Growing up in India as a 12-year-old, I dreamt of working at the World Bank. Little did I know I'd find myself an entrepreneur in the U.S. with restaurants in NYC and Chicago, a few careers and many decades into the future. It's been a mystifying, gratifying, euphoric, anxiety ridden, black hole of a roller coaster transition and journey with stark learnings that apply to anyone embarking on this journey.
So beware, this is not a “If you build it, they will come," field of dreams, be-the-happy-entrepreneur column. But I will share what worked and what didn't for me, and hope this will help all entrepreneurs starting out, and women in particular, to navigate their own minefields to seek miracles.
A little on who I am: I finished my Master's in Economics in India and came to the US for a Ph.D. in Economics, all to accomplish that childhood World Bank dream job. At the World Bank, I worked and published in private sector infrastructure development. Working in a multilateral entity with governments to build their countries was riveting, but I wanted to get a little more granular and build hardcore business skills which is where being a management consultant at McKinsey & Co. came in. Getting into McKinsey was the most competitive experience I had ever faced; the work was deeply intense, with Fortune 100 companies on their most pressing issues, and the learning curve was steep and nonstop. A few years in, as food mania and frenzy started raging in the U.S. and across the world, I started obsessing about what I considered an unmet niche – contemporary Indian dining with a twist that would appeal to even the most timid of diners. Enter going entrepreneurial and my founding Vermilion, my Indian-Latin restaurants.
Invest in Yourself First
It alarms me when I hear high schoolers or college drop outs wax on about being the next Bill Gates. Please know, the world is littered with failed entrepreneurs and not all garage start-ups will succeed. So it's vital to build your credibility and to first and foremost invest in yourself - and education and work experience is really the only way to do that. It's also a great backup to have, should your venture go bust, which there's a reasonably high chance of. In my case, my prior business background, ph.d., and McKinsey experience were invaluable and also gave me instant credibility. Even though I was entering a whole new dining industry I knew next to nothing about, other than the rosy fact that 90% of restaurants fail within five years!
Financial Literacy is not Optional
Research has shown that in the U.S., most girls shy away from math and this spills over into business skills and even their choices of careers (flocking to the softer side of even the corporate world – HR, Marketing, versus running Operations). If you're going the entrepreneurial route, however, step one is taking courses to be comfortable with Profit & Loss, Balance Sheets, Invested Capital and Cash Flow statements. I've met friends who say, “Oh, I'll hire an accountant. I'm creative, numbers is not my thing," but without these core skills, you're doomed. It's like driving fast on a highway, blind. The good news is building financial literacy is not hard, and there are tons of resources. Go to Women's Business Centers for virtually free crash courses, go audit a course at your local college, but just do it! You'd be wise to sign up for the Business Plan modules too – because only then can you speak the language of owners, investors, bankers, vendors, partners – which puts you at a whole different level, from inception to when you'll want to scale up.
If you don't know the industry you're entering into, this stage is vital, well before you commit to starting your business. Do all the external research you can, talk to owners, operators, competitors, anyone in the field who'll tolerate you. Try and live the business, collect data and run the numbers – is it economically viable, really and truly? Hold on to that job or take a leave of absence until you know as much as you can, within a specified time limit. And if there are ways to run early concept tests before you commit, that's ideal. I spoke to over 40 owners, managers, chefs; I lived with a restaurateur mentor and shadowed his every move for a week, combing over all the data he shared with me; I hired a concept chef and tested my vision of Indian-Latin dishes with potential investors and consumers to convince myself of concept and economic viability. Only then did I quit my job. This early immersion was eye-opening and educated me outside-in on the many pitfalls of the industry I had chosen.
There is never perfect knowledge and at some point you'll have to take the plunge. That's when many will come out of the woodwork to assure you of the foolishness of your choice. Not just when you start out, but constantly along the way. Naysaying also comes from within, especially if you're going it alone. Building confidence and constantly projecting it (to your team, employees, customers, all stakeholders, even family) can be exhausting and you have to find ways to replenish your stockpile. I'm a strong proponent of women being their own best self-advocates, being entrepreneurial is not for the timid. Actively seek mentors, an advisory board (often investors), peers, industry associations and external networking groups. Over time I've gotten deeply involved with key players both within my industry (James Beard Foundation, National Restaurant Association and it's State chapters, women's organizations in culinary) and outside it (The Chicago Network, NY Women's Forum, International Women's Forum, The Economic Club of Chicago). I've found so many mentors, friends, business opportunities and even investors through these connections. And it helps me renew myself, open my world, or have multiple crutches to turn to when needed.
Knowing when to Outsource
It is true that at the end of the day, you are only as good as your team. Knowing your shortcomings and where and how to bring in talent to build and run your vision is more than half the battle. Through interviews, advertisements, poaching, networking, trials, whatever it takes to get good people on board – spending inordinate time building your team pays off in the long run.
For my restaurants – I had to work with multiple brokers to find the space; I needed a lawyer to navigate opening a business, incorporating it, executing investor documents; another lawyer for retail and liquor permits; a general contractor to execute my design vision and the construction; a manager to hire and train my service team; and I tried and interviewed over 35 chefs to finally hire one to run and staff my kitchen. Then it was negotiating with all the vendors (food, beverage, supplies, equipment, maintenance contracts, over 50 vendors) and finally working on the marketing plan and launch, while building the menu and beverage plan and training all in tandem. It was insane and still is, and I couldn't do it without outsourcing well.
Keeping it Tight & Thinking Scale
The vast majority of early stage businesses fail because they run out of cash before they can hit viability. Which is why it's key to be really tight-fisted when you start out, when you may be flush with cash, and rosy with optimism about the endless possibilities. Remember that every dollar spent will have to be earned ten times over to recover in invested capital, if you run a 10% margin. Knowing where to cut corners and where to over-invest is a delicate balancing art. In my case, I knew the moment I had the keys to the space that my expenses would be ticking and eating into my financial buffer. So I gave myself a six-week turnaround to construct the space and launch the new restaurant. I planned almost every detail prior, had the constructor lined up and ready to go, ordered all furniture and long lead equipment prior, had my permits ready – everything that point on had to be done on site and justified the expense. It's easy to give into ego and build a mausoleum to yourself, but it may land up being just that!
I also strongly endorse dreaming bigger than you initially envision and introducing the discipline and scale of external capital (angel equity investors, commercial or SBA debt, crowdsourcing, VC). That only 2% of women owned businesses in the US exceed the $1 million revenue mark is a tragic reality and waste of our potential as entrepreneurs. It's also because women are least likely to venture out of financing through savings and remain too cash strapped to grow. Dream and plan big, to make miracles happen.
WRITTEN BYRohini Dey