Ordeal of the first-time entrepreneur: how I lost 20k and survived

Imagine, I am a highly paid IT consultant with 12 years of experience in large enterprise systems implementations with such clients like The Home Depot, Husky Energy. And now I am chopping fruits and vegetables, washing the dishes, and mopping the floor. I used to love making crepes, now I hate it!

Everybody dreams about having their own business. They see themselves having fun, while serving a crowd of happy customers and cashing a pile of 100-dollar bills. Not gonna happen! Let me tell you what it takes to build and quickly fail this delusion.

Back in March 2016 I lost my contract with a client. The market sucked. There was nothing available in consulting. And I decided to partner with my stepdaughter and son in law to start our own company. John and Anna were both quite entrepreneurial. They already had experience running a successful business in trade shows.

-         Slava, what are we going to be selling? – asked John.

-         Crepes! I know they are tasty, and we – eastern Europeans – know how to make them great. Plus, it’s my hobby. My colleagues love them. – answered I excitedly.

-         Dude, we know nothing about this as a business. We don’t have equipment, we don’t know the recipe for batter, for savory and sweet filling. It needs to be commercial scale. You know?

-         Yeah. I get it. But we’ll figure out. – I was unstoppable.

-         I am OK with crepes, but where do we sell them? Renting a place on a food court is expensive and it’s a long-term commitment. – continued John.

-         Let’s do a quick test and try selling them on festivals as a food concession vendor! You already know how it works on trade shows. It should be similar. – finished I.

John was damn right. We knew nothing about this trade. But I desperately needed to survive, to make money for living and to feed my family. And I used my consulting skills to arrange our business endeavor. I purchased and scrutinized the book on concession business. Came up with the plan and executed upon it.

The list of things that we needed was huge: a tent, sneeze guard, sink, working tables, cash table and box, crepe makers - propane and electric, propane tanks, cutlery, clean and waste water hoses, food containers… I don’t remember the whole list now. Some of the items were really expensive. A commercial sink for instance was 5 thousand dollars. But I found an instruction on the internet and with help of a handyman made my own with just 1.5 grands.

Plus, we needed to find the venues. I browsed different festival pages, contacted organizers and filled out applications. Unfortunately, we had to pay for them upfront as well. The more we got into this, the more capital was required. We underestimated it three-fold! But it was too late to back out.

I was thrilled to do all those preparation steps for good two months. But it ended quickly. Our first event was in the end of May. As it is typical in Alberta the weather was so bad that it started snowing. As the result the attendance was close to zero on the first day of the fair, and the second day was cancelled.

The second event was in a small town of Camrose 3 hours drive from our home town Calgary. This time it was a hot and sunny day and there was a lot of visitors on the venue. But they did not want to buy our crepes! They just passed by not understanding what we were actually making. It turned out that French crepes is not a typical fair food on festivals. Canadians are not accustomed to them and they do not even expect this type of food. Our neighbors were selling cheap and crappy fries and burgers and were having great sales! And our sign on which we spent so much time and creative energy did not serve the purpose. It showed the logo. But instead we should have made big pictures of crepes. Too late and too painful.

On top of that I had my own fears - cooking crepes in front of a customer. When you know that they are looking at each move. It is their meal. They want it to be perfect. They want it to be made professionally. And I was shaking.

The traffic was bad. The sales were bad. John asked me to offer samples to people. I had to overcome my fears to do even this small task. I am not used to offering my product to strangers. I am a consultant and I serve clients who know what they need from me. I was terrible at selling. And now I needed to do it with a cold audience.

Then we ran out of stock and I had to literally sprint to the nearest grocery store to purchase blueberries and strawberries.

Then we exhausted all the change and after checking with the nearest stores I rushed to the bank. Luckily it was Saturday 3pm and it was still open.

At the end of the day, after closure, we needed to prepare for the next day. One of numerous mistakes was to make the batter from scratch instead of using a premixed powder. So, we needed to make 20 liters of it for the next day and then wash all the containers in the tub. The cheap motel was not the best place for doing that. But we had no choice. We completed everything by 1pm. It was a long 18 hour working day! Poor entrepreneurs Slava, John and Anna.

There were more events like this that summer. And we failed this business miserably. We did not make money but rather lost 10 thousand dollars each partner. I was lucky to find a consulting project thanks to my connections. One of my previous project managers - Pamela - moved from Calgary to Saskatoon and was looking for a business analyst. And she hired me which saved my more than a desperate situation.

What did I learn from this experiment? A lot!

First, I did not have prior experience in concession trade. That was a big blunder. I should have tried and worked in this industry as an employee to see all the intricates, problems and opportunities. Plus, assuming that a hobby can be turned into a business was kind of naïve. Never ever again! Next time I will try a side hustle in the niche that I know very well and have expertise in.

Second, starting a business, especially the first time, is associated with high risks. And it was a foolish idea of mine to use a line of credit to finance all the capital requirements for this venture. Next time I would have a reserve fund and separate income stream while launching my project in parallel.