What you Learn from Owning a Business- 7 Lessons
By Nora Osman- What better lessons to learn in business than from being an Entrepreneur
In my experience, nothing in life can test a relationship more than starting a business with someone, especially your spouse. Add to that the year 2008. Most know what transpired at that time, with the housing market experiencing a significant downturn as a result the US in general went through a financial crisis. Since you don’t have a crystal ball, you don’t quite know what you’re getting into when you decide to embark on a new venture, namely starting your own business.
Myself and my husband were the mom and pop they talk about in the “mom and pop shop”. We started a Mediterranean restaurant in May of 2008, and called it the “Nile.” It was a cafe and grill, aimed at exciting the pallet and delivering an amazing experience within a middle-class budget. Little did we know that we’d be competing with the fast-food industry for what wiggle room Americans had left for outdoor meals during the financial crisis.
Owning a business during this period taught us many lessons as entrepreneurs. Here are the 7 main ones that are burned into my brain forever.
1. Research matters, including knowing your competition
By this I mean it pays to do some significant research on the market you’re in and how saturated or hungry (no pun intended) it is for Mediterranean cuisine. In our case another restaurant had opened 2 years ahead of us in the same town, about a mile away. We hadn’t done sufficient research on alternative eateries and what each plate on the menu went for. Not knowing the competition we would have was rough, a lesson we had to quickly learn after opening.
2. Location, location, location
Yes, it’s absolutely true that location can make or kill a business (or a home.) In our case we were set on proximity to our home address, out of convenience and wanting to serve our community. We didn’t think through the fact that the storefront in the shopping strip was quite small, with no parking lot attached, front or back, and a limited seating capacity of only 25. And beyond that, the only restroom was a tiny one in the kitchen, meant for the crew. We would quickly learn (after the next pitfall) how critical that restroom situation would be. Stay tuned.
3. Knowing your value proposition, and sticking to it
It seems obvious that to open a restaurant you should know what type it is and how you will deliver service. That’s true, and there’s no question we did. The only challenge is when you start off thinking it’s an “order off the counter menu and pick up the order for take-out/seat yourself to eat” quickly turns into customers getting seated and expecting to be served. This turned into a major shift in service type, requiring resources such as staffing, training wait crew, a more specialized setup of plateware/silverware, and an expectation of service well beyond order, and pay and takeaway. It was hard to resist the charm of those first few customers who were enamored with the classiness of the place and automatically assumed they could stay to eat and be served at the table while there. Unless you stick to your guns on the concept of service, you pay a steep price for the shift in concept.
4. Recognizing your value proposition- and what makes you “special”
This one is a biggie. We initially set off to be a Mediterranean “café and grill”, meaning there would definitely be light foods served alongside coffee/tea, as well as grilled/hot meals. The hours of operation were 11am to 11pm Monday-Sunday, so there was the early lunch into the late dinner crowd to cater to. Menu items originally intended for this purpose included traditional items such as kabobs, gyros, salads, hummus, and a slew of other appetizers. Even the dessert menu was limited to only 4 items. As customers grew to liking the menu, the occasional inquiry about an item that we didn’t have led to gradually supplementing the menu, first with specials and then more permanently with many more selections than originally planned. This put us into competition with the pizzeria, the burger joint, and even the seafood place. That was major scope creep. What started off as a limited menu with about 20 total items, grew over 4 years to about 60. That type of growth caused a massive increase in the food costs, storage space, and unfortunately, waste due to limited food shelf life. And to add, the insanity of having to constantly be out on the run to fetch missing ingredients.
