Business Struggles and Successes

[Kreater]

Let this thread be about your personal business struggles and successes, go in-depth about yourself.

[Kreater]

I'll start.

In 2001, I attended a university for five years. Since then I worked various jobs, from preschool teacher aide, to welding, to baking, to data entry. I truly have the "jack of all trades" title on my resume. But a couple years ago (2012) I began my own business with the help of a close partner of mine. He has since quit for a more secure paycheck and source of income, because business is struggling. Sometimes it occurs to me that I started off on the wrong foot, and have been skipping and tripping around in circles since the start. The main reason for my struggles is my loan history. I struggle to payoff my college loan debt along with my business loan debt. My business persists from month-to-month. But I have no real income or profit. I work a second job to support myself (I live in a very small trailer) and my business.

I'm essentially poor, under poverty level. I've never had more than $2500 in my bank at any given time in my life. I usually have $500-1000 throughout the year, not much.

With my loan debt, I really cannot grow nor improve my business. Along with my extremely burdensome, stressful, and exhausting work week (66-100 hours per week), I have no time, energy, or money. I often consider quitting and just giving up. Failure is enticing. Nobody really seems to appreciate my work anyway. I have a few devout customers, patrons, and friends, but no more than a few. Nobody really supports me. Nobody seems to care, which I've come to terms with. In fact I probably would quit, if I could. But failure is not an option. I don't have the choice to fail. And that keeps me going more than anything. Because I know this is my only chance, my one shot in life, to own my business. I'd never get another opportunity, nor would I want one. So I'm stuck in a situation that has its benefits as well as drawbacks.

I consider myself successful in some ways. But I realize that success means nothing as an individual. Who cares if I believe myself to be successful? Nobody does, and success seems to be more of a social endeavor than anything else. Success and failure are relative to others, and to what greater society expects of people. So this insight causes me to reevaluate what is meant by struggle, success, and failure.


Despite how negative all this may sound, I often remain hopeful and keep the faith. Owning a small business, especially a mediocre or failing one, will teach a person a lot about faith.

Because if you lose faith in yourself, then you truly will fail. It's all upon the business owner's shoulders as an individual, nobody else's.

[Blessed]

Kreater, what type of business do you have?

[Kreater]

Small cafe, and you?

[Paul]

If you could eliminate the business and school loans would the business be making any money? What is the profit/loss of the business before servicing any debt? You seem to be combining all finances into one personal "result".

You need to really analyze the business in a realistic way. It either makes money or it doesn’t. If it isn’t profitable the question is: CAN IT EVER be profitable? If not, it may be time to cut it loose.

Be logical about it. Don’t let pride, emotions or entrepreneurial martyrdom override business sense.

Failure IS an option, it happens all the time. Some of the most successful people failed many times before they were successful. Some are famous but I bet almost everyone on here has failed, maybe more than once, before they became successful.

[Blessed]

Hey Kreater - I do graphic design, PR, Marketing, Customer Service work, Sales, etc.. I'd love to see my business grow - but big growth isn't practical right now because I'm a mom of a 7 year old and 5 year old and that comes first for now. In time this season will pass and hopefully at that point I'll be able to grow my business. I can't complain about where I'm at business wise. My work is steady, I claim a profit every year and I'm keeping my skills current.

I think Paul is asking the right questions and the ones you need to ask yourself.

Is your overall debt load the reason you are struggling? If so - what can you do to get rid of that?

Is the cafe successful on it's own - not considering the personal student loans you've brought to the table?

Would you be better set to own a business and see it be successful if you closed or sold this one and worked for someone else until you could clear your debts and establish yourself financially - then try it again? I know I say it again and again in this forum - clear your debts and have a cash reserve before you start business. I don't think it's 100% necessary that you do it that way and I realize that it doesn't always work out. But debt can be stressful. As a business owner with no other income source you have to earn enough to cover your personal needs and debts AND the needs and debts of your business. Sometimes your personal debt load is too much for the business and when it's all mixed up together it's hard to determine what the problem really is - why the money is all gone before the month is. You've got to patch the hole in your leaking ship or no matter how much positive thinking you do, you're still going to sink when the storm comes through.

