An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome. (Source Wikipedia)
The Dilemma
I have recently graduated with a BBA in entrepreneurship. My ability and experience is not a question to me. I know that I can do this (run a successfull pizza business).
I am currently 39 years old. My first job at the age of 15 was with Pizza Inn and I learned everything about the business at the time. More recently I took a job with Dominos for about 4 months. This was within the past year. So again, I know that I can do this.
Here is my problem
If I quit my job of 15 years making $30 dollars per hour I will lose not only the pay but health insurance for my children.
I have $100,000.00 saved up. What do you think tankers think about my opportunity?
I have a new strip center opportunity in a town of 5,000. What will the buildout cost me?
$30 per hour is 60K per year. Family health care is worth what 10K? My guess is that the total value of your compensation when you take into account other benefits, employer’s share of fica etc is that it is in the area of 80K. In a market that size, the likelyhood is that you would not make more than you currently do when you take benefits into account… but you will take on more risk, use up your cushion (good accomplishment saving 100K, but when push comes to shove, that is not a lot of money. Odds are you will use every dime of it getting open and surving until profitable).
So… what is your motivation? I am generally a cheerleader for small business and risk takers… but you need to take the risk with eyes open. What is your worst case scenario? If the business fails can you get your job back or one that pays as well?
Getting into the pizza business is not all about being sure that you can run a business. It is about having a great pizza. Then you need to know how to market that pizza to that area. The rest is common sense and experience.
If you are scared don’t do it. If you are excited well then it is up to you to act on it.
why not come to vegas in march and talk to us face to face. several long time pizza operators will be there in this economy I bet the new strip center will be vacant and there is no better time than now to get in but, I am self made. what I have today is threw YEARS of hard work.
If you were not scared there would be a HUGE problem because you realize you are putting your whole family at risk.
great product
great location
is not a guarantee
we have seen lots of people come and go…what is your day job…why are you leaving? these are important. Why do you want to build a pizzeria…5000 people is awful small (well to me we have just 12000 and I wish I had more.)
If I was you I would weigh my options heavily and then if you are interested come to vegas in march.
There’s a BIG REASON you have no competition in a town of 5K! Strip malls are a dime a dozen and the result of another person’s entrepreneurship.
I think you’re looking at this the wrong way. “You know you can run a pizza business because you’ve worked at a chain for 4 months.” You’ve earned a degree and you’re more than smart enough to run a pizza joint.
Try looking at it from this view: Is there a business I could start, that would provide safe haven to my $100K investment, and also GUARANTEE earnings of $70K/yr for the next 3 years?
I think its a bad idea for you. You’d be surprised how quickly that $100K would evaporate while using it to back a new store and ALSO replace your $70K/year income.
I have actually considered going to Vegas in March.
When I said no competition that is not entirely true. I should have said that there is not a pizza shop in town. There is however a Sonic, Subway, Golden Chick, and a couple of family owned restaurants.
I have the option of taking a partner. Although that will limit how much I will need to contribute, I have my reservations.
Then of course there is what has been pointed out. My current salary and benefits that I must have to support my family.
The town is growing. I expect the actual population to be around 7000 once census data is published.
Everything tells me to do this. The only problem is my fear of not being able to support and provide for my family. I am going to continue reading the think tank and other sources. I have been working on the business plan and cash flow projections which look very good (but we all know that they are projections).
What does your wife say do you have family in town what are there thoghts my Father was always a chef and always wanted a restaurant we opened a Restaurant & Pizzeria about 4 years ago. My father asked everyone in our family if he should go with it and as a family we all agreed that it was a great idea and that we would all be able to help and work. i was still working at my full time up until last year as our place was not really making a profit for the first 3 years we were barely paying our bills but last year we notice the big change we started to see a little paycheck i quit my job to help them out more as we are getting a lot busier now. It took us 3 years of strungling for cash. I thnk if my dad would have done this when we were younger i don’t think he would have made it. know that all six children are in ther 20s were are a lot more supportive. we are now looking at a second location and are doing fine. But with out the family support we would not be here especially with all the money we used to start and keep the daily operations running. Just know it will probably be a long hard couple of years. Just have a strong family support my parents fought for the first 2 years about money and the struggle. But know that we look behind we see that there was a lot of times that we thought to throw the towel in and just close but we stuck it threw. i’m also not saying that were now all making 60k a year but we are getting by that is all that really matters to us.
Opening a Delco from scratch could easily run 100K… PLUS what you need to live on for the first year and possibly two. If you are looking for the kind of volume that will replace your current salary and benefits, the ovens alone are going to run you 30K with freight, installation and hood.
The posts you see where people get open for less generally are stores that stepped into failed pizzarias with equipment in place or at the very least existing restaurant locations with ventilation, grease traps, electrical etc. The rest are shoe string operations that mostly can not handle the 500K+ volume you will need to to earn what you are looking for (assumes you work ALL the time to make that on 500K)
I’d have to recommend thinking LONG and HARD about it with children that age. I’m sure others make it work, but I could not imagine having my boys that young and trying to make this thing work.
