CareerAhead Admin

Category: Entrepreneurship & Business

  • Restaurant Franchise – Is It for Me?

    Restaurant Franchise – Is It for Me?

    “As a franchise you don’t start a journey, you actually board a running train“

    The restaurant industry employs the highest number of people and, pre-Covid, it was growing at the rate of 9% YOY, which is higher than India’s GDP rate. Yet, restaurants see the highest failure rate as compared to any other industry. The restaurant industry attracts all kinds of people – from sportsmen, to actors, to businessmen and even politicians. Still, over 40% of new restaurants are unable to make it through their first three years. Surprisingly, even a business which has glamour, cash transactions, limelight, high growth rate and demand may not survive.

    Perhaps you too have thought about owning your own business because you want to be your own boss. Should you start a business from scratch? Should you buy an existing business from owners who are seeking to sell so they can retire? Or, should you buy a franchise? In my experience, the top few reasons that can lead to the failure of a restaurant venture are lack of understanding of the restaurant business, too many decision makers, inconsistent menu and taste, supplier issues, incorrect location, high rentals, lack of management, no audits or controls, and ineffective marketing strategy.

    On the other hand, chain restaurants and cafés have long lives. Mc Donald’s, KFC, Applebee’s , Chili’s, Starbucks, Gloria Jean’s Coffee, Dominos, Pizza Hut, TGI Friday, etc.; all of these brands have more than 1000+ outlets across various countries. These brands have been operating for over two decades and are still growing. And, while there are many advantages to opening a franchise, you will also find some challenges. Here are some pointers to help figure out whether a franchise would be the right choice for you.

    Proven business model

    You may pay a little more to buy a franchise than to open your own restaurant, but the franchise is already a proven system. It is already a successful business and generates profits. The biggest advantage of franchising is the reduction of the risk you will be taking for your investment. This is because franchises typically get up and running faster, and turn profitable more quickly. You may reach profitability sooner because your franchise is turn-key.

    Marketing support

    For the most part, standalone restaurant owners don’t have any support. But that is not the case with franchises. There are proper and dedicated teams which work on marketing, artwork, handling social media, and helping franchises in local marketing and corporate tie-ups. They constantly work on brand building and winning customers. A franchise owner also usually has access to a network of franchise entrepreneurs who have already been through the start-up process. So, not only is there a franchise support system in place, but also a network of people to offer advice.

    Brand recognition

    As a franchise you don’t start a journey, you actually board a running train. Consumers are familiar with franchise restaurants, so you instantly have a ready supply of eager diners. The demand for your restaurant may be immediate, and customer acquisition costs will be lower, especially if you run a well-established franchise. Often, your guests will have eaten at your chosen restaurant while visiting another city, or they may have seen a commercial online. Because of this, you don’t have a hard sell when it comes to encouraging people to give your restaurant franchise a try. Do be sure when choosing your franchise to choose one that’s well-known and has staying power – it’s best to look for franchises that have a record of success. This helps you know that your odds are just as good.

    “Whether you open your own restaurant or a franchise, your quality of life will be different than the norm”

    Good reputation

    For the most part, restaurant franchise owners are well-respected in their communities. Some restaurant owners may like the immediate notoriety that comes with opening a franchise. When running a franchise, you can capitalize on this reputation to market your restaurant and become a leader in your community.

    Lower inventory prices

    You can take advantage of the collective buying power of your franchise group and will most likely have lower inventory prices than a stand-alone restaurant. Your bargaining power with vendors is also likely to be higher due to the name recognition.

    Audits and management support

    Franchise Restaurants usually have a strong system and controls, which are applied at all outlets. There are often different audits which are conducted at each store. Mystery shoppers, quality assurance, timely staff training, inventory audits, SOPs training, accounts audits, operational audits, hygiene and safety audits; these audits are conducted to ensure that business will run smoothly. These checks and control are as important as oxygen. Many of these are usually missed in stand-alone places.