[Kreater]

Blessed, do you own a storefront??

[Kreater]

If you could eliminate the business and school loans would the business be making any money? What is the profit/loss of the business before servicing any debt? You seem to be combining all finances into one personal "result".

You need to really analyze the business in a realistic way. It either makes money or it doesn’t. If it isn’t profitable the question is: CAN IT EVER be profitable? If not, it may be time to cut it loose.

Be logical about it. Don’t let pride, emotions or entrepreneurial martyrdom override business sense.

Failure IS an option, it happens all the time. Some of the most successful people failed many times before they were successful. Some are famous but I bet almost everyone on here has failed, maybe more than once, before they became successful.
Not accounting for paying myself for labor, I would run at a profit without the loans, yes. With the loans, I neither run at profit or at loss.

[Brian Altenhofel]

"Failure" is always an option, but failure isn't always "failure".

One of the keys to success is to fail fast. It's even better if you can fail cheap and often, too. But "failure" can only turn into success if you turn it into success. As soon as a failure is indicated, you should take a step back, look objectively at the big picture, look for what failed, determine why it failed, and create a plan of action to prevent that failure. Basically, it's a postmortem report on why a particular business process did not work.

As Paul said, some of the most successful people failed many times. And if you look closely, they also failed fast and (relatively) cheap.

How do you fail fast? You need to have key performance indicators in place that measure each part of your business as well as indicators for individual steps in the process. If you're not meeting or exceeding those benchmarks, you need to analyze what's broken and determine how to fix it. Key performance indicators should be checked often - individual indicators only when an entire process is under-performing or there is extra bandwidth available for optimization.

Some indicators are more complex than they seem. For example, in the food service industry it might seem like it makes sense to always buy in bulk until the spoil rate is included in the calculation because some products just don't move as fast as others. There should also be data kept long-term on what moves at what points in the year and what the trends are. After a couple of years of data, it shouldn't be that hard to predict +/-10% what will be moving on what days.

There's also market psychology to consider. I once knew a baker that was located in an area with a market segment willing to pay $300+ for a birthday cake and $1000+ for a wedding cake. However, they based their prices on what they personally were willing to pay (less than 1/3) and instead attracted another market segment - the type that would buy a cake and then dispute the charge the next day - and alienated the higher market segment because they thought the prices were too low to consider.

I've tried a lot of different things with my web development and hosting businesses. Some of those experiments have been failures, some have been successful, but I made sure to put in place the ability to monitor their performance. As soon as failure was indicated, a re-assessment (and, if necessary, a postmortem) of that particular experiment was performed. For example, early on I tried to do premium themes. Within ~3 months, I knew that I wasn't going to be able to profitably produce premium Drupal themes without investing more front-end educational time than I was willing to do. I've tried targeting different markets as a specialist, and that's how I've gotten to where I basically specialize in data and operations. When the #NoNDA movement in the web development world took off, after determining that the proponents of that movement were mostly ignorant of what NDAs actually can and cannot do, I started advertising as NDA-friendly (and doubled my rates overnight).

You should also keep close tabs on what competitors are doing. In doing that, you can pretty well correlate something they did that you could see with a success or failure that you could see. Learn from others' failures.

[Blessed]

Blessed, do you own a storefront??

No, but I work with retail ventures and I have quite a bit of experience there.
My background is pretty diverse but I've always stayed with small businesses and I've either been in management or closely associated with management and figuring out how to be profitable ever since my first job in college.

[Paul]

This is a huge realization and should be the core of your decisions going forward. You have to break this down. In pure analytical terms your business IS a success.

1) Eliminate the school loans from the analysis-they are not related to the business. You have that liability anyway, regardless of your business.

2) Now, consider the business debt. How much of the profit is used to service the debt? When will the debt be retired, paid off? One year, five years, ten years?

