Podcast Summary
Opportunities for new businesses in hospitality despite challenges: Young entrepreneur Lucy shares her determination to start a coffee shop despite industry struggles, with potential rent reductions offering opportunities for new businesses.
Despite the challenges in the hospitality sector, there may be opportunities for new businesses due to potential rent reductions from landlords. This is important to note as many hospitality and leisure businesses are currently operating at break-even or even below minimum wage for the owners. James Sinclair, the podcast host, emphasized the difficulty of turning a profit in this industry and shared his excitement about speaking with Lucy, a young entrepreneur aspiring to start a coffee shop in Somerset. Lucy is currently managing a coffee shop for the National Trust and is determined to go out on her own. The podcast aims to provide valuable insights and advice from business owners who have faced similar challenges, and upcoming episodes will cover topics such as buying companies, team building, raising finance, and valuing your business.
Creating Valuable Content Brings Long-Term Returns: Investing time and effort in creating valuable content can help businesses attract loyal customers, generate leads, and build a strong brand for the long term.
Content marketing is a powerful tool for businesses to attract loyal customers, generate leads, and build a strong brand. James Ingram, the speaker in the text, shared his experience of filling an event using content marketing without any paid advertising. He emphasized that creating content, whether it's podcasts, books, articles, or videos, is leveraged work that can bring returns for a long time. Disney is an excellent example of a company that has been successful in content marketing for decades. By producing valuable content consistently, businesses can position themselves above their competitors and attract opportunities towards them. James also mentioned his Entrepreneurs University, an online training platform where he shares his knowledge on growing businesses. Overall, the text highlights the importance of investing time and effort in content marketing to build a successful business.
Investing in coaching and resources for business growth: Joining affordable platforms like Entrepreneurs University can provide startups with weekly coaching, valuable resources, and expert guidance, helping them navigate challenges and grow their businesses.
Starting a business comes with numerous challenges, and one effective solution to overcome these challenges is by investing in coaching and resources, such as James Inclair's Entrepreneurs University. This platform offers affordable weekly coaching, swipe files, blueprints, and cheat sheets, all aimed at growing businesses. For just 49.99 a month, you can have a coach like James guiding you, without the hefty price tag. Lucy, a young entrepreneur starting a coffee shop, faces challenges like establishing a culture, dealing with employment issues in the hospitality industry, and ensuring sustainability and eco-friendliness. She aims to open multiple B Corp certified premises, turning over £1,000,000 in the first year, with a profit of £250,000. To achieve these goals, Lucy balances her full-time job at the National Trust with her coffee shop startup. Although she has some experience in managing a cafe and has a grasp of gross profits and labor controls, she acknowledges the need to learn more about overheads and the competitive nature of the sector. The Entrepreneurs University could provide her with the necessary knowledge and support to make her business a commercial success.
Starting a coffee shop business: Low entry, high competition: Expand offerings and extend hours to boost sales, but scaling up and becoming a big brand is challenging
Starting a coffee shop business has a low barrier to entry but is highly competitive and difficult to turn into a profitable enterprise. Coffee is a massively traded commodity due to its widespread consumption around the world, but most independent coffee shops in the UK only generate about 120k in sales per year. To increase revenue, expanding the business to include a restaurant and extending opening hours can help maximize turnover. However, it's challenging to scale up and become a big brand, as customers often view coffee shops as specific establishments and may not consider them for other offerings. Personal experience shows that entrepreneurs may not earn a profit for several years, and taking on the risk of self-employment requires being rewarded with more than just a wage.
Running a coffee shop: Balancing location, competition, and product quality: To succeed in the food industry, businesses must balance location, competition, and product quality. Prioritize the quality of your product and service, but also consider the importance of high footfall areas and a diverse product offering.
The success of a business, particularly in the food industry, depends on various factors such as location, competition, and product quality. The discussion highlights the challenges of running a coffee shop, with high overheads making it difficult to make a profit despite selling relatively expensive products. In contrast, businesses like Pret, which offer food and coffee, have a better model due to the higher spend per head. However, this model only works in high footfall areas. The focus on organic, sustainable, and local food is important, but it should not be the primary USP. Instead, the quality of the product and service should be the priority, as people care about these factors before they consider the environmental impact. The success of a business relies on striking a balance between these elements.
Focus on product value and basics before sustainability: Provide quality, speed, and value for money as foundation for business success. Control customer experience and deliver basics before introducing unique selling points.
