Author, speaker, philanthropist, entrepreneur and founder of leading, cutting-edge online learning platform Adaptively Education.
The Covid-19 pandemic has been devastating to businesses in nearly every industry throughout the world. The restaurant industry is having a particularly hard time. But times were tough for restaurateurs and small business owners long before Covid-19 and they will very likely be just as if not more difficult in the years following the pandemic.
Before I became the founder and CEO of one of the top supplemental education franchises in the U.S., I experienced numerous failures in my previous business venture. I went from owning a thriving restaurant to opening three more in a way that was unprofitable and ultimately unsustainable.
Those valuable lessons from my failure actually made me into the successful businessman I am today. Experience is a great teacher, but a better student can learn from other’s mistakes. Here are a few key but often overlooked tenets I learned that can help other young entrepreneurs save their businesses now and build even more successful ventures in the future.
Founders and investors must be on the same page. (There’s no such thing as too much communication.)
One of the biggest mistakes I made in my previous business was not making sure that all of my investors were on the same page. Outlining clear, structured goals, timelines and expectations helps ensure that your investors are equally supportive of taking the business in the right direction and in agreement about key decisions. Business decisions should never be made on faith or a whim without thoroughly assessing the current situation first.
Building the right team is vital. (Hire character and train skills.)
Building the right team, including managers and supervisors, ensures your whole business is greater than the sum of its parts. Founders should carefully assemble leadership teams that have a vested interest in the business. Too often, leadership is only interested in their earnings and fails to prioritize the goals and interests of the business first.
You must also make sure you hire the right people to fill the right seats. Although each person should make their own unique contributions, they should always consider the team’s input without being individualistic or egotistic regarding the process. Each individual should personally embody the company’s core values. I see far too many teams who either don’t know what their core values are or don’t have any core values at all.
Don’t rely too much on one person or group. (Always keep the big picture in mind.)
You should never rely too much on one person; otherwise that person holds the fate of your business in their hands. In the restaurant industry, founders often have the impression that the head chef makes or breaks the business, which is a false paradigm. If the head chef is in control, he will bring in his whole team and, should he decide to leave, his team will all leave with him.
Ultimately, your team shouldn’t be connected to any manager, leader or head chef more than they’re connected to you. This way, when anyone in leadership decides to move on from your business, the rest of your team is still aligned with your vision.
Track your most important KPIs. (But stay on top of the details.)
As a restaurateur, I failed to establish, track and improve key performance indicators (KPIs), such as the cost of food, direct labor, indirect labor, etc. Because my focus was exclusively on top-line revenue, I did not realize that the more revenue we collected, the more loss we incurred.
Not tracking the right KPIs prevents business leaders from being profitable and able to scale in a healthy way. Without routinely dissecting your expenses and devising ways to improve, you’re unable to cut costs and turn your business around before it’s too late.
Establish solid SOP. (Constantly adjust, but always have a standard.)
I made the mistake of not clearly establishing and documenting my business’ standard operating procedures (SOP) and relying on people instead. Without a strong SOP, your business won’t be able to scale, your turnover rate will be high and you’ll waste even more time and money hiring and training more employees.
While it is nearly impossible to document every business procedure (things change and different chefs have slightly different recipes), it is advisable to outline and document the top 20% of procedures responsible for operating 80% of your business.
Running a company is incredibly challenging, but the rewards can outweigh the challenge with thoughtful communication, analysis and preparation. Within that, be ready to adjust and learn while constantly strengthening your core. Although change is constant, failure does not have to be.
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Author, speaker, philanthropist, entrepreneur and founder of leading, cutting-edge online learning platform Adaptively Education. Read Hao Lam’s full executive profile he