by The Active Agent

16 January 2015

As businesses evolve, their business models change.

They need to constantly adapt to their complex and ever changing environment, as well as the continued evolving sophistication of their market.

After all, imagine a newspaper… go on… a real one made of paper, with no digital presence, stop laughing.

Seems ridiculous doesn’t it?

Almost too hard to conceive that it may be a viable concern, because it isn’t, yet for the best part of 200 years its all it was, news on a paper… recycled for your fish and chips the next day.

Yet fads and fashion do dictate that businesses change too. The business just needs to pick the right fad.

Remember Kodak? Discovered, yet didn’t understand digital photography.

Vinyl Records… in or out? Who knows? Perhaps it depends if you live in Surry Hills and have access or if you live in West Pennant Hills and don’t. The video store… where are they now?

So it should be the same with small bars… shouldn’t it?

Well yes…. and no. It depends on what, or how, and if they’ve understood the consequences.

What on Earth Am I Talking About?

Well you’d expect a cool inner city bar to keep changing its business model, be it its cocktail list, wines, well Riesling was so 2013 and its food. But what about its whole business model?

Not a good idea if you’re one of the new wave of small bars.

Let’s remember why they came about in the first place.

Cooler spaces where you could get a quality wine or cocktail and even better food, not to mention attentive, caring service, more than likely by the owner.

As a result of this and the obvious gap in the market, these were designed as incredibly female friendly places too, a great place to meet your friends and talk, or just hang out.

What on Earth Am I Talking About?

Well ok, it’s the whole small bar / craft beer thing.

It just doesn’t work.


True, beer tastes have evolved and of course they should be catered for, but essentially, stocking more of this simple product, and its copious varieties, if you’re trying to stay on trend, means less shelf space for other things, and of course this more often than not attracts a different customer.

Yes, it does mean higher profit margins and easy money for the operators, flicking the lid of a bottle is way easier than mixing a cocktail, but think of this… why did you set up your business? Why do people come to you? You were different, thats why, you focussed on the experience and the product.

Now you sell beer, you’re not different… this could be a huge problem.

What on Earth Am I Talking About?

Well you’re now potentially in the business model / space of the pub / hotel, which you were trying not to be.

You are in a space, perhaps directly competing with them, and you know what? If you compete with them on beer, they will win.

After all, if you are running a venue that sells beer and is full of beer drinking customers, well your core customers, likely females, who didn’t want to go to loud pubs because they were full of beer drinking customers, need another place to go to talk and the males won’t stay, as the pub can sell beer cheaper, always, yes even that craft stuff.

Why? Because they understand it better than your local small bar, they’ve been doing it since before you were born, your parents were born even.

Indeed an article in the Observer published on Sunday 18th January 2015 talks about Craft Beer being used as the saviour of failing pubs in the UK, something that saves pubs / hotels isn’t a great thing necessarily for small bars, remember you are in a different market sector.

Oh and that small craft brewery that keeps telling you that they’re your friend?

Well they might be friendly, but they’re in business and guess what?

They just want to sell bottles of beer and make money, so whilst you were working away you may not have noticed that they are selling it to the local pub, who sells it cheaper than you ever can.

So then, it’s bye bye to you… think about this scenario it’s happening right now…

You’re signing away your sophisticated business model… for the price of a (craft) beer.

Be careful out there small bars… we love you because you are different, we want you to still be there in 12 months!!