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Biz Flop Breakdown

Food for thought… It’s rare I change my mind on something like this.

Well let me tell you, I’ve been in the process of shutting down my latest business, laying off employees and selling equipment.

One of my favorite entrepreneurship sayings is “if you’re going to fail, fail fast”

and boy was this fast.

Opening day was November 2023 and closing April 2024.

Okay so what the hell happened and what are some of the takeaways from this biz?

First some background.

I started my first food business 6 years ago as a waffle stand in a farmers market (you can read about it here)

I was entirely too involved in this business and did not hire out workers for it. Although it made good money for a food business, I didn’t want to be in the day to day operations and eventually burned out and retired the business.

I vowed to never get involved in the food industry again… Until last year…

My gym had a sign that they were looking for a smoothie/juice bar operator for the space. The whole space was already built, it just needed equipment and a ‘can do’ attitude.

I had a lot of both 😈 

I ran some numbers, got a business loan, roped in a business partner and got to work.

Then it all went downhill.

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Learnings

Smooth(ie) criminal… Long story short, here’s a breakdown of all my learnings from this failed smoothie bar business (so you don’t make the same mistakes)

1. Know your numbers

When starting you’ll have to make some assumptions on what you project revenue and expenses will be. The best thing you can do here is to find someone with weighted credibility (a former/current smoothie operator) to get some safe assumptions.

I didn’t know my numbers well until about our 3rd month. I realized what it would take to hit profitability and our run way would run out.

Essentially it was: Income - employees - tax - cost of goods - rent/utilities - fees = Cash flow

Most of these worked as a percentage, I hadn’t figure those out until a couple months in.

We were losing a few thousand bucks each month and the road to break-even was a long one I wasn’t ready for.

2. Be realistic about your commitment

How much time do you have? How much time are you willing to commit? What plans are you willing to drop? What sacrifices are you willing to make? Write these down, you’ll need this later.

This is important because if you want your business to work, you have to be all in. You can’t be all in if you prioritize partying, other ideas, and vacations.

3. Have a plan (and exit strategy)

Planning is crucial for success and failure. Do you want to sell or get acquired? Expand to more locations/products? Do you have a cut off date if things don’t go well? Having all these in place can help you plan and make things less stressful.

4. KYC (know your customers)

Whats the demographic you’re serving to? What’s their pain points and budgets and goals? Knowing this will increase your chances of success. I didn’t really know this but was able to adapt in things like menu offerings, price point and opening/closing hours.

3. Whats your differentiator?

How will you standout? For our business, we didn’t. We “planned” to stand out by being the most convenient. This meant obsessing over time per order (turns out Chipotle does this too) and offering the most convenient items possible.

While it made sense on paper, we didn’t follow through with this. There were many options we could’ve pursued as a differentiator:

• Highest quality ingredients (high price)

• Lowest cost products (low quality)

• Fastest turn around times

• No/low sugar options only

• Offer very limited menu but make them very very well

• Offer a huge menu where people have unlimited options

A lot of ways you can differentiate but you gotta follow through and own it. We didn’t.

Moving Forward

It’s tough to “watch the tape” on how you failed, but it’s a crucial aspect of growth and success. So what’s next?

• No more food and beverage

I’ve said it once and I’ll say it again. Selling food is like selling time bombs. If you don’t sell, it will expire and blow up in your balance sheet. Don’t do it (unless you LOVE every aspect of it and would do it for free)

• Find like minded partners

Someone that will go all in with you, while also being strong in areas you are weak, while also being trustworthy, and also enjoyable to be around is a needle in a haystack. Best of luck in this journey.

• Would you do it for free?

I keep coming back to this aspect of making a business from doing things you love, or would do for free. For me that would be writing, I’ve done it for free for years am slowly turning writing into a business.

More to come soon 😃 

In conclusion

I made some money and lost some money, but learned a 💩 ton. And that’s what life is all about. Yes, it would be nice if my bank account had more 0s but I (and others) believe will ALWAYS feel that way. No need to overly obsess over that stuff.

I had a ton of fun doing this and I got to run this business with one of my best friends.

So if you’re wondering whether to make the jump, do it.

I’ll leave you with my favorite quote: “A ship in harbour is safe — but that is not what ships are built for.” - John A Shedd.

Viability:

1 [building spaceships] 🚀 to 5 [easy peasy] 😊 

Keep going… We all have ups and downs. It’s important to get back up and keep moving forward. Learn but don’t obsess over the past — and finally:

HAVE AS MUCH FUN AS YOU CAN, THIS WILL ALL BE OVER SOON 💀 

(As usual each business will have it’s own setbacks, and it’s all about the execution and consistency rather than just having the idea)

It’s a great day to be great!

Love, Mike 👋 

p.s If you love side hustles, I bet you have friends that love em too. So don’t be stingy, share Ghost Business with them by pressing the below button!