Hungry for Success

 

They say hunger is the best sauce, and hunger was foremost in the minds of web developers Ciara Traynor and her Canadian business partner Anthony Kauffmann when they found themselves working late into the night on a project a couple of years ago.  The sound of their grumbling tummies had become a familiar chorus in Irish life, where ever-increasing demands on time meant the idea of shopping for and preparing a meal was a luxury in itself.
After turning their office upside-down in vain looking for a takeaway menu, they fumed at the fact that there wasn’t some way of getting fed online.  That frustration was their eureka moment, and the idea for takeaway.ie was born.

Ciara had an understanding of how the restaurant business ticks as her parents owned a sea-side restaurant in Laytown, Co Meath.  However, her career had taken a different path.  She had worked in the banking sector in IT and then spent a few years in Paris before returning home to break into the area of web design.  Herself and Anthony, pride themselves on building clear, practical commercial websites through their company Technotion (www.technotion.ie).

The duo realised that the concept for an online food ordering website, coupled with the fact that they were the first in Ireland to try to fill this gap in the market, was a big project, and probably best separated from the ‘bread and butter’ business of Technotion.

“Essentially we wanted to build a portal, where good quality food outlets could put their menus on our site and customers could order directly through it,” explains Ciara. 

They approached Dublin City Enterprise Board (DCEB) and got assistance through two employment grants and the invaluable mentoring skills of Celtar consultant Billy Linehan. “DCEB have been fantastic,” says Ciara. “Billy was really enthusiastic, but he warned us that we needed to get a better grip of the details.  We realised that we had to do more than just talk the talk; we had this great idea, but it was just an idea.  We had to build this site and start approaching people before we could speculate on how our users, clients and income might grow.”
They managed to secure the essential ingredient for any web-based business – the right domain name.  When someone is hungry and hunting for a solution online, a ‘does-what-it-says-on-the-tin’ domain name is crucial – no tricky hyphens, no added words.  Takeaway.ie was launched in April 2008 and is on an impressive growth curve both from clients keen to make their food available, and from punters happy to take part in Ireland’s latest food revolution.  What’s more, Ciara and Anthony also snapped up the takeaway.mobi domain so they will be able to develop their concept into the mobile technology market.

Online food ordering is a hot idea right now.  One of the biggest restaurant franchises in the world, Dominos, has seen online sales grow 85% to £25.3m in the UK in the last year, with internet and text orders representing 22% of the firm’s pizza delivery sales in the UK.  While many restaurants have websites where they can place their latest menus and offer contact details, takeaway.ie can give them something almost impossible to achieve on their own – top billing on a Google search. 

“Some of the restaurants we approach say ‘well we already have a site’, but we explain that what we’re doing will not detract from that online presence at all,” says Ciara.  “In fact, they have the same facility to update their menus and keep control of the content, but we make that menu easier to find online and much more prominent.” 

From a surfer’s point of view, takeaway.ie ticks lots of boxes.  Searching for a meal near you is made easy by the straight-forward layout and function of the site.  And there’s no bickering if someone wants Indian and someone else Italian food, as it’s easy to order from a variety of outlets at one sitting.  It can cater for an individual with an attack of the munchies just as easy as someone  who’s entertaining guests for the evening.
The revenue stream is simple, there is no set up charge to restaurants and it’s free for website users. Takeaway.ie’s business model sees it take a percentage of each sale generated through the site.  Food outlets are happy with the growth in business, and customers can enjoy the satisfaction of good food delivered to their door without the hassle of cooking and cleaning.

Pricing in an inflationary downturn

Tieing in with the recent Incite  here is another view on pricing.

In the current environment, costs are rising as price sensitivity increases. Six tactics from the McKinsey company that can help businesses get pricing right.

 

Getting pricing right is always a challenge in an economic downturn, as decreasing demand, excess capacity, and greater price sensitivity all conspire to drive down prices. In most downturns, the cost of raw materials, feedstocks, and other upstream supplies—as well as the cost to serve customers (for delivering goods, for example)—tends to stabilize and even decrease as business activity slows. As a result, decreases in downstream prices are at least partially offset by lower upstream costs. But in the current environment, not only is weaker demand from the end user making it harder to maintain prices, but significantly higher and more volatile input costs, energy for example, mean that companies caught in the middle are getting hit from both sides.

What’s a business to do? In this unusual downturn, companies need to manage the profitability of individual customers and transactions with greater precision, develop richer insights into their customers’ changing needs and price sensitivities, and understand more clearly the microeconomics that shape their own industries and those of their suppliers. Three McKinsey consultants have assembled six tactics aimed at maintaining the best balance possible between sales volume and profit margins in the current challenging environment.

