In the opening chapters of Harry Potter and the Half-Blood Prince, J.K. Rowling creates a picture of a floundering wizard economy. Businesses are shutting down – either because their owners have been killed or because customers are afraid to shop anymore. The only retailer that seems to be thriving in the down economy is Weasleys’ Wizarding Wheezes, a joke shop that opened only a few months earlier by two Hogwarts drop outs.
Why is their store packed with excited consumers while neighboring stores are boarding up their windows? Based on Fred and George Weasleys' successful strategy, here are seven tips for other start-up B2W (Business to Wizard) companies.
1. Get An Angel Investor
Harry Potter gave Fred and George Weasley 1,000 Galleons worth of seed money (that’s just about $10,000.) And you get the impression that Harry doesn’t expect any sort of return on his investment... or even want any repayment on the loan. To Harry, the 1,000 Galleons are a reminder of a tragic encounter, so he wants nothing to do with it. I suspect it is unlikely that you will ever find an investor who is as equally well capitalized and emotionally tormented as Harry Potter, so you might want to have a Plan B for raising capital.
2. Have the Entrepreneurial Spirit
It takes more than a solid business plan to get a start-up business on its feet. It takes an intense dedication. The hours will be long, the sacrifices will be great, and the rewards may be slow to come.
Fred and George seem to have the focus required for the job: They’ve given up the comforts of home so that they can live above their own shop. They may have alternate motives for moving out of their parents' house… but on the whole it sounds like they’ve got the entrepreneurial spirit.
3. Make A Long-Term Business Plan
The Weasleys clearly have a five-year business plan. They launched their company in phases: First, they began as a successful mail order company so they could start generating revenue while minimizing their overhead. At the same time, they continued to develop and test new products. That first phase of their plan allowed them to earn enough money to acquire a retail space and to open it with an appealingly broad range of products.
4. Listen to the Market
Through their R&D efforts, the twins developed Shield Hats—headgear that can protect the wearer from jinxes. A product they developed as just another one of their gag items ended up having very pragmatic applications, and thanks to their group sales to the Ministry (a government contract!), it became one of their biggest sources of revenue.
Because they were ready to respond to this new demand, they quickly expanded their offerings to include Shield Gloves and Shield Cloaks. They then supplemented their Shield items with complementary products to create a full range of Defense Against the Dark Arts products including items such as Decoy Detonators and Peruvian Darkness Powder (which they imported.)
None of these offerings were inline with the original business plan or the branding of the store, but they were able to adjust their approach to packaging and – by setting the more serious products in a separate room – to expand their brand identity without watering it down.
5. Be Prepared for Disruptive Changes in the Operating Environment
Businesses don’t operate in a vacuum. They are affected by external forces that no single company can control. One of the major factors affecting the general environment a business operates in is politics. (That’s the P from PEST analysis.) The Defense Against the Dark Arts product line used to be a cash cow for Weasleys’ Wizarding Wheezes, but with Voldemort gone once and for all, that cash cow is going to be put out to pasture.
Fortunately, the twins have relentlessly pursued a strategy based on new product development and they should be able to adapt. In fact, they may have already invented their next runaway hit, something that no other wizard business offers. Speaking of which…
6. Find An Untapped Need and Fill It
One of the product categories the twins developed is a series of “Patented Daydream Charms” that will immerse the user in a convincing 30-minute daydream. The cover art of one box suggests that you will be the star of a pirate adventure. The other available daydreams presumably also have escapist story lines.
Hermione is impressed by the magical talent that went into producing the charms, but I’m more impressed by the marketing savvy that went into developing the product line. With this one product, Fred and George Weasley have entirely created and cornered the market for narrative entertainment for the teen and adult wizard demographic. Other than the breakthrough Daydream Charms, there appears to be no way for a wizard to enjoy a story with the lone exception of a book of folklore intended for wizard children. In all of the Harry Potter books, there are no references to wizard television shows, wizard movies, or wizard theater. All books in the wizard world appear to be non-fiction. The only forms of entertainment available to a wizard are music, sports, and games. In other words, the twins have no direct competition. Brilliant.
7. Always Build Brand Equity
The best branding isn’t just a function of advertising and communications. The brand identity is ideally integrated into every aspect of the business. That’s why the twins’ smartest move may be that they launch their store opening with a very shrewd promotion. Sales promotions are common for grand openings, but the twins do it better than most. They don’t just offer a discount to draw in customers—they tie the sale into their brand positioning! The sale is specifically targeted at Hogwarts students “who swear they’re going to use our products to get rid of this old bat” (referring to the dictatorial headmistress Dolores Umbridge.) That’s not a run-of-the-mill promotional discount. It says something about what the brand stands for (mischief making) and it makes a strong statement about their politics, too. (That’s not always the wisest idea, but it’s the right one for the Weasleys’ Wizarding Wheezes.)
Further Reading: Harry Potter and the Order of the Phoenix and Harry Potter and the Half-Blood Prince by J.K. Rowling
Packaging design images ©warnerbros, designed by Nicholas Saunders