In part 1 of this series, I shared five lessons I’ve learned as a small business owner. Here are the next five tips I’d like to discuss in hopes that other restaurant and small business entrepreneurs will take away something from what I’ve learned so far.
6. Your instinct is good enough
Part of being an entrepreneur is having to make decisions based on imperfect information. It's better to make a decision than no decision or to keep changing your mind, because you ultimately need to move forward. Whether it’s a new employee hire or a big investment opportunity, after doing your homework, follow your instinct and take action.
You will probably be right 80% of the time. Cost of the 20% failure rate will be worth the progress you get from moving forward with the 80%. And remember, if some opportunity or employee looks too good to be true, it probably is.
7. Set realistic time frames for success
Don’t assume you can reinvent an industry you know nothing about. I see so many hotshot aspiring entrepreneurs who think they’re going to upset an industry with some new paradigm shifting service. But having an academic knowledge of an industry is not the same as working in it for years, understanding the annoying little nuances that make it harder than it looks.
We also know the failure rate of restaurants and other small businesses is very high in the first 12 months. A supplier of commercial kitchen appliances once told me that they end up buying back their products in as little as 6 months from restaurants that have run out of money. That’s because they didn’t plan their cash flow realistically to account for the ramp to profitability. That brings us to the numbers.
8. Know your numbers
Before working with the restaurant industry, I assumed that every small business owner had a strong grasp of accounting and the numbers that matter in their business. I was wrong. So many business owners have no clue how much money they’re wasting inside their operations because they don’t understand numbers or are just trusting their outsourced accounting guy to handle it. They don’t know whether their costs are in line with industry averages, whether they’re charging enough or too much, and what top line revenue they need just to break even.
Do the research before starting the business, make sure you budget for everything, and constantly review the numbers to make sure you’re on track. That of course requires that you keep your books up to date which is a challenge for many in the restaurant industry as well.
9. Don’t be a jerk
The world doesn’t need any more jerks- really we have plenty, we’re good. There are moments when running a small business can be stressful. Before you take that stress out on an employee, supplier or customer who might just be trying to help you, take a breath. Your customers aren’t the only ones who deserve your best self. Treat your suppliers and employees just like you’d want to be treated. It will reward you with peace of mind and a network of people who will go beyond their job descriptions to help you.
10. Your best is always good enough
It’s easy to be envious of others’ success and wonder if you really have what it takes when things are not going to plan. Don’t worry so much. What’s the worst that can happen? If your business fails, you’ll probably have learned more about people and business than you would in an expensive MBA program. To start your own business takes guts for which you should be proud.
If you believe the statistics for new businesses, chances are, your business will fail. But remember, even IF you succumb to the worse-case scenario, you’re not going to die. Instead, you’re going to have learned a ton that will be as valuable as gold if you use that knowledge later in your life. Like for instance, to write a blog.
Work hard, play harder and live with passion. I wish you the best.
