Simon Kerr, a Fetola mentor, shares his story – and the hard lessons learnt – about opening a restaurant without any idea what he was getting himself into.
Some employees thrive in the corporate environment, some don’t. Those who don’t think they are born entrepreneurs, but this is not always the case. Sometimes entrepreneurs have to learn the lessons of life – it’s called paying school fees! I had to learn this lesson the hard way.
Back in the day, I was working for one of the biggest hotel groups in Africa and I was doing well. I was at the top of my training courses, youngest general manager, etc. But something was missing. I wanted to be my own boss. I didn’t fit into the corporate mould, I was always at odds with my bosses and I always battled to get my tie knot straight!
When the opportunity to rent a restaurant came along, I was as keen as the proverbial mustard seed. I went to look at the premises and fell in love – the kitchen was dreamlike, sophisticated and the décor was up-market. It had a cocktail bar on a mezzanine and dance floor with a proper bandstand in the middle of the restaurant. As far as I was concerned it was a done deal! We negotiated a rental and a lease over dinner and three weeks later I’d resigned, taken my pension payout (which wasn’t as much as I thought it would be) and headed off to be my own boss. I promised myself that I would never wear a tie again.
It took only about a fortnight before grim reality set in. I had no working capital, I hadn’t heard of cash flow (big corporates don’t worry about these details). I had never experienced liquidity or lack thereof. My solution was to get an overdraft – I couldn’t spell it let alone manage it! Then it took me a while to realise that while I’d seen the busy restaurant in peak holiday season, I’d taken over in the quietest three months of the year. There was no turnover, no sales, but the overhead and the staff I had inherited still had to be paid. Every month.
It took me six weeks to realise I was in huge trouble, overheads were far over where I thought they would be, losses kept mounting, and the biggest killer was the interest kept piling up each time I looked at the statement. Then the lease agreement suddenly sprang a few surprises with rental increments every two months, which I hadn’t really noted in my excitement to get my own restaurant.
Fortunately for me, two of my best customers, a lawyer, and an accountant, had offices next door to me. These two gents became my mentors and I will forever be indebted to them. I had no money for consultation fees so I traded expertise and advice for wine and steaks.
Over many free meals and countless bottles of wine, they imparted their combined wisdom on me and slowly, over the next 18 months, I was able to stabilise the ship and get the pumps working before we ran aground.
The nuts and the bolts of how we got out of the dilemma are not relevant today, but what is important was the advice and mentoring I was given. I have used the lessons learned all those years ago in all my businesses, whatever they may be.
I’ve distilled those lessons here:
- If it sounds too good to be true, it always is.
- If it seems like easy money, it’s usually not.
- Professionals are called that for a reason – use them because we all need guidance. Have a look at the books and lease agreement before you sign anything.
- Ask around before you just open or buy a new business in a new area, be it geographical or expertise. Local knowledge is invaluable. Sit in bars and coffee shops and listen to the local gossip.
- Know your numbers, know your market, and don’t think you are smarter than your competition. Engage with your competitors, you can learn a great deal from them.
- Never ever, EVER sign as surety for anybody.
Written by Simon Kerr
Simon Kerr is Fetola Mentor that has worked with the Fetola and SAB Tholoana teams for over three years. His skill set is suited to the hospitality and tourism sector because he is a qualified and accredited chef and he has also successfully run restaurants and guest houses in South Africa.
He has won multiple awards ranging from being voted as one of SA’s Top Restaurants for Chef Simon & The Phatt Chef Restaurant to GETAWAY Magazine’s TOP 25 Breakfasts in South Africa.