HARD LESSONS LEARNED IN THE FIELD

I recently sent an email to my students and clients asking this question: “What lessons have you learned after being in business for at least one year?” What surprised me when I read the many responses is that the same mistakes keep coming up.

I would like to identify some of these and help you avoid making the same mistakes as everyone else!

My experience tells me that new entrepreneurs are too impatient; they want to be successful on Day #1, and somehow common sense flies out the window (or, in our business, goes down the drain). Hopefully, all of you reading this article will gain some insight when making decisions about new concepts, expanding, or simply planning for the next summer season.

FROM THE MIDWEST
Ice Cream and Candy Business
“Beginning a new business or expanding an existing one— I have done both— has shown me that key pieces of equipment should be purchased new. I researched for weeks for a batch freezer to find the newest one with the best features and overall the best price, because with a new one you can amortize it for a longer period. I would never consider a used model. This is the moneymaker and it is wise to invest your money in this piece. You cannot afford downtime on key machinery. Also, it is wise to purchase as much used incidental equipment, especially early on, as this helps your cash position.

  The biggest mistake I made early on was not writing a business plan. This is important even if you haven't yet found your location. The business plan is a map and everyone needs one. There is no such thing as it is too late to write one, because it is a learned reality. One is wise to learn what cash flow is and how it works; it is the business inside your business. Look for a professional in this area and pay for the information. Without an understanding, you'll pay a lot more. The cash flow suggestion is the most important of all. All beginners and those looking to expand should spend a lot of time and effort on this subject.”

Ice Cream Business
“Never fail at writing the last chapter with a dissatisfied customer. In other words, when they leave your store, make sure there is a positive end to the story because, believe me, they are going to tell their friends. Never, ever let the pressures of the moment cause you to compromise hiring the best employees. Never forget that price, quality and quantity only get you in the game, service keeps you there. Invest time and money into leadership training for supervisors and managers, (customer service seminars, reading material etc); the pay back is incredible. Never cut costs with poor quality products. It will be noticed and the impact is huge. Recovery is long and difficult like the time we switched to an off brand cone from the more expensive name brand. (There is a reason they are a name brand.) Find something else to cut. Start at the beginning tracking your cost. It’s a nightmare trying to play catch up and then you have to retrain everybody and get through the hundred why questions.”

FROM THE FAR WEST
Italian Ice Business
“My biggest mistake was spreading myself too thin.  I opened a retail store, wholesale operation, and had five pushcarts on the street, all in less than six months. I was working from 6am to midnight and still not finishing everything I had to do.” 
 
FROM THE EAST COAST
Ice Cream Farm Business
“My biggest mistake was not buying a big enough batch machine!  I substantially cut labor costs when I invested in an Emery Thompson BLT40 machine.  The first machine I bought made half as much ice cream and it was difficult to keep up with the demand. People really appreciate and love a quality product -- so don't undersell yourself!” 

Ice Cream Business
“Not enough knowledge about the ice cream business. I bought all the equipment that the salesman suggested; as a result, I have equipment that I do not use. I realize now that I have a poor location, I overstaffed, and I overpaid my employees; as a result, I have run out of money.”

Old Fashioned Ice Cream Shoppe
”Having just lived through year three, many lessons are fresh in our minds. The more unique, nuanced, and complex your business is, the more time will be necessary to train your employees without a very well developed operational manual. In other words, the manual needs to say ‘explain it to me like I'm a 3-year old.’ It is important to invest in quality; from better people, spatulas, light bulbs and every ingredient in your ice cream should have the mark of thoughtful thoroughness. Start out with detailed checklists, and make sure you understand how to use Quickbooks (computerized accounting system) because without records of how your business is doing, you will be doomed. Cleaning is underrated in the ice cream business because there is always something to clean. All parts of your operation should be on a regular cycle of cleaning with thoroughness and vigilance. It is good and a mark of pride to be a clean freak.

Round numbers may be easier in a cash business, but don't make your menu easily rounded just to save time. Charge sales tax on top of your prices, not included. Customers don't notice the convenience and it certainly doesn't help your bottom line. Cost out your products, and charge what the market will bear. We took out a loan (around 160k to open the store) and tried to pay it back over 5 years...big mistake. Without personal savings, we would never have made it through the cash flow crunches of the first two winters. I'd recommend extending out your payment on a loan for a single store to at least 10 years. We've turned the corner because we worked like hell, and had a lot of business coming at us. If it was any other way, we would be in big trouble.”

FROM THE SOUTHWEST
Gelato Business
“Aggh! Lessons learned the hard way! If I only knew what I know now back when I first started this adventure.....Bistro food and homemade gelato in a small gelateria does not work. I lost too much money on food supplies and staffing for meals. I was wrong about location because I was in denial in thinking I had a good one, but in my heart I knew I didn’t! I learned the hard way you cannot leave your staff unsupervised. You can't make everyone happy and succeed, just the majority! Resolve the problem, and apologize. Find a product or products that you like and stick with them. Do bring in new ideas when needed to keep business from going stale, and make sure you know your suppliers in person.”

So, what have we learned?
Ten Key Hard Lessons Learned

1. Never buy a used batch freezer to start out with (this is your bread and butter).
2. Write a business plan.
3. This is a customer service business—never let a customer leave your establishment without a smile on his/her face.
4. Train your employees well.
5. Use the highest quality ingredients.
6. Don’t be overly ambitious starting out otherwise you will burn out very fast.
7. Learn all you can about the product(s) you want to produce and sell.
8. Quality, cleaning, recordkeeping, and having enough money are key components to your business success from the beginning.
9. Location, location, location.
10. Consider carefully what you decide to sell along with your frozen desserts; not everything works.

I hope this article helps you avoid some of the mistakes others before you have made— Good Luck!
Note to readers: If you have lessons you have learned and want to share them, please email me your comments at mstogo@aol.com.

Malcolm