    Manpower struggles

    Finding restaurant help is challenging, and it is no different with a restaurant franchise. Restaurant workers are often transient, and turnover is normally quite high. Recruiting, training and retaining your staff is time consuming and costly. It can also be quite frustrating to train a new employee only to have them leave six months later. To help with employee retention, pay close attention to training and consider an incentive system to encourage longevity.

    Life of a restaurateur

    Whether you open your own restaurant or a franchise, your quality of life will be different than the norm. Hours are long. You’re often the first one there and the last one to leave. Your hours may not coincide with those of your family. It’s hard to take a vacation. From your birthday to Christmas, New Year’s Eve, Valentine Day, or any festival, you have to be at your restaurant.

    Royalty payments

    These don’t go away. Every single year, your franchise owes royalty payments to the franchisor. This is usually for operations and advertising support.

    Inadequate support

    Some franchisors may promise support, but in the end, they might not provide all that you need. You may find your marketing support lacking, or you may not have someone to bounce ideas off of. As we mentioned earlier, research this so you don’t end up in a bad situation.

    Final thoughts

    Opening a restaurant is an exciting venture, and for many people a restaurant franchise is a good option. Do consider all the factors carefully before making your decision. Note that buying a franchise is good for team-oriented people. It is also a better option for those who don’t have a lot of industry or business experience, because they are usually well-supported by their head offices.

    Take some time, consider your options and do your due diligence before making a decision.

  • Way Forward in the New Normal – Hospitality Education Post Covid-19

    Way Forward in the New Normal – Hospitality Education Post Covid-19

    India is poised to be one of the fastest growing tourism industries over the next decade, with the Hospitality and Tourism sector predicted to grow at an average annual rate of 7.5% to 18.36 lakh crore (US $270 billion) by 2025 (7.2% of GDP). The issue of skill gaps is a worldwide problem. In India, for instance, the shortage of skilled manpower poses a major threat to the overall development of tourism. In Dubai, a shortage of manpower poses the biggest challenge to the United Arab Emirates (UAE) tourism industry, according to industry management studies (Source: Bloomberg Nov 2019).

    The hospitality sector in India is projected to grow tremendously in the next decade. In today’s context, the demand for hospitality professionals is also growing, and the sector is expected to come up with more trained professionals in the coming decade. Moreover, it has been observed that the demand for hospitality is rising in small cities in India. People are involving themselves more in travelling as compared to the past because of better connectivity and the ease of air travel. With advancements in technology, hotel rooms can now be booked with the click of a button. From budget hotels to five-star properties and home stays to boutique resorts, there is something for every traveler. There is a growing awareness of hospitality standards in India and people are demanding high-quality services in hotels and restaurants. Social media also provides a platform for people to express their opinions. There are several brands and chains that have entered the Indian market and with high competition, customers are spoiled for choice. Overall, it is important for hospitality professionals to plan for the long term, and hence the demand for highly trained professionals is increasing. 

    ‘Talent gap’ refers to a lack of skilled individuals in the industry. Every sector occasionally faces the tough issue of the talent gap. Lack of talent can be demotivating for an industry. To fill this talent gap, an individual needs skills, abilities and knowledge about their sector. While there are ample opportunities for growth and success in the hospitality field, students need to evaluate their aptitude for a career in this field before coming right into it. A candidate must be willing to work in various areas as the profession requires employees to be multi-talented and to handle different aspects of the job, such as management, food and beverages service, housekeeping, front office operation, sales and marketing or any other department depending upon the specific requirement.

    Covid 19 Impact 

    According to the UNWTO April 14-2020 report, the tourism sector is currently one of the hardest hit by the outbreak of COVID-19, with impacts on both travel supply and demand. This represents an added downside risk in the context of a weaker world economy; geopolitical, social and trade tensions; as well as uneven performance among major outbound travel markets.

    Considering the evolving nature of the situation, it is too early to estimate the full impact of Covid-19 on international tourism. For its initial assessment, UNWTO has taken the SARS scenario of 2003 as a benchmark, factoring in the size and dynamics of global travel and current disruptions, to estimate the geographic spread of COVID-19 and its potential economic impact:

    • At the time of writing this article, UNWTO estimates that in 2020, global international tourist arrivals could decline between 20-30%, down from an estimated growth of 3% to 4% forecast in early January 2020.
    • This could translate into a loss of US$ 30 to 50 billion in spending by international visitors (international tourism receipts).
    • Estimates for other world regions are currently premature in view of the rapidly evolving situation.

