FOH Business: EAR: Entrepreneurs.

[El Presidente]

EAR: Email Assistance Required

 

Many of you work in an entrepreneurial environment. You may be surprised how many younger members we have who are looking to branch out into an entrepreneurial world. I would get 6-8 emails/PM's a week asking for advice. I had another one this morning that triggered this post. 

"....so I am 32 and have come to the realisation that I don't want to work 8-5 for someone else. I have thought about a cigar lounge here in ***** but I wanted to reach out to whatever advice you could give for someone who is contemplating making a change and punching half a million into something that will provide me and my family (wife and two children), security and a sense of purpose/why?. What advice can you give?"

 

I have answered upon the following lines but many of you are far more equipped than I . Chime in 

 

• I have had 10 businesses in my life (to date). 4 failed. Pen Czars, Opals, Friends of ORIS, Cafe. They were all successes for a period of time but circumstances change. Don't be emotional. 
• Fail early and fail cheap. Don't invest your whole nest egg. 
• Your passion is not always the best business to go into. Think clinically. Find a need and fill it. What is your point of difference?
• Making wages is not success. Generally, you have the arse hanging out of your pants and your house on the line. Wage owners don't have this. Think carefully. 
• Pick your partners wisely. Money investment is attractive but it is an insulin boost at best. Partners need to bring something tangible outside of cash to the table. 
• Great lawyers and accountants are gold. Don't scrimp. 
• Manage the minutae of your business. That means be over the shit that you don't like to do. Initially you will have to do it. 
• If you are not having fun, it is unlikely to last. 
• 8-5 is for the public service. Still, make time for family, friends, faith (if you have one), fitness.  If you are doing what you love, you are not truly working. However, keep an eye on "entrepreneurial creep". It can destroy everything that you build. 
• Debt is a double edged sword. Think thrice. 
• Love your team. Put in place programmes for them to succeed. 
• Put money aside for tax and other obligations. It doesn't take long for things to get out of hand. 
• Know your f*cking numbers. 

For our business owners/entrepreneurs....chime in. I will link to this thread for future emails/PM's on the subject. 

Many thanks 

 

[Chibearsv]

Long term business requires capital growth.  Don't be eager to distribute all your profits or you risk your entire business in a downturn.

 

[MickVanWinkle]

Not an entrepreneur myself, but have leant some guidance to a few friends - that said:

- Know your numbers - but also know you can spin many stories with numbers.  Know as true a story as you can - not the narrative you want.  

[BrightonCorgi]

Learn a valuable vocation skill and money will never be an issue. Build a business and manage others with same skill set. You'll all grow together.

[Cigarsmoker81]

Good advice 

Thanks for sharing. While I'm not an entrepreneur, I come from a family of entrepreneurs and I’ve seen three main differences in those who fail vs those who make it

1. They’re in it to win. They love the game and work hard and long to make it work. 
2. Agility and resilience. As Rob said earlier, those who make it tend to fail many times before they make it. If it doesn’t work and there are evidence why it won’t work in the future they pivot into something else and move on. No point in crying over spilled milk 

3. Relationships. They’re good in surrounding themselves with smart people who are loyal to them. Whether their own team/ suppliers/ clients/etc.

If you do decide to go ahead then I wish you best of luck. My father started his business in 1973 and closed it in the end of the 90s. Until he passed away in 2017 he kept on telling us stories about how he went against the odds and won. Nothing feels better than building something with your own hands. 

[Çnote]

On 2/2/2024 at 3:15 PM, El Presidente said:

Know your f*cking numbers. 

This, 1000 times before breakfast.

Only a half? That sounds super-undercapitalized. No dependents, yeehaw, but with a wife and 2 kids, man...more money in is more money out in retail, esp niche. Inventory flex, volume, buying power is going to send the kids to college.

80/20% all day, all the time. Sell to the masses. Volume plays trump; fast nickles, slow dimes. Don't buy what you like, take positions on what sells.

Vendor relationships are your bread and butter as much as your guest relations.

I'd add marketing savant to lawyer and accountant with even more trepidation. A great one is worth every penny, a bad one will bleed you.

