not sure if this is the best place to post this but I promised in another thread I would so here goes.;
I know some of you might have read that title and think “that guy must be crazy or an idiotâ€. But it really is true. I lost $5000 on a business deal last year and I couldn’t be happier! Dont get me wrong I didn’t like losing 5 grand but what I learned from the experience was worth much more than $5000.
Here is the story. I have been in the foodservice business for about 15 years of my life. Four of those working in restaurants and the other eleven in foodservice sales. When you work in that business (helping others run their business) you cant help but think about possibly owning your own someday. So at the beginning of this year the opportunity arose for me to take over a restaurant. I have had a part time catering business for a while prior to this and I had just purchased my first piece of commercial real estate that needed some major rehab, so I was somewhat hesitant because of all that I had going on. Oh did I forget to mention that I also work a full time job?
So I had a ton of things going on but this restaurant opportunity had a lot of potential. The bottom line was that I could lease an entire restaurant (dishes, equipment, everything) for $1500 a month. But overall I would still need to borrow some operating capital (most of my other funds were wrapped up in my RE project). Plus my catering partner was going into this with me, so overall we needed to borrow only $20,000 to get this thing started and besides it is something I have always thought about. The thing that constantly nagged at me was how much time and effort the restaurant business takes for a relatively low ROI and the normal fear of what if it doesnt work out (blah,blah, blah all the things that cause you to talk yourself out of something.
So even though I was hesitant ( and scared) and not entirely sure about the whole thing I decide to forge ahead. I negotiated a one year lease with a three year option (because of my hesitancy this was the only way I felt comfortable enough to do this) and I was a restaurant owner.
Now to keep this from being a novel lets just say that sales were lackluster (this is in a very small town in Indiana) and the manager I hired was less than stellar. I was juggling my job and I was knee deep in my RE remodel and couldn’t be at the restaurant as much as I needed to be. My partner also did not step up to the plate much and we relied way too much on our manager. So the bottom line is that things just never materialized and after 8 months it started to become clear. I hated this! I was going from working on a RE project that I loved to go to a restaurant that I despised. I was going from a money making venture (a commercial property with positive cash flow) to a time consumimg losing venture ( even though we were paying the bills and making money some months and losingmoney other months for the time involved it was a loser).
I knew that I could turn the restaurant around over time if I wanted to dedicate myself to it and put in all kinds of time and effort but I didn’t want to. So as the time came for us to exercise our option I told my partner (and he agreed) that we would not exercise the option. This of course meant us taking on the balance of the debt ourselves ( about 10k now) but I felt that I would rather do that and turn my attention to what I enjoyed ( and was much more profitable) rather than continue on with the restaurant that I hated.
So the bottom line financially is that I lost $5000 but I gained insight into knowing that I enjoy RE and even though I know a lot about the restaurant business I dont want to own one. I also gained the satisfaction of doing versus sitting on the sideline and wondering. It doesn’t matter to me that I lost $5000, what matters is that I was able to overcome some fear, forge ahead and DO something. What matters is that I was able to gain insight into what direction I want to go with my life. In financial terms my restaurant experience was a failure but in terms of personal growth it was a huge success. So yeah I lost $5000 and I feel great about it.
I know some of you might have read that title and think “that guy must be crazy or an idiotâ€. But it really is true. I lost $5000 on a business deal last year and I couldn’t be happier! Dont get me wrong I didn’t like losing 5 grand but what I learned from the experience was worth much more than $5000.
Here is the story. I have been in the foodservice business for about 15 years of my life. Four of those working in restaurants and the other eleven in foodservice sales. When you work in that business (helping others run their business) you cant help but think about possibly owning your own someday. So at the beginning of this year the opportunity arose for me to take over a restaurant. I have had a part time catering business for a while prior to this and I had just purchased my first piece of commercial real estate that needed some major rehab, so I was somewhat hesitant because of all that I had going on. Oh did I forget to mention that I also work a full time job?
So I had a ton of things going on but this restaurant opportunity had a lot of potential. The bottom line was that I could lease an entire restaurant (dishes, equipment, everything) for $1500 a month. But overall I would still need to borrow some operating capital (most of my other funds were wrapped up in my RE project). Plus my catering partner was going into this with me, so overall we needed to borrow only $20,000 to get this thing started and besides it is something I have always thought about. The thing that constantly nagged at me was how much time and effort the restaurant business takes for a relatively low ROI and the normal fear of what if it doesnt work out (blah,blah, blah all the things that cause you to talk yourself out of something.
So even though I was hesitant ( and scared) and not entirely sure about the whole thing I decide to forge ahead. I negotiated a one year lease with a three year option (because of my hesitancy this was the only way I felt comfortable enough to do this) and I was a restaurant owner.
Now to keep this from being a novel lets just say that sales were lackluster (this is in a very small town in Indiana) and the manager I hired was less than stellar. I was juggling my job and I was knee deep in my RE remodel and couldn’t be at the restaurant as much as I needed to be. My partner also did not step up to the plate much and we relied way too much on our manager. So the bottom line is that things just never materialized and after 8 months it started to become clear. I hated this! I was going from working on a RE project that I loved to go to a restaurant that I despised. I was going from a money making venture (a commercial property with positive cash flow) to a time consumimg losing venture ( even though we were paying the bills and making money some months and losingmoney other months for the time involved it was a loser).
I knew that I could turn the restaurant around over time if I wanted to dedicate myself to it and put in all kinds of time and effort but I didn’t want to. So as the time came for us to exercise our option I told my partner (and he agreed) that we would not exercise the option. This of course meant us taking on the balance of the debt ourselves ( about 10k now) but I felt that I would rather do that and turn my attention to what I enjoyed ( and was much more profitable) rather than continue on with the restaurant that I hated.
So the bottom line financially is that I lost $5000 but I gained insight into knowing that I enjoy RE and even though I know a lot about the restaurant business I dont want to own one. I also gained the satisfaction of doing versus sitting on the sideline and wondering. It doesn’t matter to me that I lost $5000, what matters is that I was able to overcome some fear, forge ahead and DO something. What matters is that I was able to gain insight into what direction I want to go with my life. In financial terms my restaurant experience was a failure but in terms of personal growth it was a huge success. So yeah I lost $5000 and I feel great about it.
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