Helpful ReplyTo start or not to start?

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Bob M
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2011/09/06 00:21:42 (permalink)

To start or not to start?

Hello All:
 
I am new to this forum and have read a few threads and found them interesting and informative.
 
I am 41 yo and have been working an office job for about 10 years, looking forward to retiring in a few years from a job I do not like. I am interested in starting a new business and find myself gravitating toward a small fast food restaurant. I have no experience in the food business and have never been involved in a small business. 
 
I would have enough seed money to start the business and am willing to put in one or two years of sweat equity. After that I would like to be able to sit back and sort of run the show from a bit of a distance while the business grows. I will not be using leverage and in case of failure I will still be able to have a comfortable retirement. My main goals are to have an extra avenue of income (not be completely dependent on stocks, bonds, etc) and also have some involvement in something I can call my own. I find the challenge fascinating (at this time). 
 
I am not looking for another job, since my current job pays very well and if compensation were the only consideration, I would be better off doing what I do.
 
Do I have a reasonable chance of success? Am I going down the right path?
 
All comments are welcome!
#1
chefbuba
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Re:To start or not to start? 2011/09/06 00:34:41 (permalink)
Take that money your planning to spend to A/C and put it on black, you will have better odds there.
#2
6star
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Re:To start or not to start? 2011/09/06 00:49:07 (permalink)
A few questions that may or may not be relevant:
 
>  Are you married or single?  If married, have you talked this over with your wife?  What are her views on the subject?
> I see you give NY, NY as your location.  Are you thinking about staying there, or would you be open to re-locating to some other area?
> Are you set on true fast food (chain restaurant management) or do you mean your own little restaurant serving short orders?
> Can you cook, or were you thinking of just doing the hiring (and firing)?
> Do you consider yourself creative?  What do you think you could contribute to the success of the business?
> Are you completely serious about wanting this venture to succeed, or would it just be a "hobby"?
 
There are many other questions of this type, but this may give you an idea of whether or not you even have a chance to succeed in this business.
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Bob M
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Re:To start or not to start? 2011/09/06 01:19:54 (permalink)
6star

A few questions that may or may not be relevant:

>  Are you married or single?  If married, have you talked this over with your wife?  What are her views on the subject?
> I see you give NY, NY as your location.  Are you thinking about staying there, or would you be open to re-locating to some other area?
> Are you set on true fast food (chain restaurant management) or do you mean your own little restaurant serving short orders?
> Can you cook, or were you thinking of just doing the hiring (and firing)?
> Do you consider yourself creative?  What do you think you could contribute to the success of the business?
> Are you completely serious about wanting this venture to succeed, or would it just be a "hobby"?

There are many other questions of this type, but this may give you an idea of whether or not you even have a chance to succeed in this business.

 
Thank you 6star for the insightful questions:
 
I am single and would prefer to move from New York to a smaller place in the periphery.
 
I would say a small independent restaurant (short orders) would be a better description for what I am looking for.
 
I cannot cook and would have to get help with developing a menu. 
 
I think I would consider myself creative, although I do not know how I would do in a new setting such as this.
 
