3 Lessons Small Business Can Learn From Darrel Lea

Monday, July 23, 2012 · 0 Comments

It’s the licorice, rocky road and chocolate icon that Australians know and love. It’s the favorite Mothers Day and Fathers Day gift idea and has a warm place inside most Aussie’s hearts – so after 85 years in business how did they go belly up?

As small Aussie businesses fight to establish a brand, retain customers, build a fantastic team and create product or service that can survive in todays climate. A business that had all of that seems to have landed on rocky waters. So what is a small business to learn from this?

Lesson 1: Keep an eye on what is trending around you!

Industry reporters are saying that Darrel Lea’s bust has a lot to do with the family owned company failing to evolve with the times. Darrel Lea lost sight of trends and got stuck in nostalgia and didn’t expand on its variety or watch consumer trends. One of the biggest trends it missed was the ‘Organic free trade movement’ that major brands such as Cadbury caught and cashed in on, now marking all its Dairy Milk with the “Fairtrade Badge”.

So what can small business learn from this? A LOT!

Small Business Scenario – Losing sight of the trends

We see it commonly in our local cafes, those that stock ‘organic’, ‘gluten-free’, ‘No MSG’, ‘Soy’ products. These Cafes appear far busier then the old ‘ma and pa’ style lunch shops. Its important for small business to look outside their immediate space and see what is evolving in the world, what trends are emanating and how can you cash in on it. By following the news, watching movies, reading industry magazines you can keep up to date on what is changing around you.

Lesson 2: Don’t loose sight of your customers!

Darrel Lea was established in a time where “old world” charm was used to advertise and sell their products. I still remember getting my Grandfather Darrel Lea Licorice as it was the only one he liked to eat. They had an image they upheld, but it appealed to the older generation.

As new generations came through, the missed advertising opportunities were lost. Children grew up seeing the Cadbury Bunny on TV and the M&M characters. American brands infiltrated the marketing on children and Darrel Lea was left with the older generation customers and the marketplace of younger generations was being taken over. Chocolate became available at every aisle check out and Darrel Lea was rarely seen except in specialty stores.

Business is about growth and you don’t want to see your business hone in on one style of customer or one segment of the market too heavily as you may find over time you are missing out on a portion of the market share or pushing new customers away.

Small Business Scenario –What Customer Growth?

The same mechanic has run his workshop for 20+ years with pretty much the same customer base As people move, buy new dealership cars, receive work cars or stop driving the clientele decreases. The mechanic continues to work on older style cars and does the regular mechanic check ups. He doesn’t notice that he needs new signage and a logo, that he needs to tidy up his workshop entrance, that he needs a websites, that he could become NRMA certified. He continues to run business how he always has, pleasing his clients with great service and remembers who they are. But as his client base declines so does his income and business begins to struggle. Making sure your customer base is expanding is an important part of business sustainability and growth.

Lesson 3: Act while the iron is hot! Don’t wait too long to make a decision.

Darrel Lea is a family owned company that reportedly had a complex organizational structure, which made making changes rather difficult. Business needs to be flexible to make decisions and act quickly upon them. Waiting too long or not acting quick enough can mean the loss of major deal or market share.

The main benefit for small business is that the management structure doesn’t tend to be very rigid. If you want something done in small business - you do it. There is no waiting for a department head to approve something, everything can flow rather quickly – if you let it.

Small Business Scenario – Let me think about it…

A corner store has been approached by the local high school to help with a fundraising event. As a donation of products the school will feature them in a referral program. As the corner store weighs up the cost of products and whether they will make any money. McDonalds has also been approached and provided food vouchers as the give away. Missing the opportunity to promote the corner store to a key segment of the market share – the local community, this small business missed out on a great marketing opportunity and potential increase in the business to a local fast food giant… because? they thought about it for too long.

Darrel Lea is an established Australian brand that failed to evolve, expand, and make decisions. Small business with their limited resources and knowledge base can learn a lot from the decisions Darrel Lea made and the effect it finally had on business.

So small business…. Read, Listen and Learn from others mistakes to keep your business growing!