I’d just ask you, is your dream big enough to turn around and see your children now 12 & 17 or older? Putting in 10-14 hours a day is going to mean missing out on a bunch of “kid stuff”.
a few things jump out at me
1 - no competition - call me crazy but I would prefer competion becasause it shows me that there is a market that supports tis type of business
2 - how important is spending time with your young family and does your current job allow that - reason I ask is you can kiss those upcoming years goodye as you will be owned by your store (I know because I was 8 when my parents started this biz) you MUST take this into consideration
3 - forget the partner idea to raise more capital - use the extra time to plan
4 - dominos - enough said
5 - are you the only money earner in the family? could your spouse get benefits through work?
when I was 1 of 3 kids my parents got into the biz becasue they had nothing to lose and they HAD to make it work taking over a down and out biz on the cheap. They proceeded to work 100+hrs a week with no days off for about 10 yrs and slowly built the biz together working like dogs until we were old enough to help…dont get me wrong that I do not regret a thing, but this life is definitely not for everyone. I would much rather see you find a place that has most of the mechanicals in place and keep you savings to get through the first couple of years. Your business degree will definitely help but keep your projections CONSERVATIVE and always think worst-case scenario
Would you invest your savings, plus your complete salary every year, to someone with your same resume in the same store and hope to live off the profits?
Make your pro forma, then cut your sales estimate in half and see what earnings looks like after that. That is the number you would have to plan for. Pretty scary stuff, huh?
Maybe you can start your foray into entrepreneurship on a smaller scale first - as a small, minor investor in something with an amount you can afford to lose?
I would run away. I opened up about 2 and a half years ago. Nothing but a pain in the ass, employees stealing, giving away food, eating food, food vendors trying to rip you off, people coming in everyday wanting free food for donations… 14 he days 7 days a week. Even when your not there your still thinking about it. If you are making 60 k a year with benefeits. Stay where you are. I just read a article where it said restaurants are 2 years behind in the recession. People are eating at home more and only going out for special occasions. I am lucky that I have other business’s that I am making money at. Honestly if you did 10k a week. After food/ labor/ costs. You would be lucky to walk out with 1500 a week. I just don’t see why you would wanna work 90 plus hours a week. It’s a lot different owing a business. Paying taxes, insurance, rent, utilities, etc etc etc. I tried warning a friend and he didn’t take my advice. He opened up about 4 months ago and he will be lucky to make it till the summer. I have known of 5 pizzerias in my are that have closed up in the last 6 months and heard dumped of 3 more to close. And I am in a area where pizza is king.
Save your money. Without getting into politics, the future just isn’t as bright as it was 17 years ago when I started. Time will tell if this will change, but dining habits have been modified quite a bit and the uncertainty of higher energy and commodity prices (due to the drastically shrinking currency we now are stuck with) will only make our job that much more difficult in the future.
Do you enjoy being “Daddy” to your kids? They grow up quickly (I have 9-ages 17 to 6 mos) and the last couple of years have been difficult. I cannot get the time back.
I have experienced both success and failure but have noted that while I had a large cheering section “going into the battle”, I retreated and assessed my casualties alone.
You have a good situation. I would wait till we see signs of an actual economic recovery. With cash inhand, you’re still ahead on the game. (Sorry, flowery speeches from politicians who do not believe in the free market move me not.)
But if you’d really like to get in the game, I have some equipment available if you’re anywhere near N. Georgia.
Gosh been thinking about what I wanted to say to ya.
As I read the previous posts it seems to be all doom and gloom. What I hope you take from the postings is at one time we were ALL as passionate about the biz as anybody could be. We have poured our blood, sweat and tears into our businesses. So when you read the posts don’t say to yourself…they just don’t have it figured out like I do. They don’t have the drive I do or whatever.
Between all of us we have 100’s of years of wisdom. We have seen hundreds of people just as yourself come and go. I guess when you really think about it that is what probably is so scary to all of us. We have seen people just as ourselves coming to the front and essentially asking “If you had to do it all over again, would you?”
I have loved operating our restaurant the last 17 years with my husband. But if I had to do it over would I? Well of course cuz it was the plan. What we never really grasped going into it was the reality of how much time it takes. How much money. All the physical and emotional demands. Demands that don’t cease only increase. You have seasons of good times and bad. Missed out on going to our only childs school funtions together cuz one of us was always working. But now…things are great the demand is less but always there. Our daughter is now grown and in college and we are able to take time off when she is home, or to go on a weekend getaway.
My suggestion to you based on my experiences would be stick with your job…spend time with your family…invest in your marriage…save money like crazy for the next few years. Set a goal. I would shoot for minimum of 250,000 and then open and pay cash. By then your kids will be older, and you and your wife can decide if you now want to take it and risk it.
Thanks very much for the valuable input. I actually have five more years and I will have 20 years at my employer and will be able to retire (I will only be 44). I am leaning toward slowly acquiring equipment and having a five year opening plan.
Five years is a good plan. Don’t bother with slowly aquiring equipment though. There is ALWAYS equipment available. Wait until you know your location and can then match the equipment to your business plan, utilities and operational requirements.
Besides, if you go around getting stuff now you have to store it.
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Thanks very much for the valuable input. I actually have five more years and I will have 20 years at my employer and will be able to retire (I will only be 44). I am leaning toward slowly acquiring equipment and having a five year opening plan.
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That sounds great. I would also wait to find equipment. Educate yourself on equipment and what is worth what or what kind of equip you want based on your menu. Like Bodge said there is always equipment available cheap.