I am not looking for a hobby, although I don't mind having it filling my time. I look at this as a pure business venture that I would like to succeed. If chances of success are low, I would not consider starting out. However, I view success as having a reasonable cash flow and being able to spend time on other interests, not necessarily something very big.
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Foodbme
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Re:To start or not to start? 2011/09/06 02:24:28 (permalink)
IMHO, you do not belong in the restaurant business. I come to that conclusion based on the tone and wording of your posts. I don't get a sense of commitment on your part. The restaurant business is a HARD business requiring ungodly hours to get it started. I don't get a sense of passion for the business on your part. You can't get "A little bit pregnant" in the Restaurant business. You're either 1000% committed and know what you're doing or stay out of it.  
I have a mantra that I learned the hard way.
I filed Bankruptcy, lost my savings, my house and my sanity by going into a business I  loved but knew nothing about.
The Mantra is, " NEVER start or buy a business you know nothing about."
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JodyP
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Re:To start or not to start? 2011/09/06 11:36:16 (permalink)
The food business takes a lot of commitment. From a single or small multi unit operation it will be your life. A friend of mine just opened a franchised wing store two months back. He is trying to run it plus other business interest. A few weeks back one of his co-managers took off with $1000.00. One of my relatives up north tried to operate a pizza restaurant with out being there. After fours years in business he got several months behind on the rent, taxes and paying suppliers. He is now a cook for someone else. The food business is a way of life and will require a lot out of you. You might consider investing in a new or existing operation as a non working partner. Or email me and invest in mine.
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lornaschinske
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Re:To start or not to start? 2011/09/06 17:21:21 (permalink)
Foodbme
... The Mantra is, " NEVER start or buy a business you know nothing about."

We started the hot dog cart with nothing and knowing nothing.
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agmccall
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Re:To start or not to start? 2011/09/06 17:35:32 (permalink)
Why not take a part time job in the type of restaurant you are interested in running.  You can get a feel for it and see if it is something you could commit to
 
al
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Foodbme
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Re:To start or not to start? 2011/09/06 18:02:13 (permalink)
lornaschinske
Foodbme
... The Mantra is, " NEVER start or buy a business you know nothing about."

We started the hot dog cart with nothing and knowing nothing.

Congratulations! You are the exception rather than the rule and I would suspect you had a higher level of commitment than the OP exhibits. You had a cart, he's talking B&M. You had a lower risk factor.
Statistically, “After the first year 27% of restaurant startups failed; after three years, 50% of those restaurants were no longer in business; and after five years 60% had gone south. It was reported by Dr. H.G. Parsa, Ohio State University. His research is titled "Why Restaurants Fail?" was published in the Cornell Quarterly (2005).At the end of 10 years, 70% of the restaurants that had opened for business a decade before had failed,”.
His Research was published in 2005 when things were booming. I would suspect the failure rates are much higher now.
post edited by Foodbme - 2011/09/06 18:36:40
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jcheese
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Re:To start or not to start? 2011/09/06 18:21:20 (permalink)
Sounds like a candidate for a Hot Dog Cart. Less than $5000 invested, park it in yer  garage, pull it out when ya wanna go out and do something. Build it up however you want to.
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Foodbme
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Re:To start or not to start? 2011/09/06 18:45:41 (permalink)
jcheese
Sounds like a candidate for a Hot Dog Cart. Less than $5000 invested, park it in yer  garage, pull it out when ya wanna go out and do something. Build it up however you want to.

A Cart startup requires just as much commitment as a B&M place. If the commitment's not there, it doesn't matter. You will blow your investment whether it's $5000, $50,000 or $500,000
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lornaschinske
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Re:To start or not to start? 2011/09/06 20:16:35 (permalink)
I think more restaurants would be successful if more of the owners started out with a food cart of some sort.
 
As for "commitment"... sure we were committed... building had busted and we are fond of eating. You do what you gotta do. that''s our mantra. well that and "We've been here too long, time to GO!".
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Bob M
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Re:To start or not to start? 2011/09/06 21:01:28 (permalink)
Thank you for all of your replies. There is definitely a lot for me to learn in this area.
 
The commitment needed to run a successful restaurant is acknowledged. I am willing to put in sweat equity now, but I am not sure I would want to be as much involved in 10 years. I am really not looking for a 60-hour per week job in that sense, rather an investment opportunity that I can begin and to some extent control.
 
The data on failure rate of restaurants is sobering. I do understand that there is substantial risk involved and I may lose all my capital and the time and effort I put in. There is risk in any venture and I think leverage increases that risk, which is why I would avoid it like the plague.
 
So basically, I am looking at this more as an investment rather than a job. Later on, I would need to delegate, understanding that I will not earn as much as someone who pursues this full time, if any earning are there to be made!
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Barry Digman
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Re:To start or not to start? 2011/09/06 21:38:46 (permalink)
I spent years doing "train wreck" accounting as I call it. I would go into a distressed business and either prepare it for bankruptcy or work on a plan for putting it back on track. One of the clear lessons learned is that if an owner paid someone else to watch his money.... they would. Restaurants are notorious for failing because of theft. You absolutely have to be there.
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Foodbme
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Re:To start or not to start? 2011/09/06 22:36:10 (permalink)
More Restaurants loose money out the back door than comes in thru the front door! Lock the back door and guard the front door!
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bartl
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Re:To start or not to start? 2011/09/06 23:52:01 (permalink) ☄ Helpful
One suggestion: Read Anthony Bourdain's KITCHEN CONFIDENTIAL. If, after reading it, you say, "Wow, I'd really like to be in that business!", you have a chance. If you don't, then you won't open a restaurant anyway.
 
Bart
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Bob M
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Re:To start or not to start? 2011/09/07 00:46:21 (permalink)
bartl

One suggestion: Read Anthony Bourdain's KITCHEN CONFIDENTIAL. If, after reading it, you say, "Wow, I'd really like to be in that business!", you have a chance. If you don't, then you won't open a restaurant anyway.

Bart

 
I put a request to borrow this book from the library.
 
I appreciate all the optimistic and pessimistic comments. Since any business venture will have its own headaches and obstacles, let's make a comparison here:
 
How would the restaurant business compare to: 1) owning and managing real estate rental units  2) owning a gas station  3) any other business which does not require special qualifications or specific training (like practicing law or car repair shops)?
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Foodbme
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Re:To start or not to start? 2011/09/07 03:45:42 (permalink)
Bob M
bartl
One suggestion: Read Anthony Bourdain's KITCHEN CONFIDENTIAL. If, after reading it, you say, "Wow, I'd really like to be in that business!", you have a chance. If you don't, then you won't open a restaurant anyway.
Bart

I put a request to borrow this book from the library.
I appreciate all the optimistic and pessimistic comments. Since any business venture will have its own headaches and obstacles, let's make a comparison here:
How would the restaurant business compare to: 1) owning and managing real estate rental units  2) owning a gas station  3) any other business which does not require special qualifications or specific training (like practicing law or car repair shops)?

BOB M,
You're missing the whole point we're trying to get across to you.
It doesn't matter what business you go into, as a small business owner, they all require a DEEP COMMITMENT and total personal involvement to make them successful.
It starts with a need or a PASSION.
In Lorna Schinske's situation it was survival. She had a need to stay alive. Fear is a great motivator! As she said, "As for "commitment"... sure we were committed... building had busted and we are fond of eating. You do what you gotta do. that''s our mantra."
Based on what you've told us so far, your basic needs are pretty well covered. So you need something you can get passionate about - something you can commit to - something you can get excited about and do whatever it takes to make the business grow. Running a small business is not a hobby unless you're willing to spend your money realizing you might loose it.
You said, "After that I would like to be able to sit back and sort of run the show from a bit of a distance while the business grows."
I have news for you. If you sit back and run it from a distance I would bet the business won't grow and will be gone in a matter of months---Right after your employees clean you out! Your concept of business is a fairy tale!
How do I know? I was President of a multi-unit specialty retail chain. I turned a major segment of business responsibility to a person I thought I could trust. After he embezzeled over $450K and skipped town, we had to close the business. Over 100 people lost their jobs and investors lost their investment.
post edited by Foodbme - 2011/09/07 03:49:13
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Barry Digman
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Re:To start or not to start? 2011/09/07 10:46:58 (permalink) ☄ Helpful
Bob M
How would the restaurant business compare to: 1) owning and managing real estate rental units  2) owning a gas station  3) any other business which does not require special qualifications or specific training (like practicing law or car repair shops)?

I like your thinking. Let me suggest that commercial real estate is less intrusive than residential rental units, unless you can own enough of them to hire management. I grew up in it and have been licenced for years.
 