Location location location. Plan plan plan. Be incredibly pessimistic about sales forecasts. Don't buy anything new when there's a salvage option.

Diversify and pivot. What has worked is not necessarily what will work.

You only get one chance with a guest.

If you insist upon partnerships with friends, do everything in writing. Money brings out the worst in people.

Success is leased, and payments are due every MFing day - shamelessly stolen from JJ Watt

100% honesty? If you're a CC enthusiast, without any retail or lounge experience, don't open a cigar lounge in the USA. 

[dominattorney]

17 hours ago, Çnote said:

100% honesty? If you're a CC enthusiast, without any retail or lounge experience, don't open a cigar lounge in the USA. 

Curious to hear more about your reasoning here. I'm not saying I necessarily disagree, but it strongly depends on the state you live in, and what business model you are looking at. 

I don't think there's a lot of money in selling cigars in states with high excise taxes, because people will just order online. That said, even in such a state, you might still get by if you find a niche and put your heart into it. 

I own my own business and I don't think I'd ever venture into cigar lounge territory because I personally don't think the juice is worth the squeeze in my state. But I do frequent a very nice club/lounge in my city and the owner is happy with his decision. He's not pulling mad money out of it, but he does ok. 

[Çnote]

11 hours ago, dominattorney said:

Curious to hear more about your reasoning here.

To be clear, not just cigars but CC.

Simple => you can't (legally) sell CC in the USA. A huge incentive in opening a venue is the lifestyle, whether smoking for 'educational' purposes or stocking your personal humidor at wholesale. If you like CC more than NC, those incentives are effectively zero.

Complex => most of the market is  bundles and flavored. HIghest margin is bundles & house blends. Anything that sits longer than your inventory metric costs money, so quality doesn't count, only volume and turn time. You need some halo effect on slow dime inventory to make you look serious, but the money is in fast nickel, turn and burn stuff that sells every single day.

Simple or complex, a passion for CC isn't going to really help you with the daily grind of the constant carrying water and chopping wood that a B&M lounge takes to run. You have to be willing to unclog toilets and run the register; you can't afford to contract that stuff out day one, and if you can, there's better investments than B&M small business.

If you really like people and making deals, that can help swing the other way.

State laws are an enormous consideration, then local competition, municipal zoning, etc. Location is potentially the 1st concern after funding.

If you can sell memberships, sodas, alcohol etc, that helps a lot. Diversify as much as you can while staying in your concept.

[Rushman]

I will add, pick your partners wisely. I have heard Rob say multiple times “do business with people you like but partner with people you love” (might be paraphrasing a bit Rob). 
 

I’m lucky to have partners that are 1000% dedicated to our employees, clients and families. 
 

I'm in a non inventory business (thank goodness) but definitely agree with what @Çnote said specific to the cigar store/lounge question. 

[BrightonCorgi]

I would not go near the cigar industry. Be it retail sales or lounge. Tough enough for established players. Unless you have a sweetheart lease I don't see how one can make a living when local, state, and federal governments are all trying the vanquish your business.

[dominattorney]

@Çnote and @BrightonCorgi make some good points here. 

I hadn't even considered the most obvious point that you can't sell CCs. I took that as a given, even in a non-embargo country. You'd be working with new word cigars. If that's a deal breaker for you, well, just move on right away. 

Considering US regulations trying to vanquish your business, you have to deal with that however you can. The best way would be in a membership situation, where de minimus you sell a day pass to enter the lounge and are looking to capture monthly members. That keeps you pulling in a stable monthly amount. Try to presell memberships that will cover your lease and general expenses before you open. If you're allowed to sell alcohol then you absolutely should. If not, try to figure a way around it, like by leasing bottle lockers or shelf space behind the members only bar area (employee pours liquor members bring in).  Lease cigar locker space but make sure you know how to babysit a humidor. 

Stay open noon through 8 pm on weekdays and to 1030 or later Friday and Saturday. Most members won't come in until 3 or later, which means you can possibly perform other tasks from your computer in the management office for a supplementary income stream. Possibly. This is more possible if you can afford to pay a guy to pour drinks and wipe tables and dump ashtrays between noon and 6 Monday thru Friday. Of course, you'll have a steep learning curve in the beginning just managing your cigar and other retail inventory. 

