In the previous chapter, you had seen how the whole idea of starting something on my own turned up and how life changed after that. This post is in continuation of the roller coaster ride called “My Entrepreneurial Journey – Chapter 1”
Hanging-On – Last phase of My Entrepreneurial Journey
Within 5 months of me running the franchise many of other same franchisor outlets were closed (whom I had contacted before opening my outlet). The focus was still on improving footfall but there was minimal increase. Repeat customers were good but number of new customers were few.
All attempts in discussing with the franchisor was a waste of time, as they were busy in getting more investors and making believe that business was good. While the reality was almost all outlets which were opened then were steadily closing, however the number of new outlets across India were increasing. So there was no doubt they were selling better and once you paid the hefty initial investment you were just a helpless guinea pig to them.
In addition to this, the operational issues were causing another nightmare
· The good staff were moving out to newer outlets
· Menu prices were increased without intimation
· No alterations were allowed to pricing or the menu
· Outlet maintenance issues started showing up
· License issues (with local authorities)
With very minimal control on food, pricing, marketing and operational costs, the only element that I had under my control was improving customer service. But that was not helping either. The brand had taken a beating as there were a lot of negative reviews from other outlets of the same franchisor. While founders were still running behind investors all of us who had invested realized its game over.
After running 9 months of operations, breakeven was still a far sight. I realised that inspite of investing a lot of money to keep it operational there were zero returns. That’s when I decided to take the step to go ahead and close it.
Being a first timer to enter business I had the courage to go after the unknown which taught me some hard lessons. Every entrepreneurial journey will be riddled with challenges. If you want to have a secondary income, I would advise you to avoid the mistakes I made.
· While the concept of Franchisor/Franchisee is enticing for newcomers, remember only franchisor will make money. Unless it’s a reputed brand you would spend most of your energy creating brand awareness (which may not help your outlet directly)
· Having your own outlet with positive P&L is better than having multiple outlets with negative P&L. One of my friends said he was making more money having 4 juice shops than these franchisors opening 100’s of outlets. The franchisor was betting on the “Valuation game” at the cost of small and new entrepreneurs like me.
· Get in the game, if you want to stay for long. And try to achieve break even in 12 months. That means there are no shortcuts. You will have to be on the ground with having complete control on all operational aspects, which I didn’t have at my outlet
· There is no fixed formula. Try & test is only way forward and you should be willing to experiment. Knowing best practices, talking to experienced people will always help. Be it marketing, product decisions or post sale of the product – having complete control with you is a MUST, which is almost impossible in franchise business.
· If there is no metric to evaluate or if there is pressure to start soon, take a break. Give it a pause. Do a reality check. Speak with similar businesses on how they are managing. Just don’t look at affordability, check on practical difficulties that others faced and avoid them early
· Do not get lured by fancy spreadsheets which promise healthy returns.
· When you attempt a new venture, it is natural to face some amount of scepticism from family and friends. Take their comments with a positive outlook and try to find answers to them. This will help you refine your business plan and give you new perspectives.
Do not be discouraged if things do not work out. There are life lessons learnt. May be at a cost, but that is ok. This experience is what gives you advantage when you think of starting something new again.
Courage to pick up the pieces and moving on is an essential life lesson learnt in ” My entrepreneurial journey”.
Be a Doer!