How to keep your indie soul; it can be a challenge for small, independent brands to maintain their spirit as they expand

September 25, 2013 4:25 pm

How to keep your indie soul

By Ian Sanders

Independent mindset: Dorian Waite of restaurant Honest Burgers

It is Monday lunchtime in London’s Soho and there is a line of people waiting outside Honest Burgers on Meard Street. There is plenty of choice for a lunchtime burger in Soho but Honest, a three-restaurant business that launched in Brixton market in 2010, is popular. The business seeks to differentiate itself through an independent spirit; having worked for chain restaurants in the past, co-founder Dorian Waite says he is striving for a different approach. “A lot of big businesses seem happy to deceive their customers,” he says. “Everything’s built around making money, not giving people what they want. We felt there was an opportunity to turn that on its head.”Of course, consumers often choose independent retailers over big chains because they would rather support the small entrepreneur over a global brand. However, any consumer brand can see that customer relationship change as it walks the tightrope between independence and commercial success. Innocent Drinks, for example, was criticised when its founders sold the business to Coca-Cola. All three of Honest’s Soho restaurants are small but benefit from a high turnover of tables and the founders are already planning two new restaurants in the capital.

Mr Waite says that by getting the tone and culture right at the start of the business, the company hopes to keep its independent mindset as it grows. His co-founders, who both worked in branded restaurants and hated it, still work in the Honest kitchens in part to maintain that link between the founders’ values and the business.

He says another key is to avoid establishing a formulaic customer service process. Instead staff are left to deal with customers as they see fit. “We employ people with personalities rather than people with experience,” he says. “They’re not brainwashed or indoctrinated into a branded experience, each store manager is given the independence to do it their way.”

Across London, record retailer Rough Trade is celebrating its independence by opening another shop. Although its west London store opened back in 1983, Rough Trade has remained small, waiting nearly 25 years before opening its second outlet, in east London. In November it launches its third store – in a 15,000 square foot former warehouse in Williamsburg, Brooklyn.

Five tips on how to retain our start-up mindset

● Figure out how you want to build the business from the start. “Setting the tone and culture early on has a massive impact on how you grow,” says Honest Burgers’ Dorian Waite.

● Listen to your customers, not commentators. “Ignore industry commentators, ignore mainstream media. Focus on what your customers tell you, what you know from your experience,” advises Stephen Godfroy at Rough Trade. “Trust your instincts.”

● Be open and honest with your customers, and be sure to communicate changes in culture and ownership as the business expands. “Customers care if the brand changes tune and does different things,” says John Mullins of London Business School.

● Have clear goals and objectives so you know how you want to expand the business. “What is it that you want?” says Anneloes van Gaalen, entrepreneur and writer.

● Think strategically about how you spend your money: hiring the right people may be more important than store design. “We focus on food and people, not design and concept. If you over-design a restaurant, it can lose its soul,” warns Mr Waite.

It may sound risky to be launching a record store in 2013, but Rough Trade remains confident about its offering. The retailer’s website proclaims it will “provide independent thinkers with independent music in an independent fashion” and co-founder Stephen Godfroy says this approach has enabled the business to buck downward retail trends in record and CD sales.

He also believes the brand can expand overseas without losing its intimate connection with the customer because Rough Trade’s clear point of difference – independence – will retain its allure. “We’re becoming more relevant and attractive in a world that craves an antidote to homogeneity, becoming more popular in a climate where trusted customer recommendations and service is the exception, rather than the rule,” he says. “We’re experts at being us, nothing else.”

Mr Godfroy will focus on retaining a unique relationship with the customer as Rough Trade expands to multiple outlets. To do this, he says “the most important relationship is over the counter. The counter is king. So no matter where we may open a store, as long as that remains at the fore of our experience, customer loyalty will follow.”

John Mullins, professor of management at London Business School, agrees. “Many consumers are tired of doing business with faceless chains,” he says. “They want to do business with real people who really care.”

Prof Mullins’s advice for small brands looking to retain their intimacy is for the founder to stay in control, without necessarily being a micromanager. “Scaling does not automatically mean you lose intimacy with your customers. Just make sure the founder remains the public face of the business, as Anita Roddick was for Body Shop,” he advises.

However, some independents face a consumer backlash when they expand and get acquired by bigger corporations. The Manhattan accessory retailer Jack Spade was acquired by Liz Claiborne (now Fifth & Pacific Companies Inc) in 2006. This summer the brand faced objections when it tried to open a store in San Francisco from those who felt Jack Spade – with 10 stores across the US – had turned into a chain.

Getting acquired by a big corporation does not necessarily mean you automatically lose your indie credentials. Anneloes Van Gaalen, author of Indie Brands, says being independent has less to do with size and more to do with having the right mindset. “It’s about going against the grain, doing things their own way,” she says, citing examples such as Estelle & Third, the Swedish skincare line, and Mr Jones, the Dutch tea brand.

Ms Gaalen says brands have to walk a tightrope between doing what they love and “keeping the machine going”. As for complaints from those who accuse brands of selling out, she urges consumers to be realistic. “In order to remain independent, even indie brands need to strive for commercial success or mainstream acceptance. This isn’t a matter of selling out, it’s just good business sense,” she says.

Her advice to a young brand such as Honest Burgers is  to “be transparent, tell your buying public about what you stand for”.

Mr Waite acknowledges that it may be a difficult balancing act opening multiple outlets and not being seen as selling out. “There are some massive challenges growing, to keep the indie feel,” he says. “But it’s all about people. We’ve got the people who won’t allow it to happen, and we’ve got the brand name Honest that gives us real focus as a touchstone – with a name like Honest, you need to have rules to stick to.”

Mr Waite adds that the business is thinking of starting a customer club not only to provide special offers but also to sell shares in the company, in order to crowdfund its expansion. “What better way to keep us on the straight and narrow than be owned by the customers,” he suggests.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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