During a recent conversation with an entrepreneur in the food sector – I was intrigued by the entrepreneur’s firm belief in what he was trying to do. Just like all other entrepreneurs he seemed to have his undeniable logic in place. Here is the essence of it.
Food businesses probably experience the largest failure rate. While all of them had a strong economic sense underlying the business, most did not build a brand. He felt that this could be a primary reason for failure. If people don’t recognise the brand and return to enjoy the food, there can be no business. Hence economics of making surplus should come only after having established a trusted brand. He felt that this was important. So, he has gone about building the brand first – a fairly well recognized name in the local market. He is about two years in the business and is approaching break-even only now. But because his brand is fairly well recognised and has a high return rate amongst customers – he feels its only a question of time before he starts reaping the fruits of his efforts and belief. In fact he is almost on the verge of raising money as well. He hopes to use the money to expand his small but well recognised brand.
While his logic seemed in place, what got me thinking was his strong message that food businesses must build a brand before building the business. Is this really true? What did he mean by the brand? He said – a promise. He said – consistent delivery of services. He said – trust. He said – great experience. I think they are all right. His logic therefore seems very well placed. He said, ‘If I can win customers first and keep them coming back for my food, it is fairly easy to start making money. But if I focus on making profits and breaking even quickly – sustaining the food business seems an unsurmountable challenge.’
The reason for sharing this message here is because many times when we teach entrepreneurship in class, we attempt to make building enterprises a rational process. Probably this is yet another example of why it may not be true. But the entrepreneur was also humble enough to accept that learning the tools and techniques from books and classes is what gave him the confidence and kept him sane through the tough times. His key to sustaining and thriving is – read one hour everyday.
Knowledge is important. How you acquire it is immaterial. Isn’t that wisdom?