As for the differences, I can think of a few right off the top of my head. The first would be the passion and committment that others have mentioned. Real estate demands attention, but not in the same way that food does. You don't have to be particularly creative in order to own and manage rental real estate profitably. If you're developing, that requires creativity. Buying existing buildings...not so much.
 
The time required to own and manage (again, I'm talking commercial and not residential) is much less than food service and more flexible. You'll always be "on" in the sense that you have to constantly aware of your market, new opportunities, and impending threats. But you won't have a schedule that demands that you're on location and ready to serve at 10:00am every morning. On the other hand, a dog vendor can put the cart away and pretty much forget about some problem popping up while the cart is in the garage. Not so with real estate.
 
Food, particularly street food like a hot dog cart, seems to be about people. The person behind the cart has to connect with every single customer that steps up in a positive way. You better be a "people person". Real estate requires people skills of course but commercial is also much more arms-length. There's way more tension between a tenant and a landlord than between a vendor and a customer on the street. I've had tenants whom I couldn't stand, and who couldn't stand me, but they needed a warehouse I owned and I needed their rent every month. I can't imagine that relationship with a hot dog cart.
 
Money. You can forget that "Make millions with no money down" nonsense. You can do it a couple of ways. If you need to finance you'll have to leverage a whole lot more property than if you're in for cash in order to net the same income. Commercial lenders are going to want sterling credit, great collateral, and probably more than 30% down. Your first goal should be to actually own the property and not just be managing it for the bank's benefit, which means you get paid nothing until the note is paid off. Paying cash is tougher and you'll obviously end up with a smaller property. But you'll sleep better knowing that if the tenant runs off in the middle of the night you're not going to lose the property.
 
Based on your desire to have something in the future that continues to pay dividends without you having to be on site every day I'd suggest that you investigate real estate. As for the market today, either one of the Rothschilds or perhaps Bernard Baruch said "I buy when I hear the thunder of the cannon and see the blood running in the street", or something to that effect. If you have the resources, now is a pretty good time to be bargain shopping for the future.
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pnwchef
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Re:To start or not to start? 2011/09/07 11:00:32 (permalink)
Bob, I worked in over 20 kinds of food services, for almost 20 yrs, before I started my own business. Most people get into this business thinking it is going to be fun and exciting, it can be, but in alot of cases its a nightmare. I have hired 1000's of people, and can only think of a handful of excellent employees. The Restaurant business doesn't draw from the cream of the crop. This may never be a business you can sit back and oversee, there are to many Employee problems, Quality and sanitation problems, and Theft problems. No one will manage you business like you do, you will lose your shirt in the long run. I now have two bookkeepers with me for 13 and 20 yrs, Vending manager 10yrs, some cooks 3 to 5 yrs. This took yrs to build, with many many times walking back in, to put out fires.
I would recommend doing something like a mini storage so you don't have to go through the unyielding hrs and work that the restaurant business demands...................Take care..............pnwchef
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CajunKing
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Re:To start or not to start? 2011/09/07 22:43:22 (permalink)
I would have to agree with Foodbme and PNWChef.  The food business is not for the faint of heart.  It takes lots of blood, sweat and tears.  In reading your OP coming from a non food related side of business.  I think there would be much better ways to invest part of your retirement income and better ways to make it grow.
 
Any business / investment can have failures, unfortunately the food service business does have HIGH failure rates. 
 
If you don't have a passion for the food, if you don't NEED the passion for food (like Lornaschinske), it is probably a safer direction to go non food related.
Sometimes, even when you have the passion for the food - It doesnt always mean success.
 
The food industry is fickle and a cruel *&$%# at times.  I know I shuttered my dream due to the economy.  I love the business, I love the food, but when the ends don't meet you got to do something else.
 
