Merchant Advance Blog

Blog Article: Small Business Case Study: Catfe vs. Demand

Vancouverites have been positively purring with delight at the introduction of a new small business in their local landscape: the Catfe, so named for its integration of a space for coffee and relaxation with the presence of cute and sociable felines with whom patrons can hang out. For those craving the companionship of a pet – but possibly restricted by rental or housing regulations that are not animal-friendly – the idea has been magnetically attractive. Couple that with a partnership between Catfe’s owners and the BC SPCA’s adoption program, and you have the ingredients for a potentially fantastic feline small business case study.

cat cafe as a business case study

The allure of such a business model – adapted from existing ventures that have become widely popular in Asia – extended to the crowdfunding marketplace, where over $30,000 was raised to make the Catfe a reality. The built-in audience advocacy, customer base generation and social media hype associated with crowdfunding have no doubt been a boon for the business’ owners, who have had to contend with adherence to a wide range of regulations and special permissions in order to get their winning idea off the ground.

The story of the Catfe, however, also provides the basis for an interesting case study in dealing with demand. The fear associated with investing in a new small business venture, only to find demand falling far short of expectations, is present in the mind of almost every SMB owner. However, for the owners of Catfe, the opposite has been true. What happens to a small business when demand exceeds projections?

For Catfe, this has manifested not only in stresses on their reservation and booking management systems, but also the rather comical scenario of a kitty shortage, as more and more of their residents are being rapidly adopted in the first weeks of  the business’ life. The danger here is evident. Having cultivated a captive audience for its model, Catfe risks not being able to land on its feet if delays or limitations end up souring the tone of the customer relationships they worked so hard to create. The traditional coffee shop side of their business will need to succeed over the long term in order to keep them in good financial health and attract new customer traffic after the initial wave of interest in their launch.

For any small business, the increased pressures of demand will create new costs and responsibilities, such as increased complexity of inventory management, staffing, scheduling and upkeep. As new management tasks are added on to address demand, the business’ finances must be adjusted. In some cases, as with Catfe, the demand might be unexpected – and who is to say that it will last a predictable amount of time? For a business owner, this degree of complexity can make it difficult to find effectively predictive financing. Financial technology and alternative financing products such as merchant advance funding are evolving to address the variability and complexity that comes with the small business environment.

 

Vancouver Office | (604) 757-4602

1500 West Georgia Street, 20th Floor Vancouver, BC, V6G 2Z6 Canada

Toronto Office | (877) 370-8850

10350 Yonge St, Suite 101 Richmond Hill, ON, L4C 5K9 Canada

© 2017 Merchant Advance Capital Ltd. All Rights Reserved. Privacy Policy