    UNWTO underscores that any estimate must be treated with caution due to the volatile and uncertain evolution of the outbreak which might lead to further revisions.

    In a recent talk at IIM-Calcutta, the Chief Economic Advisor mentioned that “the outbreak of coronavirus provides a good opportunity for India to follow an export-driven model.” But the question remains whether India has the necessary tools and infrastructure to replace China. India does not only have the potential to match China in terms of scale, but it is endowed with rich pool of unskilled labor, and a robust service sector. Given the complex chains that China operates, the biggest stumbling block will be the lack of skill. This has to be addressed immediately and effectively, as there is a huge potential for India by the year 2025 in the manufacturing and service sector. 

    Changes in the Education System Post Covid-19

    The education system will perhaps see a shift from a teacher-centric approach. Educational institutions across the country would be changing their perspective now to facilitating centers and collaborative learning centers. However, active industry academia interactions are inevitable; employability of the students and acceptability by the industry is going to be the major yardstick for measuring the quality of the institute. More technology-based teaching and learning is likely to be in place from now onwards. However, there are certain constraints on switching over to 100% technology-based distance and online programs for the practically oriented courses like Hospitality Management, Culinary Arts, Medical Science, Engineering, etc., wherein students need to perform practical experiments on a regular basis, which also need to be under the direct supervision of the faculty. Therefore, the new model of curriculum would have to ensure a certain amount of compulsory classroom and laboratory sessions for the students at the college for professionally oriented courses.

    Hospitality Management institutions need to give more importance to housekeeping management and food hygiene and sanitation, since both subjects are going to be more prominent in the changing scenario post Covid-19.

    In terms of higher education as well, changes are to be expected as a result of the epidemic. Karnataka state, for instance, is well known as a higher education hub in India. There are more than 1000 institutions for higher education in this state alone, at present. Most of these institutions are entirely dependent on students coming from different states and countries. However, the inflow of such migrant students might be a challenge in the current scenario. Therefore, there is a possibility of some kind of setback in terms of admissions for such institutions in the 2020-21 academic year. In addition, the economic situation of the country and its citizens is likely to cause further difficulties.

    Strategies to Overcome Problems presented by the Current Crisis

    • Challenges to be converted into opportunities

    The Economic Advisor to the central government has emphasized the importance of actions aimed at providing adequate infrastructure facilities to those MNCs that are willing to shift their base from China to India. The implication is that if we succeed in bringing them to India, it would in turn help to create adequate employment opportunities at by 2025. Hence, it is an opportunity for students to invest their time and energy now, which would reap a rich harvest by the end of their professional academics.

    • More Scholarships and Financial Assistance to Students

    It is the time now for financial institutions to relax their norms and provide financial support to students who are interested to take up professional courses. Institutions need to offer more merit scholarships so that students and parents can have some kind of support in these trying times.

    • Greater Focus on Developing Entrepreneurship

    The need of the hour is to focus more on entrepreneurship development, so as to create more job opportunities. Educational Institutions need to give a greater emphasis on incubating business ideas and developing them into successful ventures. The faculty must not fail to emphasize that entrepreneurship by definition is a journey on an uncharted path. The basic foundation of entrepreneurship is obsessive passion, fierce focus and seizing opportunity. There is no such thing as failure, there is only learning and bouncing back – a golden principle of entrepreneurship.

    • Increased Importance of Human Resource Management

    Understanding of human resource management extensively in business brings unimaginable benefits. Although staff training is just a small part of human resource management, it is this aspect that needs close attention in terms of the changes brought about by the pandemic. In order to keep up with the pace of change in a world that is changing rapidly every day, making the best use of the abilities of your personnel has become increasingly significant. People working in the human resource departments need to be aware of the implications of globalization, technology change, workforce diversity, labor shortage, and so forth. Staff training is crucial in any industry, and especially so in the hospitality industry.