3) Also, consider opportunity costs. That is, what other activity (job) could you do to make money IF you didn’t have to work at the business?

You said the business breaks even with all debt considered. That means it is in fact servicing its own debt plus some extra. Again, you can’t consider school or other personal debt in this analysis.

If you can retire the business loan just from the profits of the business you will eventually end up with a business that’s generating that income for you, instead of paying the debt. Of course I don’t know how much that is or if it’s worth the wait. This is a common situation, letting a business essentially “buy itself” from its own profits. Another way to look at it is you are building equity (in a sense) in the business.

One possible option to ease the strain may be to refinance the business debt. Extend it to make the payments less.

As Brian said, you have to analyze and understand the separate components of the business. Brian shared his experience in adjusting his business for a tech product. You must do the same for yours.

Are you providing the right products at the optimum prices for your market? Can you add more products to increase ticket averages, eliminate low margin or slow moving products that use up space and strain inventory costs? There are many other small considerations in your type of business that can add to the bottom line.

Don’t let emotions cloud your thinking. Be analytical.

[Blessed]

Some indicators are more complex than they seem. For example, in the food service industry it might seem like it makes sense to always buy in bulk until the spoil rate is included in the calculation because some products just don't move as fast as others. There should also be data kept long-term on what moves at what points in the year and what the trends are. After a couple of years of data, it shouldn't be that hard to predict +/-10% what will be moving on what days.

This is key - keep records, figure out what those key indicators are and monitor them. That way you can respond and adjust to changes quickly.



There's also market psychology to consider. I once knew a baker that was located in an area with a market segment willing to pay $300+ for a birthday cake and $1000+ for a wedding cake. However, they based their prices on what they personally were willing to pay (less than 1/3) and instead attracted another market segment - the type that would buy a cake and then dispute the charge the next day - and alienated the higher market segment because they thought the prices were too low to consider.

....

You should also keep close tabs on what competitors are doing. In doing that, you can pretty well correlate something they did that you could see with a success or failure that you could see. Learn from others' failures.

Yes! Yes! Yes!
This is something I tell my retail clients all the time - what market are you trying to reach? what market are you in? what will your market support? Then go for that! One of the most important questions is what will your market support - what benchmarks and expectations are already in place?

In most cases (definitely not all) you don't want to be the most expensive option on the block, but in Brian's example - the baker could have priced his birthday cakes at a base of $250 instead of $100 and he probably would have still attracted that upper segment - those shoppers who have more money to spend and are willing to spend it on a quality product.

If you position yourself as the least expensive option available you have to be prepared for the penny-pinchers. They will bargain shop, challenge prices, are more likely to make returns (I realize that doesn't work for a cafe!), nitpick service, find hairs in their meal, and use any coupons/discounts/etc... that you give them. All of those things affect your overall profit margin and, at the end of the day, increase the volume you are required to sell in order to maximize your profitability.

[Kreater]

I agree about the "failing fast" approach in general. But a big failure is something else. I can't afford to give up my lease and position, on the core level. I agree that failure and success go hand in hand.

For example, I started playing chess again, after 10 year absence. But now I'm playing speed chess, 3 minute games. I lose a lot. But this is teaching me how to improve my game. I lose 1 game, win 1 game. And these games are very fast. So I think this may help me and also applies to this conversation. There are small failures and big failures. It's best to have lots of practice when the time comes for the biggest matches of all.






No,
I suspected as much

[Blessed]

I suspected as much

We did own a storefront at one time - my husband did paintless dent removal and we leased a shop just down the road from one of our biggest customers.
It was our first and last experience going in on a partnership - we suffered huge losses. Closed the business, paid the penalties for walking out of the lease, paid off 20k in business debt that the partner walked out and left us holding.
And it was the best decision we could have made.
Was it a failure? it looked like it on the surface and at the time, but in the long run the business wasn't a failure. Only the partnership was a failure. That was 8 years ago, so it's in the past - but still recent enough to remember the turmoil we went through at the time.

