Fit to a Tea
With a thirst for "something fun and creative," Arsen Avakian wanted to launch a company with relatively little competition. His big idea--to do for tea what Starbucks has done for coffee--was born out of reflective time spent in downtown Chicago's bustling coffee cafes. Avakian, 30, started Argo Tea, a wholesale tea company and cafe, in Chicago in 2003. With 2006 projected sales of about $5 million, Avakian plans to expand beyond Illinois in 2007.
Q:What are your top three tips for startups?
1. Do your homework. "Exercise due diligence, but be flexible," says Avakian. "Dreaming and being passionate about what you do is great, but knowing the business is a must." Before launching Argo Tea, Avakian mulled over the performance histories of other successful companies, including Microsoft and Starbucks.
2. Define your goals. "Our passion is to offer healthy choices, using the best tea blends to make signature beverages. We are laser-focused on where we want our product to be seen and heard." Avakian and his team have forged a relationship with Whole Foods Market, where health-conscious consumers are introduced to Argo Tea through samples.
3. Focus on everyday results. Says Avakian, "Our mission is to deliver one cup at a time, one store at a time."
Q:What advice can you give on growing a business?
1. Make good real estate deals. Avakian and his team scrutinize every aspect of a deal, following the old adage "location, location, location."
2. Get your supply chain in order. For Avakian, this involved going to Asia, networking, taking risks and suffering losses. His first $5,000 pallet of tea turned out to be stuffed with Chinese newspapers. "It was educational," Avakian says pragmatically.
3. Never stop thinking like an entrepreneur. "If you think in dollars, you'll make the dollars!" Avakian's team is constantly developing new ways to market the company's product.
4. Develop strategic partnerships. Argo Tea reached the right influencers and invested in sponsorships, including a women's event for InStyle magazine.
5. Invest in talented people. To lessen turnaround, Argo Tea has training classes on its products, bar techniques and customer service. The company offers health insurance and fosters internal growth--Argo's training manager started as a shift supervisor.
Q:What personality trait helped get you through the lean times?
Being persistent and a little crazy. Says Avakian, "If you don't push enough, and allow for the time it takes to make things happen, you won't get there."
Q:Was there a time you wanted to quit? why didn't you give up?
"I never wanted to quit. We were cash-flow positive from Day One, so there was no reason for that to ever cross our minds," Avakian says.
Q:What was your biggest mistake ?
Starting a business has many potential pitfalls, including "overestimating or underestimating the complexities of the business, opportunities, people or yourself." Avakian's advice: Be prepared to make a lot of mistakes. "Hopefully, 80 percent of the time you're right."
5 Ways to Get Off to a Good Start
1. "Make sure your family is squarely behind you," says David E. Gumpert, author of How to Really Start Your Own Business and How to Really Create a Successful Business Plan. "Your family must be clear on what life will be like, and comfortable with some belt-tightening as the business is launched," cautions Gumpert, who founded an internet business in 1995 and grew it to a successful firm before selling it to a large company in 1999.
2. Feel good about this new adventure in the long term. Gumpert says many people get lost in the initial flush of excitement. "Think about how you'll feel about this in five years."
3. Have a web presence and strategy sooner rather than later. "People expect to go to the internet and find you--for directions, product and service info, etc.--so your site must contain this information, at the very least," says Gumpert.
4. Test-market. Seek information from competitors and feedback from prospective clients to hone your offerings prior to launch.
5. Operate in "stealth mode" in the beginning. "Get feedback and data from the market," says Gumpert, "and focus on doing business with real or prospective customers without making so much noise that you alert competitors."