 

Watch for sudden shifts in price structure

Companies should be vigilant in monitoring pricing policies that reduce revenue—such as volume discounts, rebates, and cash discounts—as well as cost-to-serve, including freight and sales support. In the current downturn, rising costs and declining demand can cause these elements to change more dramatically and quickly than they have in the past. Rapidly increasing fuel prices, for example, are putting intense pressure on delivery costs. Declining demand means that some customers may be collecting volume discounts they no longer deserve. Best-practice companies are reviewing much more frequently their pocket margin waterfalls,1 which show how much revenue companies really keep from each of their transactions, and adjusting their pricing policies accordingly—for example, by adding delivery fuel surcharges to every order. Without the extra attention and quick action, erosion at all points of a transaction can quickly destroy profits in times like these.

 

Monitor customer-level profitability

Companies should use transaction-level data to measure precisely the profitability of each customer. By doing so, companies can detect if the cost to serve particular customers or declining order volumes are nudging those customers below target profitability levels. In this downturn, for example, many customer groups are becoming simultaneously smaller and more costly to serve. One industrial company found that more than 20 percent of its customers had fallen below breakeven profitability, forcing it to raise prices selectively and, where possible, lower cost-to-serve by decreasing delivery frequency, reducing sales support, or fulfilling orders through alternate channels.

 

Adjust to changing customer needs

Downturns always prompt changes in customer needs and in the benefits they value when choosing a supplier. The dynamics of the current downturn mean that such swings can occur even more rapidly. In this environment, the best companies are constantly assessing—through market research and direct contact—how economics are changing for their customers. Even more important, they are reacting quickly by retooling their price and benefit offerings accordingly. For example, one Dublin based distributor that imports high end products from the Far East developed a new brand and range of economy products which still meet their customer specifications but at less cost. The new range helps the distributor’s customers to decrease project costs. As a result, the distributor can maintain its profit margins even while selling the alternative range at a lower price. The combination of lower demand and higher input costs in the current downturn makes it critical to get these kinds of adjustments to the cost/benefit balance correct.

 

Update price sensitivity research

Dramatic increases in energy and food prices have made consumers much more sensitive to prices across a wide range of product categories. Each price increase for necessities such as food and fuel has cut a little more from discretionary budgets, sharply increasing price sensitivity. Market price tests become obsolete after just a few months. To get price points right, pricing sensitivity research and market price tests should be rerun immediately to track these changes.

 

Monitor your industry’s microeconomics

Radical shifts in costs and demand have thrown previously predictable market pricing mechanisms into chaos. Responding correctly requires a keen understanding of the microeconomic forces at play at the industry level. In one example, a building materials company found itself in a precarious position as the downturn deepened: a precipitous decline in Irish housing starts meant diminishing demand, while the costs for raw materials, energy, and transportation were increasing rapidly. In response, the company reassessed the industry’s microeconomics, looking in particular at the latest supply, demand, and cost dynamics. With this new information, managers cut capacity at a plant in an area where the decreased supply would not cause a local shortage. The capacity reduction, which would have had little if any effect on market prices a year earlier, brought about a better balance between supply and demand and kept market prices an estimated 10 percent higher than they would have been without the change.

 

Study your suppliers

The extreme volatility in this downturn demands that companies reexamine not only the microeconomics of their own industries but also the microeconomics of their suppliers’ industries. Recently, a specialty chemicals company invested in modeling the current industry supply, demand, and cost dynamics for one of its primary raw materials. By doing so, the company predicted an industry-wide, 15 percent price increase for that raw material three months before it happened—a feat of some significance because there hadn’t been an annual price increase of more than 5 percent for that material within the past six years. Suspecting an imminent and unusually large price increase, the chemicals company began adding clauses covering raw-material price increases to its customer contracts, a move that would have met extreme resistance if made after the price increases were announced. Instead, the move established an industry precedent for passing cost increases through to customers.

 

About the Authors

Cheri Eyink, Mike Marn and Stephen Moss of the McKinsey company – with localisation additions by Billy Linehan

 

www.mckinsey.com

 

Getting real

I have come across the company 37signals over the last few years. They demonstrate a refreshing approach for smaller companies who successfully compete with corporates in technology and other sectors.

 

Celtar will soon be relaxing on holidays for 2 weeks – so we wish you a warm summer.