The biggest mistake I see places like this around me make is skimping on the initial build out. You want to create a space that people feel comfortable in. Like a living room away from home. Ideally there will be numerous rooms with their own feel. The ventilation has to be spot on too. The furniture has to be comfortable and inviting. If you're doing booze, the bar has to be beautiful as well. If you sell memberships, you want to make people think 100 bucks a month or whatever you're charging is a bargain.

Consider that some people will be office orphans and might just want to spend the money to have a corner to plug in a computer and work on.  Be careful because other members will see this and try to hassle everyone for a job or an investment or what have you. Don't be afraid to kick people out who are not a good fit. I cannot stress this enough. Getting rid of one or two annoying paying members will save you money in the long run, because they will scare away the people who you really want to come to your business. 

Let members bring in cigars from elsewhere. Figure out a way to make this cost effective for you but don't he belligerent about it. Either make it a locker member only thing or charge a cutting fee. Locker member only is probably easiest and less intrusive. 

Promote events on certain evenings. Whether it be football on Sundays, Mondays and Thursdays or something else. Cigar tasting events can be fun and lucrative, and an opportunity to grow your membership base. 

An idea I've not seen implemented by a business owner but one which would be cool is to have like Tuesday night discussion groups about certain topics. Maybe like a Tuesday night group about the nature of existence. I've got a group of guys at my spot who I love talking physics and math with. It's a hoot. You could also have Thursday night conspiracy hour. We've got an unofficial one of those which is fun too with a different set of guys. Pick a conspiracy each week to either support or pick apart. Even a gentleman's book club would be a draw. 

Get really good at brewing coffee and consider investing in a top notch espresso machine. You can sell coffee and espresso to a captive cigar audience and every town has a local roaster who'd be more than happy to link up with you to assist in this capacity. 

Put out a tip jar if you don't sell the coffee. Maybe it's a perk of membership, and that way a guy will leave a 5 spot after a nice evening spent there. 

Everything you do has to work seamlessly together for something like this to make money. You can't just open a shop that sells cigars and has a few faux leather chairs. 

[BrightonCorgi]

46 minutes ago, dominattorney said:

The best way would be in a membership situation, where de minimus you sell a day pass to enter the lounge and are looking to capture monthly members.

The best way to make money from a cigar lounge is to have "massage tables" in dedicated rooms in the back. 

[Çnote]

@dominattorney

33 minutes ago, dominattorney said:

You can't just open a shop that sells cigars and has a few faux leather chairs.

Actually, this isn't a bad place to start. It's all about what makes sense for the local market and regulations. Simple can be much easier to manage, police and clean, where you focus more on moving widgets than guest experience.

It's a very fruit salad situation 

- shop no lounge 

- shop with lounge 

- lounge with shop

- lounge with full bar

- lounge with wine & beer

- lounge with coffee 

All of these are separate license sets and concepts in my jurisdiction. Depending on the actual location and buildout, any could make sense, and much of it would be based on cash on hand, proximity to competitors, and zip code demographics.

[Çnote]

10 minutes ago, BrightonCorgi said:

The best way to make money from a cigar lounge is to have "massage tables" in dedicated rooms in the back. 

Yes. I look forward to our partnership.

[BrightonCorgi]

18 hours ago, Çnote said:

Yes. I look forward to our partnership.

Offer "girlfriend experiences". They bitch at cigar smoking and want a fancy dinner.

[Çnote]

17 hours ago, BrightonCorgi said:

Offer "girlfriend experiences". They bitch at cigar smoking and want a fancy dinner.

Stop giving away trade secrets!

[dominattorney]

18 hours ago, Çnote said:

@dominattorney

Actually, this isn't a bad place to start. It's all about what makes sense for the local market and regulations. Simple can be much easier to manage, police and clean, where you focus more on moving widgets than guest experience.

It's a very fruit salad situation 

- shop no lounge 

- shop with lounge 

- lounge with shop

- lounge with full bar

- lounge with wine & beer

- lounge with coffee 

All of these are separate license sets and concepts in my jurisdiction. Depending on the actual location and buildout, any could make sense, and much of it would be based on cash on hand, proximity to competitors, and zip code demographics.

