My Business Failed (But Not For The Reasons Most Think It Did)


4 hard lessons learned in entrepreneurship

Image: Unsplash

No one likes to talk about the time they failed. And for the longest time, I was one of those people. My failure affected my confidence, permanently altered my outlook on life, and left me second-guessing every decision I subsequently made. That’s not something anyone would like broadcasted in public.

It has been 4 years since my last foray into a proper brick-and-mortar restaurant business. The experience left me with such indelible scars, I swore off opening another one. Recently, a relative brought the subject matter up. While she made some valid points about what it took to run a successful business, I realized none of that applied to my personal experience. The conversation COULD have turned awry as I opened my mouth and started to clarify some of the points she made. Instead, it inspired me to channel my energy into writing this.

Just like success, failure comes when you least expect it. I had my first taste of success when I was 25. I had recently opened my first cafe with my brother. It was in an obscure location, with no elevator or escalator, and close to zero foot traffic. I went to work one morning and realized we had barely made $100 the day before.

Everyone told us we would fail before we even opened.

One day, an influential food blogger took a chance on us and wrote us a rave review. Success was almost overnight. The cafe thrived and is still thriving now, 10 years from inception and long after I had sold my stake.

When I was offered an opportunity to open a restaurant in an up-and-coming mall within a well-established neighborhood, I jumped at the chance. The space was beautiful. It was a corner lot with high ceilings and lots of natural light. It was located right next to the main entrance and had an alfresco area right in front of a man-made stream and garden. Yes, the rent was slightly more expensive than we would have liked, but by my calculations, we could make it work. As I stood admiring the space in front of me, I said some famous last words:

There is no way this place can fail.

So, what went wrong? We had opened to great fanfare. The reviews — on both the food and cocktails — were great. We had long waiting lists, especially on weekends, and a trustworthy team of employees. However, while the money was rolling in, the bottom line spoke otherwise. In retrospect, here are 5 of the mistakes I wished I had not made, and that I believe could have significantly altered the outcome of my business.

I learned all this by running a restaurant, but I now apply these lessons to all aspects of my life.

Not Reading The Very Fine Print

In simple terms, I got screwed over by unfavourable terms on the tenancy contract. And it wasn’t for the lack of reading the fine print. I hired a trusted commercial lawyer to vet the contract before signing it. He said it was a standard agreement. I compared the terms and conditions with contracts from other malls and concurred.

It’s just a tenancy agreement. How could it possibly have screwed up my business?

Before I made the decision to sell my business, I was desperately trying to find a way out of fulfilling these terms. These terms included paying for the operating and marketing expenses of the mall. Before signing the lease, I had asked what these expenses were. The management told me it was to market the restaurant. They asked for a bunch of information to put up on their website. They did one promotional video and then… nothing. We were tenants there for two years and were paying approximately $10000 — $15000 per year for these services.

The tenancy agreement also required the business to foot the liquid natural gas bill. No one thought to question this (it was a restaurant business — there would be a gas bill to pay). Midway through our 2-year tenancy, the gas bill doubled to $5000 per month. I questioned why our gas bill was exorbitantly priced compared to similar tenants at other malls. I subsequently found that the mall management had signed a long-term contract with a third-party gas utility contractor. They had passed on any price increases to tenants, not caring that they themselves had signed up for a bad deal.

Reading the very fine print requires you to ask A LOT of questions. And if you don’t get the answer you’re looking for, poke, prod, and interrogate until you’re satisfied with the answers. This applies to any contract signed with an employer, business associate, supplier, or investor. It could mean the difference between business survival or death. In my case, I could have saved thousands of dollars which were critical for survival at that point in time.

Too Many Cooks Spoil The Broth (Lessons In How Not To Micromanage)

Many restaurants suffer the fate of having terrible cooks and terrible food. Mine was not the case. I was fortunate to have hired a stellar operations team from the get-go. Our team was made up of chefs previously from 5-star hotels who had an in-depth understanding of the local palette. There were hiccups now and then, but they consistently served piping hot delicious meals to a full-house crowd.

