Young Hobart accountant, Eva Ewe, started a small side business selling fried chicken to university students at festivals. She learnt a lot in the process. Here she shares some great tips for anyone considering starting a business for the first time.
So you’ve got an idea and you’re convinced it’s a money maker. That’s what I thought about my latest venture. Korean fried chicken is on trend, there aren’t any Korean fried chicken restaurants in Hobart and I’m an accountant. What could go wrong?
My venture was on a small scale, tiny by all means. But it was exciting and provided me with a fun challenge, vastly different from my routine accounting and audit work. It was also an opportunity to put what I preached into practice. I could finally put those management accounting skills into good use. So, what did I learn?
1. Know your market
Knowing who your customers are is vital. My stall would be set up at festivals organised by university student societies, hence uni students would be the main demographic of my customer base. Uni students are price sensitive and would want the best bang for their buck. I wasn’t going to be able to promote my product with the words “gourmet”, “organic” or “paddock to plate”.
2. Have a goal
How much money do you aim to make and how much do you need to sell? Knowing the number of people in your potential target market enables you to plan how much stock you need to cater for the demand. It enables you to visualise the revenue you could potentially make. That potential is what dreams are made of.
3. Costing, costing, costing
On my first attempt, I bought ingredients from the nearest store, used chicken thighs, and treated it as an extended dinner party for friends and family. Needless to say I didn’t make any money from that first attempt. All the chicken sold out and there was joy from the positive reviews but the numbers just didn’t add up. A revamp had to be done.
Next time I sourced the best prices, changed from thighs to wings, and drove further to purchase ingredients at better prices. The effort paid off and the result was more money in my pocket. Total sales revenue isn’t the best way to measure how well you did – it should be the profit made (ie actual money in your pocket after paying out the expenses) at the end of the day.
4. Be proud of your product
Only sell products you believe in and can be proud of. I’m not Korean but I love fried chicken and Korean food. I also have quite a knack for cooking. When you know you have a good product, stick by it. The proof is in the pudding. Customers will vote with their money and more invaluably spread the word by mouth. There were Koreans who came up to the stall asking if I’m a Korean, and even doubted if the fried chicken was authentic. But ultimately, the product won them over and they returned for seconds.
5. Never underestimate your team
Your team members can make or break your business. They’re your ambassadors, and an extension of you. If they love your business as their own, you’ve got a winning team right there. I worked with people that loved the product, solved the problems that came along and went out of their way to convince customers how great our fried chicken tasted. Be selective about who you work with. I can’t think of anything worse than being stuck with people who do not share your passion and belief in the vision you have for the business.
6. Never compromise on the tools of your trade
Fried chicken needs deep fryers, pizzas need ovens, cakes need mixers. Every business has a unique set of tools it requires. The most obvious tools are those you need to produce the end product. It is often tools for work done behind the scenes that are neglected. Too often business owners are driven by their passion and ideas, neglecting the mechanics of actually making the money.
For my tiny venture, my Excel spreadsheet was sufficient to sort out my income and expenditure records. However for businesses looking to grow and succeed, quality and timeliness of data is essential. This is where today’s technology makes all the difference. Cloud accounting options like Xero provide real time information that allows business owners to make important decisions in a timely manner. It affords agility and allows businesses to adapt accordingly. Business owners with good accounting data, paired with guidance from their accountants become an unstoppable force.
After three festivals, selling hundreds of portions of chicken and having had the stress of dealing with leftover chicken, I’m still nowhere close in owning a multi-million dollar business. I have however gained some useful insight into the concerns and decision-making process business owners have to make on a daily basis.
There will be business owners that find themselves at cross roads – persisting with their great idea but struggling to covert that idea into a money generating business. Taking that step to find the right help and getting the right advice will steer you on the right path. Accru specialises in business start-ups and our team are always here to help.
Curious about the other lessons learnt from Eva’s venture? Give her a call at Accru Hobart on 03 6244 5044.