 
 
#21
Bob M
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Re:To start or not to start? 2011/09/08 01:37:18 (permalink)
Thank you for the objective comments. It seems to all boil down to "passion" and "need". Well, I got to think about it more. I am very passionate about my ideas, but not sure if it will survive the kitchen heat!
 
 
#22
FiveAcreFoods
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Re:To start or not to start? 2011/09/09 04:57:40 (permalink) ☄ Helpful
Bob, don't listen to the nay-sayers.  They are always here and always more than happy to lend a discouraging word.  Follow your heart. If you're half way smart you'll figure out the rest. Yes, it's a gamble. Yes, you might lose your ass. Yes, as one poster said, putting all your money on black might be a safer bet.  But look at all the fun you'd miss.  The Journey is the point, not the destination. 
 
I'm 45 years old. I have been self employed for most of my adult life (20+ years).  I have to date started half a dozen different businesses from scratch, most of which I knew very little about going in. I did my own research, used my wits and intuition, and learned the ropes as I went.  All were sucessful to varing degrees. My last venture was started over 12 years ago on a shoestring. The nay-sayers at the time told me I'd be crazy to start with less than $50k to invest - that anything less would be dooming it from the start.  Well, all I had was $8k so I made do.  Within five years I was grossing $250k in annual sales, with my total net at about 50%.  Now, after 12 years with the original location still going strong, I'm opening my third location next week.  Granted, mine is NOT a food service business. But basically, business is business. We all have a product that we bring to market, be it an automobile, a hotdog, a haircut, or a fine-dining experience.  If you're good at business, you're good at business.
 
And NO this is NOT my first post. I have been a lurker on this forum for several years.  At one time I was a fairly frequent poster, but finally got tired of all the nay-sayers shooting myself and others down without REALLY listening to or answering our questions. So, I eventually got fed up and deleted my account.  Been in lurk mode for a couple years now. But your thread promped me to start a new account just to post this.
 
My best advice: Follow your heart, but also listen to your head, do your homework, and work hard. Or, if you don't work hard, at least work smart. Good Luck!
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Re:To start or not to start? 2011/09/09 13:38:08 (permalink)
FiveAcreFoods,
Welcome back and Congratulations on your success!
I sense you were successful because you were committed to be successful and worked hard & smart at your businesses.
In reading Bob M's posts, I didn't get that same sense of commitment on his part.
THAT's the major difference between success and failure.
Can he be successful? Sure.
Are the odds in his favor? Not with his current thinking. 
I don't consider myself a Naysayer.
I've been a president of several other companies, not my own, so I have business management skills.
I'm a pretty optimistic guy with a strong work ethic and pretty smart too otherwise I wouldn't have started several businesses.
Despite my hard work, commitment, smarts, business savvy and optimism, I lost my shirt.
I'm still looking for that next opportunity though.
So I've been there, done it, suffered and willing to do it again.
All I'm trying to point out to Bob M is without commitment and passion, failure is guaranteed.
post edited by Foodbme - 2011/09/09 13:52:18
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lornaschinske
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Re:To start or not to start? 2011/09/09 16:26:00 (permalink)
If we can talk someone out of this business, then they didn't have the drive (or desperation) to do it. I think the warnings are good. Too many folks do not realize this is a very hard business. Whether B&M or food cart, you are looking at long hard hours. We have never had "easy" jobs and we have been self-employed more than not. Not everyone can shift their mindset from employee to employer. The food business, along with many other types of businesses, can't handle "absentee owners" and still be profitable unless the managers are exceptionally well trained and they are getting a huge chunk of the pie. And that isn't a guarantee.
 
PS. I got the same stuff. We did a food cart on a skinny shoestring. All the "doom & gloom" helped us as to what problems we may or may not have run into. We were prepared for the worst.
post edited by lornaschinske - 2011/09/09 16:28:06
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Bob M
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Re:To start or not to start? 2011/09/09 19:42:39 (permalink)
FiveAcreFoods

Bob, don't listen to the nay-sayers.  They are always here and always more than happy to lend a discouraging word.  Follow your heart. If you're half way smart you'll figure out the rest. Yes, it's a gamble. Yes, you might lose your ass. Yes, as one poster said, putting all your money on black might be a safer bet.  But look at all the fun you'd miss.  The Journey is the point, not the destination. 

