Hi Fellow Entrepreneurs,
As an entrepreneur who has started three companies. One of which is a Fish 'n Chips restaurant serving fast foods including hamburgers and chicken burgers. For over eight years, I loved the work and saw my sales increase 150%. The problem with the increased cashflow is the target you become to the many vultures vying for your business.
Problem #1: The suppliers. They are quick to offer solutions to save you time and money. While this works in the short term, they will promptly increase prices after a few months. The reasons they will offer is there is a short supply, or we're not making any money. So, we agree on raising the prices marginally. In the mean time, they will do the same marginal price increases on all other products like chips, flour, hamburger patties. The problem is all suppliers play the same game.
Problem #2: The landlord. This is the biggest problem in running a restaurant in a mall...especially for the blood-thirsty Westfield landlords. They will entice you with a low rent for five years; however, they will SUBSTANTIALLY raise the rent at the time of contract renewal. At my first contract renewal "negotiations", their starting point is 50% increase. Yes, try to digest that when you're already paying $12,500 per month. This is for a space that is no larger than two master bedrooms to conduct your business with four employees. The other option is to leave the contract and close your shop.
The way Westfield (and some landlords) keep you paying is at contract termination you'll need to remove every square inch of plaster and fittings. The cost to hire professionals to clear out your tenancy is $25,000.
While you're working to improve your business, Westfield will permit a direct competitor to open next door to compete for your business....all the while, they tell you it's only going to be three shops. Well, in my case, it was doubling of the shop numbers.
This landlord problem runs deep. Every five years, they also require you to do "approved' renovations....with their "approved" contractors. I can only mention my renovation costs had ballooned from $15,000 to $50,000. My contractor said he had no choice but to order the same 'approved' tiles from half way across the country at five times the costs because Westfield had requested this 'approved' source.
Problem #3: Regulations. With governments starving for money, they will throw a few agencies to spur the economy. Some the regulation offices are Health and Safety, Employment Agencies, Tax Office, Legal Office. Each of which requires constant surveillance to keep on top of changes. I literally needed to hire an Accountant, a bookkeeper and a lawyer.
Problem #4: The employees. I don't need to waste any more time with this one. Lets just say, you have to think for the employees and their well being.
I have no doubt if you put your heart and sweat into your business that you'll be successful. However, in this day and age of fairness and regulations, I would ask you to reconsider another approach to making money.
Let me know if you agree or have any questions.
All the best,
Ben - Chattrbucks
October 27, 2017
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