Business Owners Learn Lesson
The restaurant on the ground floor of the Elks Tower in downtown Sacramento has closed less than a year after its debut. Owners of RailBridge Cellars & Co. announced the closure last week and attributed the restaurant’s demise to unsuccessful lease negotiations. Business owners can learn a lot from their experience.
“As most of you know, we have invested hundreds of thousands of dollars and given our blood, sweat, laughter and tears into building a brand and culture for our friends, family and employees to enjoy,” the owners said on Facebook.
If you’ve seen any episode of one of the many reality restaurant shows, you know that it takes more than family recipes to make a profit.
According to an Ohio State University survey on failed restaurants, 60% don’t make it past the first year. 80% are out of business in under in five years. Those are some staggering numbers. The same mistakes made by these restauranteurs are frequently made by those in other businesses in Sacramento and across northern California.
Inexperienced business owners
Many businesses that are doing poorly are in that spot because of inexperienced, but well-meaning owners. Some potential business owners don’t appreciate the specific demands that come with owning and running a business. when they do, it’s often too late. This is a problem that gets worse when they try to fix it by hiring a manager with more experience to save the company and stop the bleeding. While this can be effective, it can also add to the financial burden. Especially if thus person expects to be paid relative to their experience.
Poor People Management
Most businesses have just one group of people to manage with a specific skill set. Restaurants and other specialty businesses have lots of moving parts. They require a diverse group of people with varying skills sets and talents. Experts say that the best managers are those who have worked their way up through the business. Those types of managers have experience in many facets and areas of the organization.
Managers with this type of background are in many instances are more understanding, compassionate, and seek like-mindedness. They provide insight on how best to relate to, approach, and motivate the members of the team.
Poor Accounting Skills
Owners may know how to cook or fix a sports car, but they may lack knowledge about the back office, such as overhead, fixed costs, labor, and P&Ls (income statements). Business owners need to have this knowledge or find someone who can run this side of the business. A business manager must understand proper accounting procedures, maintain and monitor the numbers so you are certain they’re up-to-date.
Poor Customer Service
First impressions can determine repeat business and loyalty in customers. Being customer-focused in every step of their experience with the business will play a huge part in whether you will retain that customer. Experts like Andrew will point out that customer retention is much more cost-effective than customer acquisition. And with social media continuing to grow, this word-of-mouth advertising, recommendations, and reviews will be the key to customer acquisition. The best way to keep a superior reputation is to make sure that your business provides exceptional customer service and an over-the-top experience.
Andrew Rogerson is an experienced business expert who’s negotiated hundreds of business transactions in cities throughout the Sacramento Region. He’s worked with business owners in Citrus Heights, Rancho Cordova, Folsom, Elk Grove, Roseville, Rocklin, Davis, El Dorado Hills, and Cameron Park. Andrew can help you with deciding on an appropriate buyer and will answer all of your questions.
Take the time to speak with professional business broker Andrew Rogerson. He knows about business in Sacramento. Please visit our website services. You can also get in touch with Andrew via email or call him at (916) 570-2674.