The Tea Businesses That Failed

I recently checked in on some old industry contacts I interviewed back before the recession got heavy in 2008. In the process of looking them up, I noticed some fascinating trends. The biggest? Nearly half of them had closed up shop.

In retrospect, some of those closures were easy to see coming even from the hour-or-two interviews I had with their owners. But the reasons behind others were subtler and far more telling about the industry at large...

Based on what I know about their business practices (compared those of the businesses that are still around), here are the top seven reasons I've observed for why tea businesses failed in the last nine years:

7. Starting a tea business after 2004. It seems that 2004 was the year the tea biz game changed. Most of the businesses that have been around since then are still going strong, even if they have made (and even continue to make) many of the mistakes on this list. Newer tea businesses have to try about ten times harder, it seems, than the old guard. But having gotten in early doesn't make a business bulletproof! Some of the grand, old companies still collapse or slowly become irrelevant. They just have better odds of survival due to loyal customers who have been with them since the start... and a particularly incestuous tea supply chain in the U.S. and Canada! (More on the advantages of wholesaling tea and buying direct another day...)

In summary: You can't turn back time, but you can compete on other fronts. Read on to learn how...

6. The heroic entrepreneur. Many of us carry around this totally unreasonable myth of the heroic entrepreneur conquering the world with late nights, loads of caffeine and a big dream. Fact is, it never really happens that way. Dig a little deeper into the stories that most entrepreneurs hold so dear, and you'll find angel investors, support staff and other factors that enabled that entrepreneur to make it happen.

Going it alone is rarely the way to succeed, and interestingly, neither is overextending the budget. I saw two trends in failed businesses that were clear simply from the responses I got to media interview requests sent over email. The first trend involved a harried business owner who got back to me at least a week after my initial request for an interview for an article... and that was often only after I followed up with them about the request. The second involved a high-priced PR firm getting back to me to say that they are contacting the founder / CEO / whatever and that they'll get back to me after they've arranged a time a date. This expensive, inefficient way of handling the interview request often reflected a bloated, inefficient company. And unless that company was part of the old guard (see #7 above), it almost inevitably failed during the economic downturn.

The lesson here is that it's a delicate balance. Hiring new staff, bringing on contractors, hiring a PR firm... these things are essential for leveraging your time and expanding your business! But making these changes TOO fast is just another way of biting off way, way more than you can chew. My general guideline is to expand your support structures as much as you can as soon as you can... while still remaining reasonable!

In summary: Get the support you need to thrive as a business leader (just don't be this guy in the process).

5. An insufficient email list. I see a LOT of businesses put a big focus on social, yet pay very little attention to email list building and lead nurturing. I know, social seems like a great way to 'get more visible' and 'become popular'... but the sales made through social are nothin' compared to the sales scored through great newsletter marketing! In fact, companies regularly earn up to 40x their digital marketing investment in sales from their digital marketing efforts. And that all begins with building up a solid list!

No matter what you hear elsewhere, the key to a solid list is NOT about the numbers alone. It has far more to do with getting interested, engaged customers on the receiving end of your email campaigns. That's something we love to do over here at The Tea Mavens. In fact, Digital Marketing Maven Tiffany once grew a small tea company's mailing list by over 40,000 high-quality customers over the course of four years, without any list purchases or affiliate marketing. Woo hoo! Her methods? Producing engaging emails, optimizing website sign-up forms and offering a tea gift to one new subscriber each month. The new subscribers were interested in (and excited about) the products on offer, and many became regular customers as a result. And THAT'S how you get a high ROI on digital marketing!

In summary: Build up your list with interested, engaged customers who will buy again and again.

4. Vague, naive, grand plans. I can't even tell you how many times I've heard statements like these from tea industry newbs: "We're going to open 20 new shops in the next two years." "We're going to take over the specialty tea industry in North America in five years." "We're going to be the Starbucks of tea!"

