Starbucks Made 17B From This One Thing

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Starbucks Made $1.7B From This One Thing

Summary

  • Starbucks managed to get $1.7 billion just by selling gift cards.
  • When people buy gift cards, they're essentially giving a loan to the business without interest.
  • The business can use the money from gift cards for investment or other expenses before it's redeemed.
  • The actual cost for businesses when a gift card is used is much less than the value of the card.
  • For example, a $100 Starbucks gift card might only cost Starbucks about $5 when the holder uses it.
  • Offering gift cards is a smart strategy because it allows businesses immediate access to cash.
  • There are laws around gift cards because they're a powerful tool for businesses to raise money.

Video

How To Take Action

Here's a good way of boosting cash flow for small businesses – start offering gift cards. Why? Because it's like getting a loan without having to pay interest. People pay upfront for these cards, and that means instant cash for the business.

To do this right, first, figure out the real cost of what you sell. Example – a $100 gift card at Starbucks might really cost them around $5 when someone uses it. So, if you know your numbers, you can see how powerful this can be.

Then, make sure you understand the laws around gift cards. They're serious business tools, so they've got rules.

Ready to start? Here's a simple plan:

  1. Set up a gift card system. Look for low-cost options online, where you can design and start selling digital gift cards.
  2. Work out your costs. You gotta know how much the service or product you're offering costs you to deliver.
  3. Tell your customers. Use social media, your website, or just chat with them in-store. Let them know you've got gift cards available.
  4. Track everything. Keep records of when gift cards are sold and used. This way, you understand your cash flow better.

Remember, by selling gift cards, you're getting money you can use for your business right away. Even if the customer doesn't use the card for a while, you've got that cash to work with. Keep it simple, keep it legal, and watch your budget grow.

Quotes by Alex Hormozi

"Starbucks was able to get thousands of Everyday People to loan them $1.7 billion"

– Alex Hormozi

"they offered them gift cards"

– Alex Hormozi

"you buy a gift card you essentially loan money to a business"

– Alex Hormozi

"that business can take that money it can invest it"

– Alex Hormozi

"offering gift cards is one of the smartest things you can"

– Alex Hormozi

Full Transcript

like a good coffee Starbucks is there Starbucks was able to get thousands of Everyday People to loan them $1.7 billion to do whatever they wanted with it you know how they did it they offered them gift cards and So when you buy a gift card you essentially loan money to a business that business can take that money it can invest it it can do other things with it in the meantime before you redeem it and when you do buy a gift card you're not even really giving that much money that they're going to have to spend on you you're giving them that much money in gross profit that they'll spend later let's say a $100 gift card to Starbucks might only be $5 an actual cost for them so they can immediately take that money and use it they can even sit in a treasury and start making interest on your money no matter what if you're a business offering gift cards is one of the smartest things you can and that's why there's laws around them because they're so powerful

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