One Year as an Entrepreneur!

It’s already been a year, I wondered. What started as a passionate journey has gained momentum in the past 12 months. Life has been very different, as an Entrepreneur to say the least. It is one thing to turn an Entrepreneur when you are in your fifties – you probably have enough savings to dip in, dabble on experiments and have alternate plans if one thing doesn’t work. The world has indeed seen many successful Entrepreneurs who started late in their lives. And it is completely different to start off on your own when you are in your twenties, which currently seems to be the flavour of the Entrepreneurial ecosystem. Lads that age have successfully demonstrated that their ideas can be converted into mega-businesses, touching the lives of millions of people. So, starting off in my late 30s was something I was not very comfortable, honestly, at the outset. I was having a fixed salary, enjoying air travels and hotels across the country, meeting the high and mighty exchanging business cards of large companies who gave me the identity that I probably deserved.

But things changed. They had to. The past two years have been troublesome for me, at a personal front which had an impact on me professionally. Entrepreneurship instincts come naturally to a few, and many others develop it over time. Mine was the latter. That’s probably because being born and raised up in middle class environments taught me the essence of valuing money. It was not too wise to let go of all what you have earned and saved, forget borrowing and running a business. It’s a bit of a taboo too, for an Entrepreneur is expected to do things which one doesn’t have to otherwise. I too, like any other person thought of all these things before I ventured in to the entrepreneurial journey. To say the least, it has been extremely gratifying and satisfying. I have learnt quite a few things more in the past 12 months, which I may not have seen and learned if I was still working for someone.

The decision to start my own venture was a well thought out plan. My wife, who is my pillar of strength (sounds a bit clichéd but a golden truth) and I planned our goals meticulously for over a year before I finally got on to it. We worked on various business plans and models and finally arrived at something what we thought was a profitable, scalable and a saleable model. Smiling Baby (a baby shop that would cater to young parents and parents to-be) was first coined in my car during a long trip we had undertaken followed by the logo designs on a computer screen. Quite soon, the first store was up and ready. We commenced operations on a Friday. We had sunk in (or invested, if that sounds right) almost all our savings that we had accumulated over the past decade or so. It was a roller-coaster ride that we anticipated. And boy, what a ride it has been. I would have met atleast a 100 potential so-called Investors over the past 2 years. The very first one whom we met chided the idea. The person (and I am not going to identify their gender at this stage) discouraged me to pursue Entrepreneurship and instead focus on a day job which was more stable and secure since I had a family and two little girls. I gave a patient ear. And went about what my heart said. No offence to the person’s thoughts.

We prepared and shared a MS Powerpoint presentation coupled with backing numbers on an MS Excel Work Sheet with numerous people. The first question was – “Have you started off?” and this kept bothering me. It looked like they would pour money once we started. And there were quite a few examples that way in the entrepreneurial ecosystem already where professionals had been backed by “Angel” Investors who went on to build successful companies. So, I decided to quite a full time career and start off – 1^st Aug. 2014 was the day I was officially an Entrepreneur. Wishes and congrats poured on my LinkedIn page along with messages and calls from all corners of the world. Friends and Acquaintances appreciated my gall to quit a full time salaried job and pursue my dreams. It was very encouraging and I honestly enjoyed the attention and spot light for a few days.

We spoke and met a number of so called potential Investors. Some displayed grace. They heard our story. They encouraged us. They offered to support us. Many others said this would fail, probably they were a lot more clairvoyant than me for they were seasoned “Investors” who could predict which way things would go. They knew cock-shit about Retail, forget knowing what it takes to quit a full time job and become an Entrepreneur especially when you have a Cancer patient at home and five dependents including your little ones to take care of.

I should have probably listened to them and should have quit being an Entrepreneur. I didn’t since I was already in the game and wanted to give it a whole try. Things were fine for some time. Not a single instance of brick-bats from our customers, who appreciated what we were doing. The journey was turbulent but we thought it would stabilise slowly. Unfortunately, things didn’t go the way we had anticipated. There were a few reasons for this – we were a bit myopic in our thoughts about the business. I was quite confident I could raise money in a couple of months from starting, since the business idea was a strong one. It continues to remain so. And I had a decent pedigree – I was among the Top 50 Retail Professionals in India as recognised by a top research firm in 2014.  

We went door after door, making presentations and pitches, changing our business course as we moved forward from time to time. Our bank balances were drying. And one day, it was near empty. A few good Samaritans came forward to help us cross the bridge. It gave us a buffer. Although a short one. Those who had promised to support us couldn’t, for various reasons. Many emails, messages and calls went unanswered. We were losing hope on people whom we thought would give us a helping hand. I was willing to offer even half of my equity at some stage, just to ensure survival. Things went awry. My lowest point was for a few days when I gave up even on God.

I finally came to terms. It was my life and no one is expected to make an impact on it except me. Probably my close family and a few friends. I decided to shut the first store we had taken on lease. I had built it more passionately than the three houses we had bought in our lifetime over the last decade. I pulled out everything out of the first store, some personally with my own hands. I was choking. But with a glee in my heart, that this was not the end. And probably it could have got worse.