Regards

Billy

 

 

“I don’t have anything against big business,” Jason Fried says. “It’s just not for me.” So he quit and in 1999 started the Chicago-based digital design firm 37signals with three other designers.

But Fried’s jaunt as a corporate employee wasn’t his last experience with big business. Thanks to his firm’s innovative and simple approach to Web design, big clients soon were knocking on his door, and Fried once again found himself working for some of the biggest businesses around—but this time as a contractor and not as an employee.

Fried grimaces as he recalls his encounters with big business: “The decisions being made by these large corporate clients were just so irrational,” he says. “Big business loves mediocrity: They put process first and product second. As long as you go through this process and all these objectives are met along the way, then what comes out at the end is considered successful, no matter what. It doesn’t up set anyone, but doesn’t make them happy, either. It’s safe. I can’t deal with that.”

Still wary of the waste and brain drain of the corporate world, Fried started focusing on reducing his dependency on all things big business. Now his own firm is lean and mean, with only eight employees who are developing a new generation of online services, including the popular project-management software Basecamp.

Fried built his business with a philosophy he calls “Getting Real,” a way of thinking that inspires those with limited budgets and few resources to create successful products. While Fried’s simple, streamlined approach focuses on software development, the principles apply to any small business challenge requiring you to do more with less.

Fried’s mantra about how to be successful in business is simple: Less is more. Being a small business is better than being a big one. Having few resources is better than having unlimited resources. Having less time is better than having all the time in the world. Indeed, having less of anything is better than having more—except when it comes to happiness.

 

Necessity Is the Mother of Invention

Today, 37signals and the Web-based applications it creates (Basecamp, Campfire, Backpack and Ruby on Rails) have a near cult-like following among more than half-a-million users. More than 60,000 people regularly read the firm’s blog, Fried’s online, self-published book about his streamlined approach to software development—generated almost $200,000 in revenues during its first four months of publication. Fried is regularly invited to speak at top technology conferences and his design work and software products offer some of the most influential approaches in his industry. No list of “hot new tech companies” is complete without a mention of 37signals and Fried. Any review of the “next big thing” typically cites his firm or one of its products.

What’s ironic is that Fried never set out to become the next big thing. His Basecamp project-management system was born out of personal need. “We created it initially for ourselves because we couldn’t find a project-management product that worked for us,” he says. At the time, Fried and his team were scattered among four different cities on two continents. The solution they developed to manage their projects for large clients soon caught on with the clients themselves, who wanted something similar to manage their own work.

Now, projects at some of the world’s largest companies are managed with software created by a business that subleases a few desks in a warehouse district west of downtown Chicago.

 

Using Limitations to Your Advantage

After graduating 14 years ago with a finance degree from the University of Arizona, Fried returned to his hometown of Chicago. When he started 37signals a few years later, he decided to remain in the Windy City rather than move to Silicon Valley with the rest of the tech start-ups. Fried’s decision was a good one, since his path to success breaks much of the Valley’s conventional wisdom about start-ups. For example, he had no venture-capital backing, though more than 25 firms had offered to invest. Fried says he has no need for their money or connections because Basecamp is already profitable, in part because of Fried’s radically low overhead. “I can only speak about developing software,” he says. “Perhaps if you’re starting a manufacturing company, you need lots of capital to purchase machinery, but with our business, many of the cost barriers have been removed.”

Instead of spending lots of money on services his start-up didn’t need, Fried chose to keep it simple. For example, during the first year, Basecamp was hosted on a single server that cost about $150 per month. The products developed by 37signals were all created using open-source, free software.

And instead of requiring his employees to spend hundreds of hours of their time developing products, Fried obsessively controls the scope of projects. One key to his “Getting Real” approach (see below) is scaling back the number of features on a product so that it isn’t bogged down in unnecessary bells and whistles. “If you have all the time and money in the world, you become Microsoft,” Fried says. “And now, even Microsoft can’t deliver new products: There’s no urgency.”

 

Success in All Sizes

In reality, the “Getting Real” concept is a more real-world approach to small business than the often mythologised—and likewise, demonized—tech start-up model. Access to venture capital is a rarity in most Main Street retail and service companies. Capital is available for financing equipment, but it comes with plenty of strings and requirements attached.

Fried’s notion of doing more with less resonates with small-business owners who, like him, have discovered that you don’t have to be big to be great. They understand that success doesn’t only come in extra-large. As more businesses operate in a virtual world, small businesses can develop new and efficient products that allow them to compete head-to-head with the big guys — without becoming big guys themselves.

