Bodhi Leaf is an Orange County–based speciality coffee business, founded by Steve Sims in 2009. They directly source coffee beans from farms around the world, then wholesale raw and roasted beans to other businesses, offer a retail line of coffee to consumers in outlets like Whole Foods, and service customers directly at two of their own boutique cafés.
Bodhi is doing a whopping $6 million in annual revenue, but they’ve been growing too fast. Now, they’re facing problems that no amount of caffeine can fix. Let’s look at them one by one:
1. Chaos reigns behind the scenes. Bodhi has no system for tracking inventory, they’re short on working capital, and there aren’t any staff meetings. But they do have Jeff, and Jeff in abundance.
2. Jeff is, in reality, Bodhi’s green coffee sales manager. In Jeff’s mind — and sometimes when he introduces himself — he is the company’s vice-president. He theoretically handles the business’s wholesale accounts, and when Marcus asks him if he has a team that works for him, Jeff cagily responds, “Per se.” What could per se possibly mean in this context? Perhaps he is invoking its lesser-known meaning, Latin for “I have no direct reports, but I boss other people around and tend to work from home and am generally unpopular around these parts, for good reason.”
3. As Marcus sees it, Bodhi’s generic branding is in need of an upgrade. Jeff is miffed he doesn’t like their leaf logo. Jeff, do you have a correct opinion about anything? The leaf isn’t “memorable” enough. But you know who is memorable? Steve, the guy who founded the whole business. But he’s reluctant to step forward as the face of the brand, out of fear it might seem “arrogant.”
4. Steve has an impressively bushy beard befitting a Cowardly Lion (and the tattoo sleeves — did the Cowardly Lion have tattoo sleeves?), but he’s lacking in self-confidence. He worked in real estate until the market crash, then took a gamble on a friend’s connection to a coffee grower in Sumatra. Steve is afraid he could lose everything again, but he knows he needs to step up and lead his tight-knit “family” at Bodhi Leaf.
5. Speciality coffee is a fast-growing industry, and Marcus gotta have his java!!! Luckily, he’s impressed with the full vertical integration Bodhi has achieved. There’s no middleman (or middlewoman, thank you) in their sourcing process, meaning they have superior margins and superior oversight of their product. Plus, it helps that their café serves what Marcus calls the best cup of coffee he’s ever had. Why couldn’t this be a national company, not just a regional one?
Here’s how the numbers shake out: Steve currently owns 51 percent of the company. He took on two investors previously. Their total revenue last year was $6.6 million — $5.2 million of which came from the wholesale business. Their net profit was $77,000. Bodhi has $3.5 million in assets, but absolutely zero working capital, and they’re going to need cash soon because the Central American coffee harvest is coming up.
Marcus says a visibly nervous Steve should be proud of all that he’s accomplished. He makes an offer of $1,750,000 — which will go toward working capital, to make buying new inventory far less of a headache — for 50 percent of the business. Steve would have 26 percent, and the previous investors would be diluted to 24 percent. Steve balks at these numbers: He’s frustrated that, as hard as he works, he has to give up more and more of his company. Business Dad gets it. Okay, he’ll take 40 percent. Steve will get 40 percent, too, and the investors will get 20 percent. Deal!
Now it’s time to count the inventory, the oversight of which is supposedly our good pal Jeff’s job. There is apparently little correlation between the amount of beans listed on their balance sheet and the amount of beans they actually have, not to mention that there’s nothing on paper that will tell you where to find a varietal in Bodhi’s massive warehouse. Any attempt to seek out a particular coffee in this place is like a very low-stakes National Treasure, or maybe a medium-stakes Hoarders.
Like Bodhi’s coffee beans, Jeff is about to be roasted to perfection. Café manager Brando (yes, Brando) mentions that he’s been asked by other employees whether they have to obey orders from Jeff, despite the fact that he isn’t their boss. Jeff insists he’s never overstepped like that. “I can have evidence of that in two minutes if you want me to,” Brando says, before summoning star witness for the prosecution Dana, a shift supervisor who says she was instructed to clean up by Jeff. Marcus eagerly invites her testimony without hesitation, because a) this is a man who is good at making television, and b) receipts are very important in business.
To build a national presence, Bodhi will need a distribution center in the Midwest. Marcus finds them a massive production facility and warehouse in his beloved Chicago (The Profit is John Hughes–movie–level obsessed with Chicago) that’ll enable them to produce 1 million pounds of roasted coffee a year — a huge increase from their current annual capacity of 120,000 pounds. While in the Windy City, they pitch their coffee to the restaurant group Rockit Ranch Productions in the hopes of forging a local business connection. Marcus is eager to see if Jeff is a good salesperson, or, really, if Jeff has any redeeming value whatsoever.
He is not and, so far, he does not. Jeff trails off repeatedly, neglecting to tell their potential customer anything about the product or its quality, and the client doesn’t bite. It’s obvious their pitch needs a lot of improvement — and yet, when he sits down with Steve and Marcus, Jeff thinks he “did okay.” When Steve questions Jeff’s sales numbers, his first reaction is to ask his boss how much he’s selling a month. Jeff’s second reaction is to immediately deny that he deflected like that, despite having literally just done so. But Jeff’s apparent fondness for alternative facts isn’t the worst of it. See, Bodhi has been buying from the same coffee farm in El Salvador for three years. But recently, Jeff has started dating its owner, and suddenly, his employer is getting the very worst pricing they’ve ever had from this farm — far outpacing any other cost increases in the region. Hmm. Steve has finally had enough. “I don’t think you need to do anything further for Bodhi Leaf,” he tells Jeff, to Marcus’s undisguised delight. Steve is king of the forest after all.
Within a few weeks, Steve has hired a new salesperson, Rick, who seems neither incompetent nor actively difficult to work with, so he’s quite a pleasant change. Steve has also implemented weekly staff meetings to open up teamwide communication, and a nifty new barcode-sticker-based inventory system that makes the scanner-wielding employees look like they’re registering for an overwhelmingly coffee-themed bridal shower.
With the team back in Chicago, where their spiffy new facility is all finished, Marcus debuts the new branding in a wallscape billboard. They’re now Red Beard Coffee Traders, as graphically represented by an adorable black-and-white sketch of their founder himself. Steve, despite his initial misgivings, seems genuinely proud and pleased of the branding.
That’s not all: Marcus, who predicts that his new investment will soon be raking in $10 million annually, has secured Red Beard their first Chicago retail storefront in a gorgeous space. But even that’s not all: Business Dad decides to give back 10 percent of his original investment to the Bodhi Red Beard team, in deference to all their hard work.
And even that’s not all — actually, no, that is all, for now. See you next week!