On 31^st July 2015, the day I completed 365 days as an Entrepreneur. This day and date will be etched in my mind all my life. It was a Friday too. The day we commenced our venture. And on this day, I had to legally cancel the lease agreement. It was a couple of hours’ thing and it was all over. Finally. For a venture which was started with so much excitement, it was not the best way to end.

As I wake up, sip my coffee and write this article, I begin my second year as an Entrepreneur. I have stood up, dusted, come to terms with the Ecosystem and have moved on as an Entrepreneur although I have a bit of baggage left as an individual. I have lost faith in people whom I trusted and those whom I didn’t know much – I would get carried away at times by sweet talk, but not anymore. I have realised that people come and go out of our lives for a reason. The “going” and let-go part seems to be more important, on a lighter note.

I always thanked my ecosystem for making me a reasonably successful professional over the past 18 years. In my first job when I used to scoop Ice-Cream 18 years back at Baskin Robbins as a part time job during my graduation, little did I realise that I would be blessed to offer jobs to a few people one day. “My Retail Journey” has been a very exciting one. And it continues to be so. I felt that an important reason for my success was the ecosystem. And I also feel that the same ecosystem let me down as a first time Entrepreneur. Am not sure how much importance should I give anymore to the ecosystem though. But I will continue to respect the views of people around me, although I may not be able to abide by what they say at all times for all issues, unanimously.

I have a few plans for the next couple months on what I should be focussing on. This time, I have not one but multiple back-up plans. Although they are just plans on paper and computer at the moment. But am sure, I am going to crack this, come what may. I cannot and shall not allow life dictate terms to me. This is my life and I shall live it the way it suits me and those around me the best.

I have Miles to go, before I sleep. This is not the end of year 1, this is the beginning of Year 2.

Watch this space. 

Are Cafes sustainable?

The most discussed topic these days in Retail circles in India is the impending IPO of the company that runs the Cafe Coffee Day chain of stores. The holding company, Coffee Day Enterprises is planning to raise ₹1,150 Crores from the Indian Stock Market for which Draft Herring Prospectus has been submitted recently. The company is among the few of its peers such as The Future Group, Shoppers Stop, Trent(Tata's) and Dominos (Jubiliant Organosys) who have gone public with the companies. CDE plans to utilise the money raised for paring debts and for expansion almost on an equal basis. The company started out renting its premises for Internet enthusiasts to browse in 1996 while also encouraging them to buy a good cup of Cappuccino, coffee that is prepared and presented in the Italian style for 5 times the price of a normal cup of coffee. Very soon, the company decided to change its strategy for Internet to consumer and positioned itself as a place for conversations and more. The rest is history. 

A lot happens over Coffee, is not just the tag line for CCd but also something that is real. A lot of things get done at cafe similar to CCd such as Costa, Barista, Coffee Bean and Tea Leaf, and of course at Starbucks, the world's largest cafe chain which entered India in 2012 in a joint venture with Tata's. I was at a Starbucks for over 4 hours yesterday, which included a one hour meeting, a half an hour call and rest of the time on Mails and office work. During those four hours, not more than two tables were empty for more than 5 mins. The cafe was running at full occupancy. There were people working on their Macs and other laptops, a few who were reading stuff on their books and devices and one man sitting next to me who watched a full movie! 

With an Investment of over ₹1 crore in interiors and hefty rents for locations, this SBUX outlet does a Sale of about ₹40-50 Lakhs a month. Compare that with ₹3/5 Lakhs that a CCD would do, albeit with 1/4 th the investment and 50% lesser opex. So, are these cafes really viable in the long term?

Answer is Yes and No. 

Cafes are viable in the medium to long term provided they receive continuous and healthy patronage. Keeping aside the Capex and Opex for a moment, the cafes would be profitable not just financially but as a Brand asset in the medium to long term when their occupancy remains high. Consumers walk in to a cafe for the coffee (and food) for only 30%. The rest is for the experience in itself and a peaceful me-only space that one doesn't get at home or workplace. 

It is far easier to be viable as a single store than as a chain of stores, for Ny format in Retail. Most of the Indian Retailers are bleeding due to unresponsive assets in the form of their stores and high costs of operations including servicing debts. This will change over time with Retailers finding new avenues for their revenues. But what about cafes? CCD took a strategic position to be the nearest cafe in every neighbourhood and that has paid off. There are over 1,400 cafes across four formats in over 250 cities in India apart from a handful of them in Austria and Malaysia. Most of the cafes for CCD are operationally viable and are not seeking money from Corporate anymore. The newer ones face tough competition with the traditional outlets, especially with the changing landscape in the out of home consumption sector.

Cafes have always been viable provided you get the fundamentals correct. So, for every Java Green and Barista, there is a SBUX and CCD as examples. As the saying goes, the 120 bucks you paid for the coffee is actually not for the coffee but for the sofa and a/c. With the increasing trend of people working in casual environments, cafes will have a large impact on our lives. Next - probably a Bollywood fil, on how cafes have made or broken marriages! Watch this space.