A few weeks before the Coronavirus forced a lockdown, I traveled to Varanasi. While visiting the ghats, I chanced upon a traveling tea seller. I normally don’t drink the brew they serve but I am not sure why that day I decided to have it. When he began mixing the tea with fresh lemon and secret spices, I focused my mobile phone on him to record a video. I distinctly remember, my only thought was to show the contrast in a street sellers humble offering, the price and taste in contrast to the brew served in branded stores. But in that video I got the opportunity to capture more than I bargained for.
I ordered two cups (one each for my daughter and I). The total bill was Rs. 20. I offered Rs. 100 but the tea seller said he had no change. I told him that he could keep the change; I felt he could do with the extra money. He refused to take it and instead eyed the other note in my hand – a ten-rupee one. He was willing to take that. But I insisted that Rs 10 was an unfair price; to me Rs. 100 was a fair price. He would have none of it. I then struck a bargain with him. I told him to take the Rs 100 note and if he got the change I would take it from him. He whined that he wouldn’t come back to this side again, especially to just return some money. I told him, I would wait.
He reluctantly took the note and walked away. I was sure this was the last I would see of him. Somewhere I felt good that I had done a good deed. But in another corner of my mind, the sceptic me wondered why he needed to go through the charade to take the money? I was happy to part with it anyway. In about five minutes, my thoughts were forced away as the beaming tea-seller came striding towards me. He had the entire Rs. 80 now. He gave them to me. I counted it and separated the Rs. 50 note. I tried to give it to him, but he refused to take it. I then gently placed it in his pocket. I assured him that I was giving it to him willingly; he shouldn’t feel obligated or bad about it cause he hadn’t asked for it. He still didn’t want it. I then told him that since he moved around I was sure he came across people who wanted the tea but couldn’t afford it. I told him that he should serve these people tea. The money I gave, was compensation for that tea. The idea gelled with him. He took the money and walked away.
So, do you think he served tea to 5 people? Chances are he did, but in the end the entire episode has many management lessons for all. I have divided the lessons into two parts. In this article the first part – Entrepreneurship. In a subsequent article I will discuss the lessons on Leadership.
Lessons in Entrepreneurship
An entrepreneur is described as “a person who sets up a business or businesses, taking on financial risks in the hope of profit.” To achieve his objectives, he needs to bear many aspects in mind. The most important ones are described below using the lesson learnt from the tea-seller.
The product: There was just one product the man sold – lemon tea and it had just one variant. With or without his special masala mix. The tea was pre-brewed and carried in a heated vessel. The strength was pre-determined and most importantly, there was sugar already added to the tea.
Here are the lessons learnt:
1. Product catered to a large part of his target audience – given his target market, he was ok with losing a few who didn’t want the premixed sugar. The majority though would have no problem with the product.
2. Simple workflow to get fresh product to the client – the tea was pre-brewed, the cups were of one size only, the masala was pre-mixed and handy. He squeezed a lemon into the cup, added the masala and then topped it up with the tea.
3. Affordable pricing – he ensured the cup size was such that he profited from every cup he sold. The price was such that no one hesitated in parting with the money (impulse buying).
4. Just in time inventory – he didn’t carry any inventory cost – the tea could be reused as milk tea, or at worse, he could still consume it on his own. For the next day he was sure to have a new brew available.
5. Efficient product delivery and availability – he wasn’t seated at any given spot and was constantly on the move. This way he ensured that he was where his most potential customers were. He lowered his fixed costs too by not being rooted to a single spot.
6. Competition made redundant – it wasn’t that he was the only tea-seller on the ghats that day. But with his product mix, his agility and mobility, he ensured he was seen well before others were. He found me when I was standing at the edge of the ghats on a floating platform. If I had wanted tea at that moment, I would have had to climb multiple steps and traverse about 100 meters before I would find a seller.
There are limitations to his model, and I am aware of that. However, the principles I have described are ones that need to be applied to every type of business, especially to new ones. Very often than not, I meet individuals who are focused on the complexities of the products they create. There seems to be this romantic notion that the more complex the product, the more attractive it would be as a business proposition. But in the end its simple product targeted at receptive audiences that make entrepreneurs successful. This tea-seller exemplifies what works well.