Business lesson: Go where the people are

[In business] you shouldn't swim upstream. Don't try to change people's behavior. Go to where your customers are. - Ramit

Like Ramit, I learned this lesson the hard way. Growing up in a small town, I always wished there was a small, local shop I could visit to buy clothing, skateboards, and snowboard equipment.

After graduating from university, I decided to make it happen. Together with two partners, we launched The Real Deal: a local skateboard shop in a small town. Our mantra was: "You don't need to go to the city to shop, you can shop local!"

And our shop was awesome. We really cared about our customers. We had a well designed store interior. We stocked the best brands.

Here's the problem: our customers, skateboarders, were already used to driving to the city. They would make a day of it on Saturday or Sunday. With a whole day of shopping, they could visit multiple shops, with a bigger selection than we could ever have. Our customers weren't shopping local.

Once we discovered this, we tried to change their behavior. We launched "shop local" campaigns, we developed relationships, and we offered competitive pricing. We also sponsored local athletes, put on shows, and even launched our own magazine. But none of that mattered, because local consumers liked going into the big city for shopping.

Don't ever lose track of the idea that a business needs to make money. In retail, that means lots and lots of traffic. If there's no traffic at your proposed location, in doesn't matter how awesome your shop is or how good your idea is, it's not going to fly. This applies to other businesses as well: you can't change the way an entire market operates.

Don't go into business because of a particular ideal (ie. "shopping local is better").  Instead, identify a group of people who need a particular product or service... and then go where they are.  Once you're there, you need to test out your business.  I will discuss that in my next post.

Published on August 13th, 2010
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