The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success

29 years old: Business worth $1M but no growth potential - Need to pivot

KnockTheHustle

New Contributor
Sep 20, 2018
3
8
11
So I'm 29 years old and jumped into business 4 years ago before finding this forum or reading TFL book (oops). I had no prior experience, was extremely naive, and didn't find many resources that I thought would be helpful or as relevant since the location that I was actually embarking on business in was Sub-Saharan Africa. The business I'm dealing with is sweets, cakes, and high end desserts in Sub-Saharan Africa, at that. Having said that, I've spent the past 4 years quietly fighting a battle/war behind the scenes to grow the business, overcome a learning curve, grind out the essential systems and processes, while rapidly growing the brand and gaining a wealth of experience in the process.

Despite my business having been "valued" at more than $1M by various investment groups and PEs (they often times cite a valuation metric of 4-8x EBITDA), it feels incredibly illiquid because selling private company's in the country I'm in is incredibly difficult. Either that or I'm still incredibly inexperienced or too disconnected from the proper circles to know how to execute a sell. So this means I have a cash-flow positive, profitable business, with no real exit strategy. That's problem #1.

The next problem #2 I'm facing is that despite my brand having grown enormously in the past 4 years and being incredibly popular in the main business capital of the country, I feel as though I've basically hit the ceiling as far as growth. I made the mistake as MJ refers to of entering a market with a very low ceiling in a best case scenario. I've executed very well, however, maybe close to best case scenario, and grew to 8 locations in my first 4 years, without any partners, investors, loans, or credit. It's all been organic growth, financed by cash and profits, starting from one location. The brand has transformed also visibly in appearance from being rough around the edges to being quite polished and professional, as you would expect of an international standard brand. Our customer recognition in the market is extremely high, and our brand has a lot of weight in the market. But we are already located at all the prime locations that are likely worth opening without many other places to go.

Also, as MJ mentions, not only is the ceiling low, but the floor beneath me doesn't feel very secure. Things in Africa can be unpredictable and unstable at times, even though I've got a lot of experience here now. Hence why my situation feels a bit stuck in the middle between slow/fast lane. Although the profitability is there, the scalability is limited, the ceiling is low, the expected growth is low, and the risk of declining sales feels high. Other business friends I know here are a lot more optimistic than me, but nobody can really say with certainty.

But, the two most valuable things I probably have going for me are that 1) I have learned and gotten extremely good at automating operations and creating systems to remove my involvement. I started out completely bootstrap hands on, at the shop, helping in the kitchen, purchasing things myself, etc. Now, I have an operation with 8 shops across the city basically run by my small management team of just 4 people, while I occasionally supervise what's going on maybe an hour a day or so, or sometimes not at all. The amount of work and stress I deal with these days with 8 shops is a small fraction of what I dealt with when I first started and had just 1 shop. Not only are my stress levels down, but my profitability and efficiency on a per shop basis is higher. The 2nd most valuable thing I have going is 2) The brand still has enormous respect, trust, and recognition in the market place. We're one of the most known brands in our sector. So, while things seem to have peaked, it seems like I should/might be able to leverage these 2 factors to pivot somehow into a faster lane.

There are 2 ways that I'm considering that might be good for where to go from here. The first one was to start franchising my brand into other neighboring countries of Africa so that others can open shops as well. Since I've already developed systems that have made it possible for me to seamlessly run 8 shops, I think the business model is primed already (or can be) for franchising. I don't have experience in that space though and would have to get caught up to speed.

The other option I was considering was starting to get into FMCG creation of various products using our brand, or another, that can be produced/processed and then distributed into the market at lower margin / higher volume. This would leverage current productive capacity we have at our production facility, and would also potentially leverage our brands reputation into other products. In Africa, the real potential definitely is low price point, high volume products that tap into larger portions of the consumer base. Our desserts are more high end for the upper class market, at high end malls, hence the ceiling I am reaching.

So I'm at a point where I'm literally unsure if I might be on the cusp of something even better, or whether it's time to look into bigger opportunities that address bigger needs, with more potential. I've considered just letting the current business run in the current form and going a different direction all together but don't have an immediate idea of what I'd want to get into.
 

Don't like ads? Remove them while supporting the forum. Subscribe.

AlessioLC

Bronze Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Jul 19, 2017
479
444
225
22
France
I would start a Franchise, if you feel that there's room for expansion, go for it.
Your locations already prove that your concept is working very well and people love it, so if you multiply your locations you would become the place to be, in every city.

You could also build your brand online and create products of your niche with your brand on them and sell them online.
 

Megaman9

New Contributor
Jul 21, 2018
15
5
14
Congratulations on your success so far.

Are you selling to private consumers only ? what about business like hotels, restaurants etc ?
 

AgainstAllOdds

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Read Millionaire Fastlane
Speedway Pass
Dec 26, 2014
2,019
12,019
2,446
27
Chicago, IL
Based on your writing, you seem like an incredibly intelligent guy.

I can't give you any solid advice, but from what I read, it seems like you'll figure things out. In three months your outlook will be completely different than what you're thinking today.

Congrats on your success so far.

P.s. Take my opinion with a grain of salt since I don't know your situation fully (as no one else here does), but I'd prioritize FMCG creation first, franchising second, and doing something else last. You don't want to step away from your business until it's definitely hit a ceiling or are confident that the sales can't go away overnight.
 
OP
OP
K

KnockTheHustle

New Contributor
Sep 20, 2018
3
8
11
I would start a Franchise, if you feel that there's room for expansion, go for it.
Your locations already prove that your concept is working very well and people love it, so if you multiply your locations you would become the place to be, in every city.

You could also build your brand online and create products of your niche with your brand on them and sell them online.
Hey man, yeah franchising is something I'm currently looking into as well as a consideration. Online isn't very common here yet but that's something I could check into as well to perhaps be one of the first movers on that.
 
OP
OP
K

KnockTheHustle

New Contributor
Sep 20, 2018
3
8
11
Congratulations on your success so far.

Are you selling to private consumers only ? what about business like hotels, restaurants etc ?
I used to sell to the hotels and restaurants but they usually wanted very customized and constantly changing products that it became more of a distraction than anything. They also used to want very low prices, despite not really doing that much volume. I met with a few 5-star hotels that wanted us to enter into an agreement with them but at the time I was quite busy with other shops I was opening so it didn't seem to make sense. Definitely something I've considered though at this point once my own retail options have slowed.
 

Create an account or login to comment

You must be a member in order to leave a comment

Create account

Create an account on our community. It's easy!

Log in

Already have an account? Log in here.


Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom