Starting a Business? Not Enough Money? Learn to Bootstrap!
Inspired by their coffee experience in New York, brother and sister Bobby and Sahar Hashemi used their meager savings to launch Coffee Republic from their own home. Opening their first store in London in 1995, they were operating 108 stores within six years. Yet, in their no-holds-barred bestselling book Anyone Can Do It: Building Coffee Republic from Our Kitchen Table 57 – Real Life Laws on Entrepreneurship the duo explains frankly that they knew next to nothing about the business.
As if the learning curve could not be any steeper, they also had no venture capitalists or expensive consultants on-hand. They had no office and no equipment. They did not buy a franchise nor did they enjoy the luxury of having an office. They did what they could with what they had. This is the essence of bootstrapping. You can do it too. Here’s how.
Call Friends and Family
In 1965, one 17 year old Fred DeLuca, took a $1,000 loan from Pete, a close friend in order to launch his first sandwich store known simply as ‘Pete’s Super Submarines’. Fred gratefully lent his generous benefactor’s name to his new business before opting for a catchier title. Today there are in excess of 40,000 of these outlets across the globe in more than 100 countries. In fact, you may have heard of Fred’s business. It’s called Subway.
Like Fred, if you cannot spare your own money to start your business, your family and/or good friends like Pete are the second port-of-call for small amounts of finance. “Most businesses are started with money from four or five different sources,” according to Mike McKeever, the author of ‘How to Write a Business Plan’. Needless to say, these same good friends and family are also the very people whom you would least want to disappoint or screw-over.
Be honest, be frank. Have clear projections as to when you can expect to repay any and all money you borrow. Share the same level of detail, which you would show to a bank manager or investor. Have a business plan. Articulate both the upside and the downside of your plans. Be prepared to explain what can go wrong and how and when you plan to repay any debts.
Be Lean Be Mean
Cash flow is king. Think carefully before incurring any costs, particularly those that require a long-term commitment e.g. leasing a premises or hiring an assistant. Your food business can – with few exceptions – operate from your own domestic kitchen until such time as you absolutely need to move into professional premises or acquire a $3000 Hobart Mixer.
Do you need a tempering machine to begin chocolate production? No. Do you need a 10,000 gallon drum to experiment with your first batch of gorgeous craft beer? No. Do you need a professional oven to make your first stack of organic meat pies? No No and No. Hang on to every cent or penny until you are sure that profit or quality is indisputably affected by lack of investment.
In the movie ‘Chef’ (2014) Jon Favreau’s character re-launches his career from scratch with an old battered food truck. What would be the point of making a movie about someone who buys a $350,000 spanking brand new mega-kitchen on wheels and lives happily ever after? Where’s the story or the lesson in that? It’s really amazing how inventive you are when you resist the urge to whip out the credit card. Seek alternatives. Think lean and mean every time. Nice one Chef!
Hey! Nobody needs to know the size of your operation. You are not obliged to declare that those delicious soups and mouth-watering paleo salads (now available in 50+ outlets daily) were all conceived, produced, labeled, packaged, marketed and sold by you alone in your own kitchen. What goes on behind the scenes of your production door is your business as long as you are compliant with the relevant standards and laws.
In the early days, Michael de Klerk and Anthony Gird of Honest Chocolate in Cape Town (South Africa) rose every morning at 3AM in order to have the perfect temperature to make their delicious creations in their own apartment. They had no temperature-controlled production premises. Nobody saw them. No one knew. Similarly no one cares how you deliver your quality product to those same 50 retail outlets whilst holding down an office job. Just make sure that you keep your brand’s promise and deliver that quality every single time. That’s all that really matters.
For goodness’s sake, do you really need that Vulcan V60F – 6 Burner 2 Oven 24″ Griddle to start your pop-up restaurant? Ok, maybe you do. But chances are that you can do without this commercial-grade kitchen oven until you really really need it. We all want new toys, gleaming steel surfaces and shiny equipment fresh from the catalogue (the one with the suntanned permanently-grinning model-dressed-as-a-chef).
But the professionals in the food industry always look for second-hand before they splurge on anything new. Sad as it may be to point it out, restaurants open their doors and close down operations with almost equal regularity. There is always second-hand equipment to be found. Start looking!
ACityDiscount in Atlanta Georgia (USA) and Caterquip in Peterborough (UK) are only two of hundreds of businesses that can sell you used kitchen equipment. Alternatively, check out Ebay (International) or TradingPost (Australia) for sweet deals. Main Auction Services in Texas (USA) can sell you a single device or the entire stock of a professional kitchen via scheduled online auctions.
Alternatively, be prepared to jump in the car and pay in cash for short-lived bargains if a local food business closes its doors for good. Occasionally, state-of-the-art, barely-used equipment will turn up literally ‘around the corner’ from you. Keep an eye on the local press, put out your feelers and do your research.
Wear Every Hat
Congratulations! You are the CEO. You are the taste-tester. You handle marketing. You are the Sales Manager. You handle any public relations, answer the phones and respond to each and every relevant email. Oh.. and If there’s anything to be posted, you’re the shipping department, too! Get the picture? Save costs by doing it yourself.
If you are serious about success, you are definitely in this for the long-haul, in which case, you need to understand all aspects of your business thoroughly before you can even think of entrusting a vital function or critical responsibility to an employee, contractor or an external service-provider. This experience will prove invaluable when you are running your company employing dozens of colleagues and delighting hundreds or thousands of clients.
Now get to it!
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