  • Entrepreneurship versus Family Business: A Difficult Choice

    Entrepreneurship versus Family Business: A Difficult Choice

    Life becomes tough at points where we have to make some important decisions which have a lifelong impact. One such decision is related to making career choices. Out of the many alternatives available, each with its own pros and cons, one must cautiously weigh each one of them to make a prudent career decision. One such combination of choices may be – opting for a self-created entrepreneurial venture, or choosing to join the already established family business.

    Let us now evaluate these two options on the basis of some common parameters. A self-created venture calls for extreme levels of enthusiasm, creativity, and preparedness – to start from scratch in arranging the factors of production, bearing all the risks, and shouldering all the responsibilities alone. This requires a cluster of 4 C’s, including Courage, Conception, Capability and Capital, to establish an enterprise without the background support. Entrepreneurship, therefore, is not an easy venture to enter into. However, it creates immense satisfaction and a sense of independence for an individual to start with something of one’s own, and that too, on one’s own. It is an inner motivation that pushes one to touch the sky of one’s dreams. The beauty of a self-created enterprise lies in the fact that it creates a constant urge for moving on and making one’s dreams come true. Additionally, it can bring that rare inner happiness which one has been craving for, and which is felt when one accomplishes one’s dreams. For all this to happen, it is essential for an individual to be self-motivated, disciplined, target-oriented, inclined to move with the times, and capable of adapting to change. There is also a strong need to be on one’s toes, to work really hard in the direction of dream fulfillment.

    An alternative to entrepreneurship, if available, may be joining the family business and taking the family legacy ahead and forward. One can be the good son or daughter of the house and can take up the family business, aligning one’s personal dreams with the happiness of the family.

    In doing so, there are the benefits of constant background support, capital availability, guidance, and training; and one can be free from the fear of starting from square one. There is a degree of convenience of having things already processed and functional, thereby giving the individual an opportunity to channelize their energy in the direction of business expansion and diversification. This may not only bring a good name to the family business but will also reap long-term benefits for future generations.

    Towards the end, the question arises, “Is the individual ready to take up what his/her forefathers have already created, or is he the one who is constantly making an effort to chase his or her dreams and accomplish them on his own”? The discussion is a never-ending debate and a final choice can be made on the basis of several factors taken into account together. The individual has to understand his own feelings and set his own goals to reach a final conclusion.

  • Who wants to be an Entrepreneur?

    Who wants to be an Entrepreneur?

    We all have choices to make about the career we want to go into.

    When we make this vital choice we are still very young and we decide based upon many   factors. Probably, the three key issues that determine what route we take are education, Desire and Peer pressure. Most people begin their career by combining these three in their thinking. We may have a degree in economics, but our real interest lies in social welfare, but our family and friends might want us to go into their family business or some other route, and so it goes on.

    It is a big decision and not easy.

    BUT even if you make the wrong decision and spend a few years doing something you decide is not for you, you can still change. And often people change their life by becoming an entrepreneur. You are never too young or too old to start your own business or join a friend in their business. It is NEVER too late to change. Some people become entrepreneurs as old as their sixties, or even older.

    BUT you must remember that to be an entrepreneur is high risk, and must have the right personality and character to do this very difficult job.

    Make no mistake; being an entrepreneur is one of the hardest things to do.

    What are the character traits of the most successful ones? If you don’t have some of these at a minimum, you may struggle to make it in the tough world of start-ups.

    • Passion for the project
    • Belief in the project
    • Strength of Purpose
    • Adaptability
    • Resilience
    • Perseverance
    • Determination

    It also pays to be a good listener and take advice from advisers BUT without compromise from the core purpose.

    Additionally, you have to know that at any moment things can change and you will need to manoeuvre fast to save the day. Black Swans are now a normal part of life and being an entrepreneur means you are vulnerable to the effects of them.

    You need a grasp of numbers as “Cash is always King” and understanding the key financial metrics are vital to success. You cannot rely on others on this. Understand how the numbers work and what they mean for your business.

    You must be a good team player. If you are the leader of the team then lead but listen and motivate your core team. Lead all the company members and inject the passion you have for the project into all of them.

