Path To Entrepreneurial Success Seldom Straight Failure Part Of Entrepreneur’s Life
On the way to launching a profitable food-service business, Chicagoan Eric Paul Meredith worked as an employee at four major corporations.
In between, he tried his entrepreneurial hand at real estate, dry cleaning and a restaurant, but he was short on capital and expertise.
This time, though, Meredith is confident his healthy-meal delivery business, AlterEatGo.com, will make it. The company is moving into a new kitchen in July and is on target to ring up $250,000 in revenue this year, he said.
“Sales have increased, so I definitely don’t have to go back to corporate America to pay the mortgage,” he said.
Meredith’s circuitous path to small-business success is hardly unusual. Few entrepreneurs’ business ideas end up panning out exactly as planned, said Daphne Woolfolk, founder of Essati Consulting in Hyde Park. “I don’t know anyone for whom success is a straight path,” she said. “It’s about moving through failure, not avoiding it.”
Entrepreneurs who hope to get rich quick often are disappointed, said David Koehler, clinical professor of marketing at the University of Illinois at Chicago’s College of Business Administration. “You can’t expect to hit a home run,” Koehler said. “Life is all about Plan B. You have to have a backup plan.”
Many entrepreneurs move back and forth between employment and launching their own businesses. Meredith, who has a degree in information technology from the University of Illinois at Chicago and a culinary degree from Illinois Institute for Art, worked for IBM, McDonald’s, Aramark, Lotus and his mother’s data-processing company before launching AlterEatGo.
The Melting Pot Franchisee Featured In Gulf Coast Business Review
Bob Johnston, franchise owner of The Melting Pot Tampa, was recently profiled in the Gulf Coast Business Review. The weekly newspaper provides business news and resources on the area’s companies, trends, entrepreneurs and CEOs.
The article, titled “Entrepreneurs to watch,” profiled Bob Johnston and how he got into the industry. In 1985, Johnston was 21, a college drop out and moved to Tampa with his wife to run the fondue restaurant, The Melting Pot. “With sales of $217 million, 132 franchisees and 5,000 employees, Johnston’s hunch about the Melting Pot was right,” wrote the paper.
Johnston and his brother Mark and Mike devised a new business plan - from focusing on profits, customers and team-member experience, to a customer-first model, new menu and trainers for employees. “The new strategy worked. In the next 10 years, The
Melting Pot increased its restaurant count from 19 to 100. Average restaurant volume tripled.”
Johnston enjoys life as an entrepreneur because it allows someone to stomach the risks that are involved. The company is in the process of developing a third concept restaurant featuring a wine bar and small plates restaurant.
Using Industry Statistics To Sell Business Opportunities
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"In the past many business opportunity sellers would use industry specific statistics on their Web sites, brochures and even in videos, which they would mail to potential buyers.The Federal Trade Commission looked into this and found that many business opportunity sellers overused these figures to sell their wares.
In the future this tactic of using industry statistics may become illegal and considered fraudulent due to a proposed rule that the Federal Trade Commission is considering which would govern business opportunities.
In the rule business opportunity sellers would have to prove and have records to prove that the statistics they use are actual statistics of people who bought their particular business opportunity."
What the FTC is trying to prevent is the anchoring, the well known psychological disposition to give too much significance to industry numbers.
For example, suppose that you were told that the payphone business is a $12 billion business, and that "on average" each payphone is used for a 50 cent call once every 2 hours. Is .1% of this $12 billion market worth $3,000 per payphone, if on average the payphone will earn $12 per day?
The mathematical answer is that 12 * 365 is greater than 3,000 and so the payphone will pay for itself within a year.
Even if you believe that the payphone is only used every 4 hours or every 8 hours, then the pay back period is 2 or 4 years. Not bad and certainly reasonable.
Unfortunately, this reasoning is an example of anchoring on the first number: the payphone is used every 2 hours. The real number might be, for a certain location, once a week - dramatically altering the real value of the deal.
Good for the FTC for paying attention to some of the new behavioral economics.