After all, successfully running an efficient business with a low overhead that makes the owner and employees happy is the goal that drives all of us in that huge part of our lives called work. It’s a goal that Jason Fried already has a handle on.

 

Back to the Basics: How to use your (lack of) size to your advantage

While developed with software companies in mind, Fried’s principles can apply to any small business that strives to do more with less.

 

Underdo your competition: Businesses get caught up in a cycle of adding more features and services. Great opportunities exist for those who create the same products, but with more simplicity and ease of use.

 

Create services you would use: Few great product and service ideas come as a result of groupthink and committee meetings. Democracy is great, Fried says, but in the product-development arena, it rarely leads to great results. Great products are the result of solving problems for yourself — and then offering solutions to others.

Fund yourself: The more money you have, the more you’ll waste, Fried says. He admits that outside funding is necessary for capital-intensive businesses, but for many service businesses—especially those utilizing technology or operating online—being able to turn your business concept into reality is getting less expensive by the day.

 

Take half: List all the features you’d like on your product and cut them in half, Fried advises. Then, cut that list in half. Being driven by time and budget rather than by your dream list of features will result in a much more solid, workable product that won’t break the bank.

 

Call off the meetings: Fried is not a fan of endless meetings or documents filled with specifications and details that no one reads. He’d prefer to focus on the essentials — and those don’t require a lot of meetings.

 

Interruption is the enemy of productivity: “Most companies are built to promote interruption, because they think that’s the same as collaboration. It isn’t.”

 

Don’t hire people: Is the work that’s burdening you really necessary? What if you don’t just do it? Can you solve the problem with a change of practice instead?

 

Founders: Jason Fried, Ernest Kim, Carlos Segura

Funding: Undisclosed sum from Jeff Bezos, CEO, Amazon.com, and the first outside investor in 37signals,

Employees: 8

 

37signals.com

Mybusiness.com

Guardian.co.uk

 

New company Takeaway.ie – check it out

On

It is always inspiring to be an adviser to a new start-up, acknowledging the amount of work (and blood, sweat and tears) that has been invested by the two entreprenneurs.

 

Online food ordering is the way of the future and Irish company Takeaway.ie is leading the way. The idea is simple; one website, multiple outlets and quick simple online ordering directly to your favourite restaurant.

 

www.takeaway.ie has been live for less than a month and is already in partnership with a broad selection of food outlets including premium brands like Insomnia, Bombay Pantry and Bistro Bianconi.

 

Takeaway.ie owners Ciara Traynor and Anthony Kauffmann have recognised a niche in the Irish food market; connecting modern technology with an increasingly cosmopolitan consumer base.

As web developers they know what works on the Internet and it was through their work that they came up with the idea.

 

“We were working late one night on a project and we were starving” says Ciara Traynor. “Of course could we find a leaflet?  Anthony wanted pizza and I fancied an Indian, so we got to thinking, why isn’t there one site where all this is available?”

 

First came the idea for www.takeaway.ie. Then came the technology.

“We came up with a direct online ordering system that is user friendly for the consumer and extremely efficient for the restaurant on the receiving end”.

 

“The idea is that we are a one stop shop for ordering food nationally”, says Ciara Traynor. “Already our Dublin range of restaurants is growing and we are also delighted to have outlets in Galway, Mayo and Limerick”.

“The Irish consumer is very sophisticated and Irish food outlets recognise that. People want choice and they want quick access to it with no fuss”.

 

www.takeaway.ie currently hosts multiple food outlets; Italian, Chinese, Indian, Thai and office catering. (Quantifying is pleasantly difficult as new outlets are signing up every day).

There is no set up charge to restaurants on www.takeaway.ie, it’s free for website users.

 

Contact Ciara Traynor and Anthony Kauffmann for interview at (01) 477 3931 or email press@takeaway.ie.

 

Onl

 

 

We’re a family business. We do what we like and like what we do.”

“We’re a family business. We do what we like and we like what we do”

Topflight are a leading Irish tour operator, and a client. I liked this piece about them as it gives a flavour of the entrepreneur behind the company.