    You need to be the culture manager as all staff will follow your lead. They will also follow your behaviour patterns – if you are rude they will be rude; if you are angry, so will they be; if you are kind, so will they be. Decide what type of company you want to create and it can be formed in your image.

    As an entrepreneur you will live a lonely life. Especially if you are the leader. Be ready to have ups and downs and be ready for your family and friends to not understand why you are that way. Only peers in similar businesses will understand your feelings. So being a leader of a start-up is a VERY difficult thing to do and a career choice that is easy to make but not so easy to be successful at.

    Entrepreneurs have an ingredient within them that drives them forward. Often this ingredient has been added to their character early in their lives. Many successful founders say they were determined to prove to others they could do it! Could be the parents OR the siblings OR any key influencer in their youth. It is quite often not money that drives them, but success and ego.

    “So being a leader of a start-up is a VERY difficult thing to do and a career choice that is easy to make but not so easy to be successful at”

    So how do you know if you can be a successful entrepreneur?

    Well, to start you need to have the flame burning within you. If this passion does not exist then you are probably making a mistake.

    You need to have a long term horizon. You probably won’t make much money for a few years.

    You will need to understand that it will probably take five to ten years before the business shows success enough to reward you. It is very unlikely to happen overnight.

    My personal experience:

    I started a number of software businesses in the eighties and nineties when it was great to be a software entrepreneur. The heady days when anything was possible. I surrounded myself with people better than me in their discipline – a top sales guy, a top marketeer, a great tech guru, etc. Without the team, I would have failed. No one can do it alone.

    After exiting a couple of businesses (one was sold to a part of Moody’s India) I started my investment company in 2012. Again, learning from the past and what I believe strongly in, I surrounded myself with top talent. We are now the leading early stage investor in UK! Teamwork always prevails over a one man band!

    We have now invested in over 200 start-up companies and it is quite clear why people succeed or fail. They succeed because:

    • The founding team have complimentary qualities
    • A clear, understandable product vision
    • A clear route to market
    • An ability to pivot and change as and when the black swans emerge

    Plus, it always helps if there is a team of at least two at the start. The team should have compatible qualities and skills. A great example is a company we invested in seven years ago. It is now worth 450 million dollars. Why? Because the initial founding team of three are still together and they have compatible skillsets. There is a great sales guy as CEO, a top techy as CTO and a well organised person as COO. They work brilliantly as a team of three. We now invest ONLY if we like the team. The ideal team is like the one above; with a leader who has the vision, passion and people skills to get talent to work with him or her. A leader can get the best talent at a fraction of the cost that they would expect elsewhere. They do this by selling the vision and creating the path to success.

    This brings me back to why you would want to become an entrepreneur?

    Simple answers:

    • If you want the best ride of your life full of adventure and ups and downs
    • If you want to be your own boss – Some people are very happy going to an office of a big company and seemingly doing a job, but they don’t often like this job. They will get paid better than in a start-up, BUT can they say it’s exciting ? Can they say they did something with their lives? Can they say they tried to change the world?

    There are (at least) two types of people; the doers and the sleepers. The doers are the entrepreneurs. They change things. They move the paradigm. They actually matter more than the sleepers in the big scheme of things. The sleepers sleep at their big corporate desk.

    You should decide which one you are going to be. There is nothing wrong with being a sleeper of course…most people are! But it is so much more exciting to be a doer and be in charge of your own destiny and life. Even if it goes wrong. You are responsible for your own future, not reliant on a big company. And remember that it is even harder now to work for a big company after the pandemic. Nothing is secure any more. They can fire you easily and you are then left in a void. Taking charge of your life, tough as that can be, gives you more autonomy and more responsibility for your future.

    So my answer to “Who wants to be an entrepreneur?” would be EVERYONE. It is tough. It is volatile. You might be poorer. You might have more sleepless nights. BUT, my goodness, it is more fulfilling. It is more exciting and it is much better to be in charge of your own life. After all we only have one of those!

    Good luck entrepreneurs around the world! Come on, help change the world for the better!