Being an “entrepreneur” is something of a buzzword. A whole ecosystem has developed around it, with incubators, clubs and god knows how many books. We’ve even got a television show dedicated to startups in our sector seeking investment – My Million Pound Menu.
During the past decade I’ve founded a few businesses and sold a few as well as working with lots of others. I have had mild success of my own and, perhaps as is always the case, helped others find much more success. One thing that has always concerned me is the culture that has built up around the idea of entrepreneurship. In my early 20s, I became wrapped up in it – attending regular sprint sessions, working from incubators, and generally bathing in the warmth and glory of calling myself an entrepreneur alongside my peers.
Obscurely in this world, because of the heavy influence of technology startups the whole premise of starting up has seen aspiring entrepreneurs taught they have to be fixing a problem, bootstrapping is the only way to get going, and you can worry about commercialisation later. In the tech world there’s no lack of angels looking to invest in the next big idea, with the knowledge lofty valuations give them a little more comfort around the risk.
You’ll often hear well-known influencers in the startup space promote the need to work relentlessly and tell you struggle is what it takes to be a successful entrepreneur. “Struggle-porn” as one business editor called it recently.
In the past year, Think Hospitality has invested in several early-stage concepts and worked with many people on all kinds of entrepreneurial journeys of their own. We’ve met far more – too many, truth be told. I’m always willing to meet with people who reach out to offer guidance and support but my first questions are always around sustainability of the way the business is working and the commercials.
More often than not there’s a lack of knowledge or even basic understanding around the commercials and financials. Usually the business owner is working unsustainable hours and not accounting for this in any way, which means there’s no true indication of how the business is actually performing.
There have been a few occasions where we’ve tried to help people save their business with restrategising, refinancing and turnaround projects, something that may come as no surprise given the well-documented issues in our sector.
Compared with many countries, it’s simple to start a business in the UK. Owning a pub or restaurant has always been a dream for the masses and has long been realised through opportunities presented through the leased and tenanted sector. In a way, the opportunities created by street food and market hall propositions, which reduce ingoing costs, has meant starting a hospitality business has become easier than ever. In these type of models, entrepreneurs are able to concentrate on the food as there’s usually limited staff, little infrastructure and footfall delivered to their door.
The challenge, as many reading this will know all too well, is food is only one aspect of a great business. There are a number of incubator-type programmes run by food hall and market operators that help teach the skills to get set up within this model but it feels like there’s a significant gap in helping these business owners take the next step into bricks and mortar and sustainably expanding from there.
The idea of scaling a business to multiple sites is attractive and often an entrepreneur’s intention but it’s no easy feat. It takes a lot of experience and knowledge to do this effectively. A good idea or popular concept isn’t enough. There are many well-documented examples of small brands that seemed to be on a winning streak and scooping major accolades in our sector, who rolled out too quickly and have now virtually disappeared. Only yesterday I met an operator currently riding high on publicity and exposure that, beneath it all, is skating on thin ice.
It’s one thing to be entrepreneurial and take risks, another to be reckless when taking new sites, credit lines from suppliers and other peoples’ money.
With the slowdown in brands scaling, an increase in company voluntary arrangements and a respective increase in property availability, some landlords are increasingly taking bigger risks on who they let their sites to and directly fuelling unsustainable growth by financially supporting these entrepreneurs with what seems like little due diligence.
As a sector we need to encourage diligence and robustness in how we approach helping entrepreneurs. We need to be careful not to overexpose young brands in the sector as it’s far too easy to let ego and ambition run away with itself.
If you are reading this as an entrepreneur, my biggest advice is to know your numbers, spend time with professionals on your financial planning and leave yourself breathing room. I am in no way trying to clip your wings but would encourage you to learn to walk before running, ideally with a good warm-up first.
Originally published in Propel Friday Opinion