The idea of developing and launching a new startup business based off an already successful one is certainly not a new one (see SitePoint’s relatively new Name My Thingy based off of their success with 99designs).  Based on CNN’s recent report about Starbucks, and how they have adopted this practice, it seems necessary and reasonable to address the underlying reasons and motivation for making such a move. [the video feature of the CNN story is posted at the bottom]

Why start a business from an existing business?

1. It directly relates to or is in line with your current core competencies.  Starbucks is spinning of cafes because coffee is their core competency.  It is the business they understand best, and it is the business that they dominate.  If you are looking to launch a new company from an existing one, be sure that it fits in with or at least directly relates to your core competencies.  Having a complete understanding of your industry and core competencies will make starting the new venture much easier.

2. It (usually) require less work than starting from scratch.  If you have already started your own business you are then already familiar with some of the challenges and issues that may come up in starting yet another one.  While you can never totally prepare for what may happen as you launch into your startup phase, you will at least have a decent idea of what to expect from certain parts of the process.

3. To try something new.  There is a high probability that you got into entrepreneurship because you wanted to do something new and exciting.  Starting a new business based on your existing one allows you to relive the startup days all over again as you build a new brand/product/service from the ground up.

What are the advantages of starting a new business from an existing business?

1. A community/need already for your product is already built.  You already know your industry well because you have created one successful business in it.  Not only will you be able to leverage your experience, but you may also be able to leverage your customer base to create buzz about your new offering and get it off the ground.

2. Expanding offerings and services, therefore expanding the revenue stream.  Businesses are always looking for ways to make more money.  Starting a new business based on your existing business will allow you to do just that!

What does Starbucks stand to gain from their new “stealth” stores?

1. New Customers.  There are a contingent of people in the world who are opposed to supporting large chains and pre-fabricated, seemingly fake, corporate behemoths who see their customers as dollar signs.  Does this describe Starbucks? Not necessarily, but many people won’t buy there just because they are so big.  These customers generally find their satisfaction in supporting the local coffee shops who promote community and maintain a local and “homey” atmosphere.  Starting shops with a completely local feel could ultimately result in the once resistant demographic buying their coffee and cafe drinks from Starbucks (albeit indirectly).

2. A return to the beginning.  Whether or not Starbucks meant to morph into a global cafe powerhouse is completely beyond the scope of any discussion now.  It appears, as a result of studying the company’s origins, that Starbucks was created with a great focus on the product – coffee.  As the company grew rapidly, the customer’s focus went from coffee to quick coffee fix.  Most customers now enter a Starbucks expecting to spend less than 4 minutes waiting for their beverage and then hustling out to work.  With their new locally branded stores, Starbucks can return the focus of their cafes to coffee and community, hopefully stripping the consumer of their expectations and Starbucks mindset.