted with a doctors office, a restaurant, fire station etc… The cake room had a peter pan theme (or something) going on.

In college I had a friend who painted people’s rooms like that. She was going to school out west, and would fly home to Raleigh North Carolina on the weekends. She would work all weekend painting somebody’s rooms then fly back to school. That was her job. To justify a 1500 mile round trip flight she had to be making pretty good money back home.

Well CAAB should get together with whoever painted the birthday area and work out an arrangement. Put some kind of display together showcasing the possible room designs and sell them for the room painter. Anytime CAAB sends the painter a client, the painter will pay CAAB a commission. I am one hundred percent positive that in my community there are hundreds if not thousands of people who would be interested buying in a custom painted room for their spoiled spouse or 10 year old.

You probably aren’t going to open up a thrift store, but it’s a good idea to train your mind to recognize instances where somebody is doing something smart. Over time you’ll get better at coming up with smart things on your own.

Later,

Jay


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