While these goals are certainly grand, they are also unrealistic and unfocused... and I have yet to see a company reach them in over a decade of work in the industry. Why? Well, for starters, they are generally based on the idea that no one is selling great tea yet. That's simply not the case. And they're usually naive about the specialty tea industry as a whole, both in that it is incredibly fragmented and in that there already is a 'Starbucks of tea' (and it's called Starbucks). But most of all? They're really pretty vague! Even the ones that seem specific (e.g., opening 20 shops in two years) tend to fall apart upon questioning (e.g., "In which markets?").

This kind of high-energy drive to reach a vague goal pretty much inevitably ends in burnout and major financial problems. After all, without specific goals, you can't take specific actions to reach them. Clear, actionable goals are imperative for scoring big. Just talking about your successes is not enough to get you there... you have to know your way and walk the path.

Interestingly, when I work with tea businesses as a coach, I see these kinds of vague goals transformed into clear, actionable ones... ones that lead to successes that may not be quite so grandiose, but are far more realized and profitable in the end! Part of that process involves clarifying the actual goal, part of it involves breaking the goal down into sub-goals (complete with specific milestones and reasons those milestones are needed for reaching the larger goal), and the final core component is the accountability and drive needed to reach each of the attainable subgoals in order to reach the biggie.

In summary: Replace grandiose goals with clear, actionable ones with subgoals that include specific milestones and key reasons for wanting to reach those specific milestones in service of the greater goal. Accountability is a big plus.

3. Unclear branding. A tea brand 'for everyone' is a tea brand for no one! Getting clear on your branding from the start makes an enormous difference in customer acquisition, sales and returning customer sales.

The majority of the tea companies I saw fail had failed from the beginning, because they hadn't gotten clear on their brand. They scattered their investments into the wind instead of using their money in targeted ways that could reach a defined market.

Knowing your target market, having a detailed customer avatar and making your business decisions around these two points not only saves you loads of time and money. It also funnels your target customers right toward your register!

In summary: Get clear on your branding ASAP. It's not a luxury for later. It's a necessity for now!

2. Bad design. Design isn't just about looking good. It's about functionality, usability, clarity and (in the tea biz) sales conversions.

#DYK? A staggering 94 percent of people who say they don't trust a website give poor design as their primary reason for not trusting it. Of mobile users, 48 percent say that if a site looks bad on mobile, it means the business behind it 'doesn't care.' And 40 percent of people will abandon a page if it takes more than three seconds to lead.

And those numbers are just for web! Consider the snap judgements you make about design every day, whether you're window shopping, grocery shopping or browsing Instagram. We humans are visual creatures, and our judgements about what we see run deep.

So if you haven't done so already, invest in a fantastic logo, an easy-to-use (and quick-to-load) website and good-looking marketing materials. Your sales numbers will reflect the change!

In summary: Great design is worth every cent. Get your website, logo and marketing materials (as well as your brick-and-mortar shop, if you have one) looking fantastic to build your customer base and increase sales.

1. Poor SEO. A whopping 90 percent of online experiences begin with a search query. And 70 percent of the links users click on are from organic traffic. If your online tea business isn't doing well, poor SEO is most likely the culprit.

Contrary to popular opinion, great SEO does not start and end with 'hiring an SEO guy.' In fact, many of these so-called 'SEO guys' have little to no knowledge of the tea businesses they get paid good money to work for, and they end up using the same lists of keywords as all the other SEO guys, sometimes to disastrous effect. (I've even seen one high-charging SEO guy use a copied-and-pasted Google Keywords list that included terms like 'tea bags' and 'bottled tea' for a loose-leaf tea company! The result? The company's Google ranking declined due to back-clicks when users didn't find what they were looking for... i.e., teabags... on the site.)

The far stronger approach is having great content that users want to read and share online. Sure, you can always augment that with great web design, digital marketing tactics and online ads! But when it comes to SEO, great content is king.

In summary: You need great site content to get online sales, and just hiring some rando SEO guy is not gonna cut it!

Did you see any elements of your tea business reflected in the list above? The good news is that it's never too late to change track! And now that you know the problems, you're already on your way to their solution.

Best wishes to you and your company! And as always, if you'd like to schedule a free, 45-minute discovery call to discuss the possibility of collaboration, you can do so here.