I'm 45 years old. I have been self employed for most of my adult life (20+ years).  I have to date started half a dozen different businesses from scratch, most of which I knew very little about going in. I did my own research, used my wits and intuition, and learned the ropes as I went.  All were sucessful to varing degrees. My last venture was started over 12 years ago on a shoestring. The nay-sayers at the time told me I'd be crazy to start with less than $50k to invest - that anything less would be dooming it from the start.  Well, all I had was $8k so I made do.  Within five years I was grossing $250k in annual sales, with my total net at about 50%.  Now, after 12 years with the original location still going strong, I'm opening my third location next week.  Granted, mine is NOT a food service business. But basically, business is business. We all have a product that we bring to market, be it an automobile, a hotdog, a haircut, or a fine-dining experience.  If you're good at business, you're good at business.

And NO this is NOT my first post. I have been a lurker on this forum for several years.  At one time I was a fairly frequent poster, but finally got tired of all the nay-sayers shooting myself and others down without REALLY listening to or answering our questions. So, I eventually got fed up and deleted my account.  Been in lurk mode for a couple years now. But your thread promped me to start a new account just to post this.

My best advice: Follow your heart, but also listen to your head, do your homework, and work hard. Or, if you don't work hard, at least work smart. Good Luck!

 
Thank you FiveAcreFoods for your supportive post. The responses have not necessarily been discouraging, but rather thought-provoking. I do have a passion for starting a business of my own, but it does not necessarily have to be the restaurant business, although I can see myself succeeding if I put my heart into it. At least at this stage, I can consider other options as well. But once I make a decision, I will have to commit and follow through with it. I do agree with you that once one sets out, they need to ignore the negative suggestions. 
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Re:To start or not to start? 2011/09/09 20:12:14 (permalink)
FiveAcreFoods

Bob, don't listen to the nay-sayers.  They are always here and always more than happy to lend a discouraging word.  Follow your heart. If you're half way smart you'll figure out the rest. Yes, it's a gamble. Yes, you might lose your ass. Yes, as one poster said, putting all your money on black might be a safer bet.  But look at all the fun you'd miss.  The Journey is the point, not the destination. 

I'm 45 years old. I have been self employed for most of my adult life (20+ years).  I have to date started half a dozen different businesses from scratch, most of which I knew very little about going in. I did my own research, used my wits and intuition, and learned the ropes as I went.  All were sucessful to varing degrees. My last venture was started over 12 years ago on a shoestring. The nay-sayers at the time told me I'd be crazy to start with less than $50k to invest - that anything less would be dooming it from the start.  Well, all I had was $8k so I made do.  Within five years I was grossing $250k in annual sales, with my total net at about 50%.  Now, after 12 years with the original location still going strong, I'm opening my third location next week.  Granted, mine is NOT a food service business. But basically, business is business. We all have a product that we bring to market, be it an automobile, a hotdog, a haircut, or a fine-dining experience.  If you're good at business, you're good at business.

And NO this is NOT my first post. I have been a lurker on this forum for several years.  At one time I was a fairly frequent poster, but finally got tired of all the nay-sayers shooting myself and others down without REALLY listening to or answering our questions. So, I eventually got fed up and deleted my account.  Been in lurk mode for a couple years now. But your thread promped me to start a new account just to post this.

My best advice: Follow your heart, but also listen to your head, do your homework, and work hard. Or, if you don't work hard, at least work smart. Good Luck!

 
Matt
 
I was not trying to be one of the negatives or nay sayers.  The OP asked an honest question and we have been trying to give him our HONEST answers.
 
In your post you talked about your start up and how successful it has become.  Congratulations, but you also stated shortly there after it WAS NOT a food related business.
 