Here’s a hard-learned lesson on how not to fix something that isn’t broken:

As an entrepreneur, I had an uncompromising vision of what I wanted to accomplish. And some of these goals were tied to my training as a ‘chef’. Having a culinary background allowed me to work closely with the head chef. For close to 2 years, we had a good working relationship. We both came up with menu ideas he would then ask his team to execute. The entire team would taste-test the dishes. He would purchase the inventory, and I would sign off on it. However, this synergy would not last.

As mentioned earlier, I had a vision. And this dream of mine involved constantly upping the bar by inventing and innovating new items without breaking the bank. So I was always asking to taste test new items and pushing the team for more, more, more. In the midst of this, I failed to see that my head chef was stressed, overworked, and headed straight for burnout. This vision of mine was extra pressure nobody could shoulder.

Meanwhile, food costs were running a little high. At a weekly meeting, I voiced my concerns and offered to look into food costing and inventory management. I even offered to find suppliers who could offer us better prices. In essence, I offered to do his job for him. It was the straw that broke the camel’s back.

There was no looking back after that. I had lost my chef’s trust because he thought I had lost confidence in him. My poor decision to micromanage a situation had severely affected his morale. And with that, he took the team’s enthusiasm and commitment levels down with him. It showed in the work they produced. Which quite simply, does not forebode well for a restaurant.

Running a Business Like A Sprint, And Not A Marathon

Did I mention my head chef was burnt out and I was clueless? I was severely burnt out too at that time, but I had no idea. My head was mired in contracts, profits, losses, and HR issues, and there was just no time to breathe. Oh, did I mention I was also pregnant?

I remember dreading stepping into the restaurant. Seemingly minor issues- an employee showing up late, and an improperly closed account, irritated me to no end. I used to look forward to our weekly staff pep talks and monthly team birthday celebrations but would now approach them with trepidation. Behind the merry-making, tensions simmered, and I knew my employees were unhappy. Meanwhile, the restaurant’s less-than-satisfactory financial performance gnawed at me daily. Our social media stats were up; we had just appeared in several reviews and won that award — why did our numbers not go up? We were able to pay our rent this month, but what about that pesky gas bill?

At this point, I recognized I had lost the race because I didn’t want to give a damn.

There was a lot of should haves, would haves, and could haves. Maybe things would have worked out differently if I had a winner’s mentality, maybe this, maybe that. There was only one important thing I should have done: slow down.

Pivot, Pivot, Pivot

There is an unforgettable scene from Friends in which Ross (with Rachel and Chandler’s help) was trying to move his couch up the stairs. It was a monumental task, and Ross can be heard shouting ‘Pivot, Pivot, Pivot!’ to Rachel and Chandler’s annoyance. The friends quickly realized that pivoting so many times didn’t work. Subsequently, they went back down the stairs and had to start from square one.

In startup speak, the term ‘Pivot’ was coined by Eric Ries of The Lean Startup fame. It means changing the direction of a business when some of the existing products are just not selling¹.

I was a HUGE fan of The Lean Startup philosophy back then. I even made my business partner read it and applied it to my businesses religiously. Maybe I had employed its philosophies erroneously. However, I found pivoting too frequently created more headaches and confusion instead of helping me save time and make more money.

In my case, I was looking for a way to increase our lunch crowd on weekdays. I threw everything I could at this: changing our core concept multiple times, altering the price points, and offering deals. Service suffered as my employees were often confused by the many changes, and food quality deteriorated from the lack of direction. More tellingly, instead of drawing a larger crowd for lunch, some of our loyal customers stopped returning.

Sometimes, the correct course of action would be not to pivot in a crisis. These three companies successfully employed ‘stay-the-course’ strategies during the Covid 19 pandemic. They waited, properly assessed all possible scenarios, and decided to make some minor adjustments that eventually catapulted their growth.

Sometimes, a winning strategy involves simply tweaking a product messaging or continuously fine-tuning a core product (e.g.: Apple).

So, there you have it.

These not-so-common reasons don’t appear in generic ‘5 Most Common Reasons Businesses Fail’ listicles, but they did happen to me. If you would like further advice on ‘How Not To Run A Business’ or ‘5 Different Ways You Can Fail As A Solopreneur’, drop me a message! More than happy to share!

My Business Failed (But Not For The Reasons Most Think It Did) was originally published in Entrepreneur’s Handbook on Medium, where people are continuing the conversation by highlighting and responding to this story.

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