Year End Musings
We got into a business and we did not manage it. That was the fatal mistake.
But let me just say that from both ends, from the beginning until the end, there were a lot of good intentions.
Last year, we were invited to invest in a new venture – a restaurant. Hubby always wanted a restaurant to call his own and since we could not fulfill his dream yet because we are both so busy in our careers (design and law, respectively), we dived in, one eye closed.
Well, the idea guy had a successful franchise tucked under the belt and I guess that blinded us to many other questions we should have asked. Yes, we did some due diligence but only some. But now, looking back, I am not really sure if we could have prepared for the pitfalls that lined the path of this investment. Maybe yes, maybe no.
Like this was our partner’s first venture with the food business. Now having worked in the food industry, hubby knows that a lot of things go into it – like hiring trustworthy and dependable staff, inventory and delivery, and really good food. And the boss / manager / top guy had to be there all the time. There was no way around it. For the staff to know what to do, for the staff not to stray, for the business to really do well. It cannot be operated via remote control with the hope that the reports would be accurate, that the sales are accurate, that the deliveries are accurate, that the hidden camera will capture everything it needs to capture, that the quality of the food is top notch. Where hubby used to work, the bosses were there all the time, even cleaning tables, and they were there at the end of the day, to count the money and to balance the sheets and to make adjustments where adjustments are needed.
As another friend said, business is cheaper than an MBA. I guess it is, but I am not sure if we learned a lesson in this one – other than we should have done it – with our bare hands – by ourselves.
So from me to you – know what role you want to play in a business. If you want to be an angel investor and just invest in a business, make sure the fine print says you get regular reports, that all extraordinary purchases or radical changes to the “original plan” will get your nod, and that you get a return (an ROI) at the end of it (should be at least 20% per annum to make it worth your while).
But if you want to be the one learning and thriving, do it yourself. Because it is the business implementor that gets to learn the lessons in the experience.
I guess next time, we will finance our own dream. This way, there are no failed expectations and the money will be well spent. It will then be truly a cheaper-than-an-MBA experience.
Article by Issa. Photo by Danvic Briones. Copyright 2010.
Website: www.YouWantToBeRich.com
Email: issa@youwanttoberich.com
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I’ve always wanted to get into the restaurant business (I would love to own a sushi place), but from what i hear it can be very difficult. I know a couple of people that have had some huge successes, but when they tried to expand, they weren’t able to maintain the success that they had with the 1st restaurant.
The success of the restaurant/bar only lasted a few years, then the buzz died down, and they weren’t able to replicate it.
@Ross Yes, from our experience, we learned that we should proceed with caution with this type of business. Because there’s a lot of variable, and a lot of must haves – a great chef, a tasty menu, good location, good concept, honest personnel, stretchable budget (!). I had a friend too, who opened up a branch of his resto, but it did not quite take off despite the okay location and they were forced to make it into a karaoke place (!), which, of course, sped up the restaurant’s demise. But then again, where will you get the lessons if you do not take the tests?
So I still think a restaurant business is do-able and one of the more profitable businesses around (everyone has to eat!) but next time we make the plunge, we will try to make sure that it has a more than average survival rate – just don’t know how to do this yet (:D). Good luck with your dream of a sushi place. I think it has potential, especially if you have had training and a new/interesting take on sushi.