While providing high-quality services and being environmentally sustainable are important for a business, the focus should first and foremost be on the product and providing good value for money. Quality, speed, and value for money should be the foundation upon which all other aspects of the business are built. As the speaker mentioned, even in situations where customers are willing to pay a premium price, such as for a high-end experience or a unique product, they still expect good value for their money. The speaker also emphasized the importance of controlling the customer experience and delivering on the basics before introducing any unique selling points or additional features. This approach ensures that customers are satisfied with the core offering and are more likely to become loyal fans of the business.
Maintaining a successful hospitality business: Quick service, good value, strong GPs, and unique offerings: Focus on quick service, good value, strong GPs (ideally 70% or higher), and unique offerings to ensure a hospitality business's success. Pay less for leases by contacting underperforming businesses.
For a successful hospitality business, focusing on quick service, good value for money, it tasting great, and strong gross profit margins (GPs) is crucial. GPs should ideally be 70% or higher to ensure a business makes between 10-20% net profit. This becomes even more important considering the upcoming increases in VAT, NI, and business rates. Additionally, avoid offering products that require high prices to maintain profitability and instead, focus on unique offerings that customers can't easily get elsewhere. When signing a lease for a new business, try to pay as little as possible for it by contacting coffee shops or restaurants that are currently trading but not for sale. Remember, a successful business relies on a balance of quick service, good value, strong GPs, and unique offerings.
Learning and Negotiating to Take Over a Business: Start by running the business under its existing brand, negotiate a long rent-free period, be confident in negotiations, look for struggling businesses, and use personal letters for leads
Taking over a business can be a profitable venture with careful planning and negotiation. The speaker recommends starting by running the business under its existing brand for a learning period, then making changes based on what you've learned. When negotiating a lease, aim for a long rent-free period and be prepared to negotiate. Confidence is key in persuading landlords to give you favorable terms. Additionally, there are often many opportunities to take over struggling businesses, so keep an eye out for potential deals and be persistent in your negotiations. Handwritten, personal letters can also be effective in generating leads and building relationships with potential customers. Remember, every successful business owner started somewhere, and with determination and hard work, you can turn a struggling business into a thriving one.
Creating a profitable artisan hospitality business: Focus on building a strong business model with high-quality products, effective distribution, and various revenue streams like events, office catering, and potentially buying shop freeholds.
To make a profitable artisan hospitality business, it's essential to have good systems and processes, make high-quality products centrally, and distribute them effectively. However, it's crucial not to be in the business just for turning money. Instead, consider holding events, opening pop-ups at festivals, and providing office catering for predictable income. Additionally, aiming to earn the freeholds of the shops where your business operates can be a long-term goal to secure a stable future. The speaker also mentioned the importance of footfall and marketing, as seen in Pret's success with high rents and no marketing expenses. They suggested focusing on events, especially in towns with festivals, and providing sandwich platters for offices to create regular income. Moreover, they advised considering an option to buy the shop freehold when looking for potential locations. The speaker acknowledged the challenge of tracking customer lifetime value and creating regular income in the industry, but emphasized the importance of trying different strategies to address these concerns. Overall, the key takeaway is to focus on building a strong business model with various revenue streams and long-term goals.
Investing in property with alternative financing strategies: Explore purchasing a freehold property with a leaseback agreement or consider starting with small investments like catering to build capital for property investments.
When looking to invest in property, exploring options beyond traditional home loans can be beneficial. One such strategy is purchasing a freehold property with an agreement to lease it back to the seller for a set period, while also having the option to buy it back at the current price in the future. This approach allows investors to build wealth through both the business and the property asset by the end of their mortgage term. Regarding financing, it's essential to understand that some lenders may require securing loans with personal assets as collateral. If this isn't an option, starting with smaller investments, such as festival and event catering, could be a viable alternative to build capital and eventually invest in a premises with no money down. Remember, the best strategy depends on the individual's financial situation, business prospects, and personal beliefs.
Apply to James Sinclair's podcast to share your business story and expertise: Applying to podcasts and business broadcasts can expand your reach and contribute to a community dedicated to business growth.
If you're looking to grow your business, consider sharing your story and expertise on podcasts or business broadcasts. James Sinclair's show, "Grow Your Business," is an excellent platform for this, and you can apply on his website, JamesSinclair.dotnet. Don't forget to check out the YouTube channel for additional content. To help more people discover the show, please rate, review, and subscribe. By doing so, you'll not only expand your reach but also contribute to a community dedicated to business growth. Remember, sharing your knowledge and experiences can inspire and help others achieve continued success.