Yes, small businesses are somewhat alike, you start small, you pour your life into it and it grows and hopefully grows and grows and then you can possibly take a step back and enjoy the fruits of your labor.
 
But not all businesses are alike:
 
Business A - Widget Sales
You buy widgets from supplier, you mark up widgets, you sell widgets to consumers who want or need widgets.  You see a need for floozdoobers, you find a source of floozdoobers, and again mark them up and sell them to those in need of floozdoobers.
 
Business B - BBQ Business (just picked a food that was close to heart and varies from location to location) You learn all you can about BBQ the different styles, the different meats, the different rubs, the different sauces, the different styles of cooking.  You start small seeing if you are any good at BBQ.  When you get enough response and know that your product is the best you can make it. Then you share your creation with the world.  The BBQ business is LONG hours of baby sitting your pit, then trying to run the service side of it also.  You are spending XX amount of hours in the "back of the house" do you then trust someone to run the "front of the house" while you stay in the back with your creation.
 
The time spent doing both is astronomical and one person will wear his arse out, but because it is something that is real to him/her then you run yourself ragged and work the LONG hours.  Sometimes at the cost of friends and family.
 
Even then after all that love, sweat, tears, hard work the peoples mood changes and they like corn dogs over bbq or the economy tanks and less and less people come through the doors.  They can fix food at home, they don't need to eat out. 
 
you end up seeing the time you spent building the thing you love, come crashing around you.
 
Business A - Widgets - You can always add floozdoobers or snozwranglers
Business B - BBQ - You can change your menu and attempt to bring back the customers, but when you are talking discressionary (sp) funds..... Widgets beat BBQ
 
The OP asked our opinions and our opinions come from the heart, come from being there on the front lines of a food related business.
 
If I have the chance to do it all over again would I??
You are damn right I would, I love cooking and serving.  Seeing someone's face light up and smile as they eat what you have produced.
 
If given the chance would I open a widget shop instead....
I would if I were smart and wanted to make money
#27
Dr of BBQ
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Re:To start or not to start? 2011/09/09 20:26:45 (permalink)
I'll take 2 dozen floozdoobers  at $45.00 each and 144 snozwranglers at $12.00 each but I get free shipping on both.
And don't even think about it because the last batch of widgets were the wrong color.
 
Good Post my friend
 
Jack
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CajunKing
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Re:To start or not to start? 2011/09/09 20:46:49 (permalink)

 
You said "Hot Pink" so that's what I sent ya
#29
mar52
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Re:To start or not to start? 2011/09/09 21:36:06 (permalink)
  I sold floozdoobers, widgets and bbqs for 15 years.
 
Every time I thought I was going to get ahead the insurance went up.  When I caught up with that the rent went up.  Then the shipping, ultilities and once again the insurance.
 
I was in a service business.  I don't know about restaurants but I had to pay workman's comp insurance, liability insurance, auto insurance because we went to the customer's home AND building insurance.
I even had to pay for the business license of my landlord that gave her the right to collect rent from me.
 
Then there was product.  In the food service business you might not have enough or you might have too much.
 
I was pretty lucky and had great employees who always showed up to work. 
 
You figure out all your pricing and the cost of goods and shipping goes up.
 
What if your chef is sick?  Do you have a back up?  Do you just close for that day/week?  Don't forget the food that you've ordered for that day.
 
When I started I bought a store that had been in business since 1929.  I should have wondered why they wanted out.  The profit margin on bbqs when I first started was a healthy 40%.  When I sold the margin on a lot of the grills was only 18%.  The retail price remained the same and the profit took a dive.
 
Look in to all aspects of the business you want to start.
 
You've never done this sort of thing.  A start up restaurant wouldn't be a good idea to me. 
 
Working for a restaurant you want to purchase with the staff and equipment you will inherit for a month or so before it becomes yours makes more sense.
 
Find out why they are selling.
 
Experienced people fail.  Think about it.
 
 
 
 
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