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Made in us
Battlefield Tourist




MN (Currently in WY)

I am a small-business owner and entreprenuer. I own a bakery, a coffeeshop, and few other small time LLCs. On these boards, we frequently see people who want to break into the gaming business world.

Before they do, I recommend they read this. Granted it is about a neighborhood coffeeshop, but it is the tale of all small businesses.

http://www.slate.com/articles/life/a_fine_whine/2005/12/bitter_brew.html

Since I also own a Coffehouse, it has special resonance. It reminds me of advices I heard about starting a small business that goes as follows:

If you want to start a small-business you need to be able to answer yes to 3 questions:
1. Are you willing to lose all of your money?
2. Are you willing to lose all of your friends?
3. Are you willing to lose your family?

If the answer is yes to all three, then proceed.


For the work blcoked:


You know that charming little cafe on New York’s Lower East Side that just closed after a mere six months in business—where coffee was served on silver trays with a glass of water and a little chocolate cookie? The one that, as you calmly and correctly observed, was doomed from its inception because it was too precious and too offbeat? The one you still kind of fell for, the way one falls for a tubercular maiden? Yeah, that one was mine.

The scary part is that you think you can do better.

I never realized how ubiquitous the dream of opening a small coffeehouse was until I fell under its spell myself. Friends’ eyes misted over when my wife and I would excitedly recite our concept (“Vienna roast from Vienna! It’s lighter and sweeter than bitter Italian espresso—no need to drown it in milk!”). It seemed that just about every boho-professional couple had indulged in this fantasy at some point or another.

The dream of running a small cafe has nothing to do with the excitement of entrepreneurship or the joys of being one’s own boss—none of us would ever consider opening a Laundromat or a stationery store, and even the most delusional can see that an independent bookshop is a bad idea these days. The small cafe connects to the fantasy of throwing a perpetual dinner party, and it cuts deeper—all the way to Barbie tea sets—than any other capitalist urge. To a couple in the throes of the cafe dream, money is almost an afterthought. Which is good, because they’re going to lose a lot of it.

The failure of a small cafe is not a question of competence. It is a sad given. The logistics of a food establishment that seats between 20 and 25 people (which roughly corresponds to the definition of “cozy”) are such that the place will stay afloat—barely—as long as its owners spend all of their time on the job. There is a golden rule, long cherished by restaurateurs, for determining whether a business is viable. Rent should take up no more than 25 percent of your revenue, another 25 percent should go toward payroll, and 35 percent should go toward the product. The remaining 15 percent is what you take home. There’s an even more elegant version of that rule: Make your rent in four days to be profitable, a week to break even. If you haven’t hit the latter mark in a month, close.

A place that seats 25 will have to employ at least two people for every shift: someone to work the front and someone for the kitchen (assuming you find a guy who will both uncomplainingly wash dishes and reliably whip up pretty crepes; if you’ve found that guy, you’re already in better shape than most NYC restaurateurs. You’re also, most likely, already in trouble with immigration services). Budgeting $15 for the payroll for every hour your charming cafe is open (let’s say 10 hours a day) relieves you of $4,500 a month. That gives you another $4,500 a month for rent and $6,300 to stock up on product. It also means that to come up with the total needed $18K of revenue per month, you will need to sell that product at an average of a 300 percent markup.

Pastries, for instance, are a monetary black hole unless you bake them yourself. We started out by engaging a pedigreed gentleman baker with Le Bernardin on his résumé. Hercule, as I’ll call him, embodied every French stereotype in existence: He was jovial, enthusiastic, rude, snooty, manic-depressive, brilliant, and utterly unreliable. His croissants were buttery, flaky, not too big, and $1.25 wholesale. We sold them for $2 and threw away roughly 50 percent—in other words, we were making a negative quarter on each croissant. After a couple of months of this, we downgraded to a more Americanized version of the croissant (vast and pillowy). The new croissants ran 90 cents each and made us feel vaguely dirty. We sold them for the same $2. Ironically, their elephantine size meant that every time someone ordered a croissant with cheese, we had to load it up with twice as much Gruyère.

Coffee was a different story—thanks to the trail blazed by Starbucks, the world of coffee retail is now a rogue’s playground of jaw-dropping markups. An espresso that required about 18 cents worth of beans (and we used very good beans) was sold for $2.50 with nary an eyebrow raised on either side of the counter. A dab of milk froth or a splash of hot water transformed the drink into a macchiato or an Americano, respectively, and raised the price to $3. The house brew too cold to be sold for $1 a cup was chilled further and reborn at $2.50 a cup as iced coffee, a drink whose appeal I do not even pretend to grasp.

But how much of it could we sell? Discarding food as a self-canceling expense at best, the coffee needed to account for all of our profit. We needed to sell roughly $500 of it a day. This kind of money is only achievable through solid foot traffic, but, of course, our cafe was too cozy and charming to pop in for a cup to go. The average coffee-to-stay customer nursed his mocha (i.e., his $5 ticket) for upward of 30 minutes. Don’t get me started on people with laptops.