You're right, and again I'm guilty of making this up as I go with an eye toward regulations in the state in which I live, where you can't sell booze or anything except tobacco accessories if you allow smoking indoors. The workaround is a members only club. 

Elsewhere, you'd have more options. 

I still think faux leather chairs and sell cigars is not going to get you too far, as there are plenty of chain stores that already have this experience to sell and they can undercut you on price of cigars and selection. It's like how to operate a successful liquor store once grocery stores get into selling booze. You have to set yourself apart somehow. 

[Çnote]

17 hours ago, dominattorney said:

You're right, and again I'm guilty of making this up as I go with an eye toward regulations in the state in which I live, where you can't sell booze or anything except tobacco accessories if you allow smoking indoors. The workaround is a members only club. 

Elsewhere, you'd have more options. 

I still think faux leather chairs and sell cigars is not going to get you too far, as there are plenty of chain stores that already have this experience to sell and they can undercut you on price of cigars and selection. It's like how to operate a successful liquor store once grocery stores get into selling booze. You have to set yourself apart somehow. 

Totally understandable, you plan for your backyard. 

I had an offer earlier this year where part of the deal was no/minimal alcohol. The deal fell thru due to other issues, but the barebones plan was 10-12 chairs and 50 facings + concierge service. It probably would work given foot traffic and a nice neighborhood nearby, but the numbers were still very sketchy.

 

 

[Çnote]

17 hours ago, BrightonCorgi said:

Offer "girlfriend experiences". They bitch at cigar smoking and want a fancy dinner.

This would actually be easier to staff than a lounge. Just saying, having independent contractors paying a fee to the house is better tax liability and cash flow than paying employees to tidy and serve guests. Your local authorities may have different opinions, and mixing this level of service with alcohol is a huge no-no in my local, but this is actually a pretty smart dumb idea.

[eltoroosborne]

Just a couple of points to think about:

do your background research by speaking to as many cigar shop owners as you can about how the business works / take notes (how do you source inventory, do you focus on a particular customer type, what type of foot traffic do you get, blah blah).

see if any cigar trade shows in your area that you can attend. Great place to meet people in the industry.

put together a business plan that discusses what your business is, how you’ll make money and what makes you better / different; put together a budget for the business and P&L.

Lots of comments in here that are quite useful.


Sent from my iPhone using Tapatalk

[El Presidente]

Business plans should fit on one page. One. 

If you can't descibe your business/POD (point of difference) in 30 seconds, you are done.

[Çnote]

On 2/7/2024 at 9:19 PM, El Presidente said:

Business plans should fit on one page. One. 

If you can't descibe your business/POD (point of difference) in 30 seconds, you are done.

Anyone who wants more than that wants your ideas in writing so they are easier to steal. Ask me how I know!

[Li Bai]

5 hours ago, Çnote said:

Ask me how I know!

How do you know ?

By the way for all the entrepreneurs to be, sometimes you have to consider moving to another country. 

[BrightonCorgi]

On 2/9/2024 at 1:24 AM, Çnote said:

Anyone who wants more than that wants your ideas in writing so they are easier to steal. Ask me how I know!

Social engineering?  Stealing ideas.

[Çnote]

Several times I've been interviewed for sales consultant positions where I've had to show some small part of a detailed plan as proof of concept of why my retainer/structure ask is 'exorbitant.' Maybe I come in for 30 days and start some implementation, maybe just some staff training. Either way, I'm not there long term, and they didn't pay the full retainer. They got a neat trick cheap that a monkey could do, but it's just one step of 20 points for phase one.

I'm going through a version of this right now actually. I took a bloated inventory with bad logistics and made it pretty clean to get it up to next level. They hired in someone cheaper, and suddenly inventory is bloated again and they aren't getting the basics covered or making plans for the future. A lot of that is just attention to detail and a different level of understanding of how you can make a very niche logistics system work for you; but you have to do the work all day everyday, it's not just another task to speed thru on the 9-5 checklist before you go home and cash your check.