5. Quality and Quantity, important, but within reason
I know the intentions were absolutely beyond good in this area, in fact they were great. My husband, having managed several restaurants in a large food chain in the US, learned the art of perfecting a dish, not just the ingredients, but also the presentation. The issue becomes the portioning. Large franchises get huge discounts from food manufacturers and farms because they buy in bulk and can negotiate low rates as a result. They lure the customers with massive portions. When you try to fill a plate and much of it goes into the trash can, you also throw away a hefty margin of your profit. Lurking beneath the surface is the concern that you need to give high value to your customers, so they leave happy. And since marketing budget is limited or non-existent, you need word of mouth to expand sales. With costs being high, waste being high, and costs of marketing being high, a good amount of the margins diminished for this one reason- wanting to over-deliver on every dish, literally eating the costs. Add to that, not learning to charge for all the extras like sauces, dressings, refills, and occasionally giving away free dessert! It’s difficult to estimate how big an impact this one area was, but if I had to estimate, I would say this was likely a 25%-30% impact on profit.
6. Downtime is important if not critical, even for you as the owner
Perhaps the issue started with having an “open 7 days a week, 365 days a year” concept, giving little to no time off to rest and recharge. It could also have been the 12-hour shift, likely 2 hours longer than necessary since most neighborhoods turned in by 9pm. Regardless, most people don’t realize how much work goes into pre and post activity to support a restaurant. That includes purchasing food items and supplies. 12-hour shifts, with 2 hours pre and post shift meant it’s a 16-hour day, with barely time to eat and sleep, let alone actual live and enjoy life. Those 4 years were quite a blur for myself and my family. I was doing triple duty, as an IT leader, a mother/wife, and a co-owner of a restaurant. My duties included all the financials, including payroll on Friday nights, marketing/menu design, the weekly dessert baking, and, when in a bind, the occasional food delivery in the neighborhood. I won’t even mention the ad hoc catering orders that were a completely different animal. As a result of perpetual activity and stress, my husband experienced many signs of wear and tear, with the strain of being constantly on and wearing every possible hat (chef, cashier, driver, delivery guy and overall nice guy) affecting his health in a direct way. I myself also experienced tremendous pressure from 40–50 hour NYC work weeks, long commutes, and an added 20+ hours of personal time spent supporting the business each week. We needed to slow down, but it was virtually impossible to do that. You can’t peel away without paying someone to take over, and you need to make enough to afford that. Hence the burn out was inevitable.
7. It's all about the people, in the beginning and in the end.
This one is one we knew we knew was important. We knew that the customers were always going to be super important and giving them an outstanding customer experience was going to be everything. We also knew that to give excellent service, something exceptional even, you have to cultivate a culture of caring and going above and beyond. That takes time to develop and nurture with staff. Hand selecting the people in the front of house as well as the kitchen was one of the most crucial (and painful) exercises. Pivoting quickly from counter ordering to wait staff needed at the table changed the dynamic of training and the pay scale. To afford 2+ wait staff on 2 shifts required lower wage-accepting workers, which meant under experienced ones or students/teenagers. We got all that, and part-timers and seasonal crew, and then some. With it came the high turnover. Never under-estimate the exhaustive effort you put into training/retraining staff for a growing business, open 7 days/week, 12-hour shifts, with an expanding menu. We did that, and we paid a hefty price for it.
These 7 lessons were huge ones and have stayed with me well beyond the last 16 years of my career, as they’ve been applied in different ways to the business world around me. I learned many more lessons because of this huge expedition, and perhaps the biggest of them is the lesson in resilience. To stick with something for 4 years, with almost every possible factor going in the wrong direction took grit. It took courage, which Ryan Berman would say is “knowledge, plus faith, plus action.” We both knew people, good cuisine, and service. We didn’t know many things, which became t these lessons that we learned along the way. We did take a lot of action, pivoting quickly and often, as we learned. In the end, the best lesson learned, for me at least, was how amazing an experience it is to initiate a business from the ground up, and learn it deeply. This includes starting from design and through all the messy details and parts, all the highs and lows. I loved that part of it, and I’m grateful to have stood by my partner through this world-altering, once in a lifetime experience. I’m also grateful that these lessons (or what others would call mistakes/failures) are what “refined us” but didn’t define us.