It’s cold outside. It’s starting to rain. The phones are hopping at the Topflight offices in central Dublin. Some customers are desperate to escape the country.It’s like a modern version of Rick’s Cafe in Casablanca. One caller wants to book tickets for four people. To leave tomorrow, if possible. You wonder whether they’ll bring luggage or just make do with the clothes on their backs. Either way, it’s all good news for managing director Tony Collins. As he stands for photographs, he explains that he’s been out the night before with some Czech colleagues. Still, he looks no worse for wear. The country’s largest ski tour operator, Collins says that his fundamental belief at Topflight is that the customer has to be the continuous focus. “They choose to give you money. They can choose not to. You do things right and hopefully that filters down to the bottom line,” he says. The affable Collins is long enough in the industry to be aware of its vagaries. After leaving school in Cabra prior to his 16th birthday, he went to work as a motorcycle courier with An Post’s predecessor, Post & Telegraphs. “I liked having a bit of money in my pocket,” he explains. “I’d had a job of some sort or another since I was 12, working in a pub or doing milk rounds. I felt it was important to have another income coming into the family.” But his plan at P&T to get into electronic engineering fell through after a fall from his bike put him behind a desk, an outcome that didn’t have much appeal. A deluge of CVs later, he secured a job with a travel agency on Dublin‘s Mary Street, and would later move on to work with Thomas Cook and Ryan Hotels. At night, he studied for his Leaving Certificate and then a marketing qualification.

 “I did a four-year stint at an agency in Drogheda, and in 1983 decided to open my own business. There was a depression and everyone told me I was mad,” he remembers. With a £5,000 loan from AIB, the then 31-year-old bought a shop on Dorset Street. It made money in its first year. In 1990 he bought Topflight, which at the time was in bad shape. “I’m in business 25 years now, and we’ve made money in every one of those,” he says. “That’s a pretty good record in our industry.” Last year Topflight generated sales of €50m and made a profit of “between €1m and €2m” says Collins. Typically, it sells between 65,000 and 70,000 holidays a year.

The big changes in the sector happened later in the ’80s when UK operators began muscling in on the Irish market. The advent of Ryanair and, later, Aer Lingus’s decision in 2001 to revamp itself on the low-cost model, made it a much tougher market for travel agents as commissions were slashed and the price of flights plummeted. “The real impact on the tour operators here was that the UK heavyweights began mopping up most of the Irish businesses.” But Topflight has soldiered on alone, despite the usual offers from competitors, none of which have yet proved tempting to Collins. “We’re a family business. We do what we like and we like what we do,” explains Collins. “Whenever the future looked bright for us, I didn’t want to sell. When things looked bad, nobody was interested anyway.” He says that the company is operating on far tighter margins than 10 years ago, but adds that in each of the past four years the company has achieved at least 20pc sales growth. “We don’t go for high margins. We look for modest margins, reasonable growth, stability and sustainability,” he says. “That has served us well. We’re not greedy.”

Meanwhile, Topflight has captured the lion’s share of the ski market, while its sun holidays prove popular too.

Anticipation “You’ve got to anticipate what people might like and match your client base with the product,” says Collins, who adds that the company operates in the “upper to middle” price margin bracket. “We’d never do anything that’s two-star, and rarely even carry three-star properties,” he adds. “Nobody wants rubbish any more.” Ski holidays now account for about one third of Topflight’s business (it was recently awarded the accolade of Ireland‘s best tour operator — the 14th year in a row it has received it), with holidays to sunspots such as Portugal, Italy and the Canary Islands forming a large part of the remainder. Around 30pc of Topflight’s sun holidays sold annually are, unsurprisingly, booked in January. While skiing has proved popular, Collins (who likes to head for the piste in Austria and Andorra) admits that, in respect of the Irish market, the level of business is probably heading for a plateau.

His sons, Anthony and Neil, also run a separate online business, Directski.com, in which Collins has a small stake. Topflight, meanwhile, has been branching out, providing foreign wedding services and also targeting groups heading off on golf trips, for instance. It has also begun offering sporting trips to schools, including ski, rugby and soccer packages. But as the economy begins to ease off the accelerator, Collins says it’s evident that at least some customers are being a “little bit more cautious” about booking. “This sector isn’t recession proof,” he explains. “It has to be very strongly customer-focused.” “We’re going for growth this year, but it will be more modest than in previous years. We’re certainly aware that there’s a nervousness out there and that people are watching their money.” Roulette may be out, but it seems people will always need their sun fix, however.

From the Irish Independent newspaper
  

 

Grow your business

The Business Development Programme at the Irish Management Institute is now recruiting, aimed at owners, directors and successors in SMEs. Starting in May 2008 it is Ireland’s premium course for entrepreneurs and it has contributed to the transformation of many businesses.

See http://www.courses.imi.ie/courses/Published/Business_Dev_60.shtml for further details and quote ref. 007
With a generous subsidy from FAS I recognise it as the best course available for owners and directors who wish to plan business growth over the next 5 years.