There was, of course, one way to make the cafe viable: It was written into the Golden Rule itself. My wife Lily and I could work there, full-time, save on the payroll, and gerrymander the rest of the budget to allow for lower sales. Guess what, dear dreamers? The psychological gap between working in a cafe because it’s fun and romantic and doing the exact same thing because you have to is enormous. Within weeks, Lily and I—previously ensconced in an enviably stress-free marriage—were at each other’s throats. I hesitate to say which was worse: working the same shift or alternating. Each option presented its own small tortures. Two highly educated professionals with artistic aspirations have just put themselves—or, as we saw it, each other—on $8-per-hour jobs slinging coffee. After four more months, we grew suspicious of each other’s motives, obsessively kept track of each other’s contributions to the cause (“You worked three days last week!”), and generally waltzed on the edge of divorce. The marriage appears to have been saved by a well-timed bankruptcy.

Looking back, we (incredibly) should have heeded the advice of bad-boy chef Anthony Bourdain, who wrote our epitaph in Kitchen Confidential: “The most dangerous species of owner ... is the one who gets into the business for love.”

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Made in gb
Ridin' on a Snotling Pump Wagon






And whilst I'm not a business owner, the OP has reminded me of the following story....

How much for hot water and a slice of Lemon? wrote:


A café’s manager scathing response to a negative TripAdvisor review is being shared online after a customer complained about being charged £2 for a cup of hot water and a slice of lemon.


Mike Fisher, owner of Bennett’s Café & Bistro in York, spelt out the exact costs of preparing the drink in his epic reply.


A customer, only known as Hannah C, from North Yorkshire, described the bistro as “absolutely awful” in her review.





@jayrayner1 @Pietros1 @TripAdvisor got these, whch shows it was up there pic.twitter.com/sSyeM2oNLe
— Curious Mr. Wolf (@The_Zaps) January 14, 2016


“I ordered hot water and a slice of lemon which, firstly, did not arrive on time with all my friends’ cake and drinks. I was then charged £2 for the hot water and a thin slice of lemon,” she wrote.


“When I asked why I was being charged so much for some water the waiter rudely said, ‘well, do you know how much a lemon costs?’ Yes, it’s definitely not £2.

“He then went on to wrongly inform me that a 'pot of tea for one' (which is what I was charged for) is the same price as a lemon. To show just how ridiculous this is, my friend ordered a slice of chocolate cake which was £1.90.”
Mr Fisher replied outlining the costs of paying a waiter, the time his staff spent serving her and the overheads for running his business, “which works out at £27.50 per hour of trading”, he wrote.

He added: “I pay my colleagues a decent living wage and after taking into account holiday pay, national insurance and non-productive time prior to opening and after closing, the waiter who served you costs me £12.50 per hour.



“I accept that it makes the price of a cuppa in a city centre cafe look expensive compared to the one you make at home but unfortunately that’s the cruel reality of life. It’s actually the facilities that cost the money, far more so than the ingredients.

“Perhaps, the rudeness that you perceived in me was triggered by the disrespect that I perceived in you by your presumption that you could use our facilities and be waited on for free.”

The post, which has since been deleted from TripAdvisor, went viral after being shared by food critic Jay Rayner.


If you're not breaking down your costs like that, you may want to think twice about entering business.


   
Made in ca
Ancient Venerable Black Templar Dreadnought





Canada

Total cost, especially overhead costs is the #1 consideration for applying a value to product sold for most retail.
Easiest markup consideration is figuring overhead cost per square foot and see if the price is appropriate including profit targets.
I am in a more assembly/production environment so direct labor becomes the bigger cost (shop rate).
It gives a great rule of thumb for prioritizing the space:
People game here so I have tables out, they take up "X" space = $X to provide that service: is it making me money through related sales?

Yeah, that lemon water story burns my butt a bit.
How much was your time, car cost: insurance/loan/gas to get to the grocery store and get that lemon?
How much is your mortgage, cup AC/heating and general home environment cost?

I find it incredibly nice if a business is happy to give you water for free.
I make darn sure I order something else as well.

This message was edited 1 time. Last update was at 2017/12/08 17:25:33


A revolution is an idea which has found its bayonets.
Napoleon Bonaparte 
   
Made in us
Last Remaining Whole C'Tan






Pleasant Valley, Iowa

Here's another fascinating story of a guy who opened a restaurant who was not prepared to, and never should have.

 lord_blackfang wrote:
Respect to the guy who subscribed just to post a massive ASCII dong in the chat and immediately get banned.

 Flinty wrote:
The benefit of slate is that its.actually a.rock with rock like properties. The downside is that it's a rock
 
   
 
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