[Blessed]

...I can't afford to give up my lease and position, on the core level....

OK - so you can't afford to give up the lease and your position.
But you still need more cash.
So how are you going to make that happen?

Get more cash, get rid of the debt and you'll be able to turn your cafe into something better and even more profitable than it is now.

[Kreater]

My business partner walked out on me too, leaving me the full loan.

As I mentioned, I still have powerful faith in myself. That is the true essence of the entrepreneur.

[Paul]

My business partner walked out on me too, leaving me the full loan.

As I mentioned, I still have powerful faith in myself. That is the true essence of the entrepreneur.

I think you're missing the point. With all the actual business advice here you continue to cling to an intangible. Blind faith is NOT the true essence of an entrepreneur. Careful, calculated and realistic understanding of business is.

You may want to tell us at least one proactive thing you can do to improve the situation, rather than listing all the weaknesses and problems.

[Brian Altenhofel]

Blind faith is NOT the true essence of an entrepreneur. Careful, calculated and realistic understanding of business is.

This.

Faith doesn't identify problems. Faith doesn't solve problems. Faith creates emotional attachments, and emotional attachments to businesses are unhealthy.

One also shouldn't write off advice from people that operate different businesses because no industry is truly unique when it comes to the business. Just because someone hasn't run a storefront doesn't mean they don't have an understanding of running a business and properly using that storefront. There is nothing special about a storefront from a business perspective.

[Kreater]

You may want to tell us at least one proactive thing you can do to improve the situation, rather than listing all the weaknesses and problems.
Keep the faith

[Kreater]

There is nothing special about a storefront from a business perspective.
A store front legitimizes business in a way that stay-at-homes and websites cannot.

[tallen]

You may want to tell us at least one proactive thing you can do to improve the situation, rather than listing all the weaknesses and problems.Keep the faith

Faith in what, exactly?

What concrete steps are you taking to increase your business's revenue and/or decrease it's expenses?

Note however that there is more than a kernel of truth in the old saying, "You've got to spend money to make money." A rule of thumb is that one should allocate between 5 to 10 percent (perhaps more when starting up -- or digging out of a hole) of expected revenue towards marketing -- my sense is that a lot of struggling businesses are not doing enough in this area, perhaps because it is an easy expense to target for reduction.

In your opening post, you remark that no one is supporting you, with the implication that you do not have a lot of repeat customers. Unless you are in a high transient traffic area, I would think that returning customers would be the backbone of most small cafés. The "cost" of retaining customers is usually much less than the "cost" of acquiring new customers! Can you ascertain why your customers don't come back (if indeed that is the case)? What value can you add to your service to encourage repeat business?

(and yes, I operate a hospitality business with a physical facility, with about 75% of our business coming from people who have been here before)

[Kreater]

Faith in what, exactly?
Faith in myself, my business, my customers, my meaning and purpose in life for creating new business and jobs.

We are the job creators. We are the top 0.01%.





What concrete steps are you taking to increase your business's revenue and/or decrease it's expenses?
I bought a gym membership, changed my diet and sleep schedule. Healthy business is derived from a healthy president/owner.





Note however that there is more than a kernel of truth in the old saying, "You've got to spend money to make money." A rule of thumb is that one should allocate between 5 to 10 percent (perhaps more when starting up -- or digging out of a hole) of expected revenue towards marketing -- my sense is that a lot of struggling businesses are not doing enough in this area, perhaps because it is an easy expense to target for reduction.

In your opening post, you remark that no one is supporting you, with the implication that you do not have a lot of repeat customers. Unless you are in a high transient traffic area, I would think that returning customers would be the backbone of most small cafés. The "cost" of retaining customers is usually much less than the "cost" of acquiring new customers! Can you ascertain why your customers don't come back (if indeed that is the case)? What value can you add to your service to encourage repeat business?

(and yes, I operate a hospitality business with a physical facility, with about 75% of our business coming from people who have been here before)
Agreed, the difference between "spending money" is money spent from savings as opposed to money spent from loans. I took a loan out for my business, bad idea. But it is what it is. I can't go back now.

