Tuesday, December 9, 2014

The Next Generation Latte Factor


The other day I was at the mall.  We weren't even buying anything.  They have a great, free indoor playground that I sometimes take the kids to on cold, winter days.
On our way in, we were walking in front of some teenage girls in the food court.  I generally try to tune out the conversations of teenage girls, but this one was interesting.
"I want to go to Starbucks so bad."
"Then go to Starbucks!"
"I can't."
"Why not?"
"Don't  you know?  If you buy lattes, you'll go broke."
At this, her friend stopped to think.
"Well, I'll just buy us a Starbucks.  That way you can have lattes whenever you want.  And we'll make money."
At this point we parted ways.  Putting aside the fact that Girl 1's understanding of the latte factor was remedial at best, Girl 2's solution intrigued me.  There were so many factors that went into those two sentences, even if they weren't meant pragmatically. 
I'll just buy us a Starbucks.
This thought would have never come into my own head.  Because "just buying" a franchised storefront sounds crazy intimidating to me.  Maybe her parents "just buy" her anything.  Maybe major purchases and partnerships like this seem like a simple process from her vantage point, void of risk or initial hurdles because she sees the adults in her life that have money, and can therefore use it to make more money.
Or maybe, just maybe, she was a teenage girl trying to cheer her friend up with a "dream" hypothetical.
Then you can have lattes whenever you want.
Owning a business does have some perks.  Like free coffee if you're running a Starbucks.  But dip into your inventory too much, and you'll start to see a dip in your profit margins.  Because inventory isn't free, and every cup of coffee you're drinking is a cup of coffee you could have earned profit on.
I'm assuming she was planning on getting her friend hopped up on so much caffeine that she'd be bouncing off the walls day and night.  Which I'm sure was not the point.
But dipping into inventory for a latte daily is essentially the same thing as buying a latte everyday.  It's the "small," repeated luxuries we grant ourselves that add up to destroy our budgets and potential savings accounts, whether we're running our family's finances or a business's accounting spreadsheets.
And we'll make money.
While repeatedly dipping into your inventory will slow your profit margin, odds are you will still have profits.  And that's why I'm impressed with Girl 2.
She saw two problems:  no coffee, and no money.  And then she found a creative solution that solved both at the same time.  Not only that, but she did it with a (pseudo) entrepreneurial spirit.  
It turns out Starbucks isn't franchised.  I'm sure owners of the branch receive some portion of the profits, but unless Girl 2 had some very specific real estate opportunities lying around, odds are she wasn't just going to buy a store.
But her attitude makes me hopeful for the generation that immediately follows me.  There are problem solving skills.  There's an entrepreneurial spirit.  And her interests ensure that there will be a free place for me to work and access Wi-Fi in the future.  Maybe I'll ask for a free latte when I stop in.

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