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Blenz Coffee uses technology, marketing to grow through downturn

Small business owners at Sage's Simply Partnership conference remain concerned about the economy, but see technology as an enabler

VANCOUVER – While pessimistic about the state of the economy and the pace of recovery, one small business owner sees investment in marketing and technology as the keys to maintaining and even growing business through a challenging market.

During a small business though leadership panel during Sage Software‘s Simply Partnership conference, participants generally agreed there remain difficult times ahead for Canada’s small business owners.

“We’re clearly not out of the water yet in terms of the economy, and some of the indicators are sputtering,” said Jamie Sutherland, vice-president and general manager of Sage Software. “One of the biggest things is credit, and access to credit for small business owners. It’s improving for large business, but it’s still a problem for small businesses and its a barrier to them taking their businesses to the next level.”

However, while Sutherland thinks we’re through the worst of it, George Moen is a little more pessimistic. Moen, president of the Vancouver-based Blenz Coffee chain, said the economy hasn’t turned around yet and businesses are going to have to adjust to this new dynamic for the long-haul.

“The biggest weakness for Canadian businesses is thinking this is a cycle. We should think of this as a new normal,” said Moen. “I’m trying to steal business from my competitors. That’s how you’ll grow your businesses, because I don’t see us coming out of it anytime soon.”

The down economy isn’t just because of just one thing, said Moen, such as the sub-prime mortgage crisis. It’s a combination of factors that has led credit and investment to tighten-up as people try to wait for an improvement no one is sure is coming. When they’re uncertainty, he said, everyone tends to default to inertia.

Blenz’s plan to grow through the downturn included recognizing the coming storm early, said Moen, which allowed the company (which operates on a franchise model) to begin a 20 per cent cut in head office payroll through attrition in 2008. However, while cutting back on over-head and non-essential spending, Blenz also increased its marketing budget by 40 per cent.

“We immediately went into re-branding and refocusing our brand,” said Moen. “We had a reserve war chest for marketing; we called it our rainy day fund, and the rain came. We expanded half of that in 2009, and our competition didn’t have those resources.”

The investment allowed Blenz to mostly stay in the black through 2009 and 2010. In addition to marketing though, technology has been key to Blenz’s continued success. The company requires all its franchisees to use Sage Simply Accounting, which allows them to feed all their financials into head office where Moen’s team cam make better decisions with better data to react to changing market dynamics.

“Most franchise companies don’t insist on standardization of reporting, and I think that’s just insane,” said Moen.

Blenz has also working to integrate its point of sale system with its financials and accounting system. The company recently moved to digital menu boards in its shops, and the goal is to be able to change pricing dynamically from head office based on shifting input commodity fluctuations, such as the rising price of coffee beans.

“It puts is light-years ahead of our competition in the marketplace,” said Moen. “We believe it will be a competitive advantage, and lower our cost of business.”

Moen said Blenz intends to role-out its next technology differentiator next year: mobile ordering. A customer will be able to order and pay for a beverage on their smartphone, indicate when they’ll be in the store, and a barrista will prepare the drink and have it ready when they arrive so the customer can just grab it and go. Similar systems are already in use by some small coffee shops in the U.S., and Blenz plans to be up and running in 2011.

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.