[Blessed]

A store front legitimizes business in a way that stay-at-homes and websites cannot.

Seriously?

You've been given some good advice here, been asked some pertinent questions and what you have to offer us is "faith", the "legitimacy" of having a storefront and a gym membership.

It's true that both "faith" and the gym membership could have positive results on a business owner's level of mental health and therefore success, to some degree.

I also think you need something a little more concrete to see your business thrive. Every business has an area to improve on and many of us do work to improve our business, sometimes through small things, sometimes with bigger ideas either way - it takes hard work, thinking outside the box, evaluating expenses, evaluating what we charge, marketing, capital, treating your employee's and your customer's right, and a slew of other things that many entrepreneur's just do... good luck with your gym membership.

[Fulcrum]

Kreater, there is tons of great advice here.

There is nothing wrong with having faith in yourself, your business, your customers, product, etc. I don't think any of the other posters have said otherwise. What they, and myself, want to know, is what can you change in your approach to running the business.

Here's a few questions that you should answer.
1) What sets you apart from your local competition?
2) What are your cafe's strengths?
3) Similar to #2, what are your cafe's weaknesses?
4) Is there are way for you to bring your product to your customers rather than them come to you (just to get your name out there)?

Be objective and honest with yourself on these.

I think it's safe to say that every single person who has responded here wants to see you succeed.

[Kreater]

I'm not going to present anymore of my private troubles and challenges because it seems like mere complaining at this point.

Beside this thread is for everybody, not just me. Discuss your own struggles and successes. I'll go more in depth later as the thread evolves.

[Paul]

People on here are practically begging to help. That is what this forum is about. I know you want to talk about struggles but for most entrepreneurs struggles are just another day, part of the deal, expected and overcome. There is nothing new or unique about yours.

Faith is wonderful. We all have faith in ourselves. But we don’t just hope for the best while the ship is sinking. We plug the leaks, repair the rudder and adjust the sails. Our faith comes from knowing we can do all of those things. That’s being an entrepreneur.

You can dismiss any advice I offered but take a look at what others have said. You may note that they offer sound advice and suggestions, but not much sympathy. They also are not discussing their struggles other than to demonstrate solutions.

Somehow you have become trapped in a romanticized concept of entrepreneurship. As if some mystical force or guardian Angel is going to change your fate. Forget about being an entrepreneur, be a business person!

Do something, anything, to fix your business!

[shrinkme]

Would you like to hear my rags to riches to rags story? Hoping for riches again someday.

We started a business in the 1990's about when the internet was really taking off. This was a business in the middle of our other business. It did well. We traded houses with the income. It was a f&*()_ lot of work. And it vaporized with the turn of the century. Never again, I said, never again. But you know, time heals all wounds. I think.

I have written a book. I think three people have read it.

[MrBruce]

Kreator I can do my best to give you a few ideas, some of them you may already be aware of. But I understand where you are coming from.
- Cut costs everywhere you possibly can and when you are done.. look for more ways to cut costs. For instance, if you use plastic eating utensils then switch to the real deal, stop ordering/buying paper towels in the kitchen and use wash clothes.
- Hire family (some will disagree) but by hiring family it relieves the cost of workman’s comp insurance.
- Decrease the size of your menu (having a large menu can kill your restaurant) avoid buying fried foods and premade foods from vendors. Try to make all of your dishes fresh it’s generally cheaper and taste better.
- Try to avoid having a large inventory on hand (it does nothing but take up space and gives employees the idea that its okay to give out larger portions.)
- Get creative with what you have on hand and try to come up with new dishes.
- Watch your thermostat during down time adjust your temp to a setting where you’re not always having your units running. (makes a big difference imo)
- Rent out any extra space to other people.. you could even go as far to rent out your kitchen to someone.

I would be more than happy to share other ideas if you would like? My philosophy is “its not what you make, its what you save” and by having that mindset I have made a little.