Apr08

Ask iChef…

(08 /04 /2016)

Question:

I received an email from Grandparents seeking guidance on a dilemma. They have been approached by family (their grandchildren) to see if they would support them financially in a Cafe start up. The Grandparents’’ have no experience in the hospitality industry and their grandchildren’s experience is from being wait staff and a newly qualified chef! They were looking for my thoughts on 1. Should they help them out and 2. What kind of things should they look at or be asking should they decide to help?

Answer:

Think seriously, very seriously about this commitment as it is truly can be a life changer. It could lead to a successful future or on the flip side could be a financial disaster and could damage a family relationship. Based on personal experience I would be steering clear!  I asked family to support me in my restaurant venture. The house was put up as security and the business was given the funds to continue, however unfortunately the writing was on the wall fairly early on, the partnership died and the house was exposed to the possibility of being taken. The problem was not that the business wasn’t viable or a good idea, it was I just didn’t have the experience nor the financial finesse to keep it afloat.  In hindsight, if I knew then and had the tools I do now, it would be very different story!  At the time I was fresh out of my apprenticeship and ready to take on the world!

Family and money don’t mix well and I have seen many families fall apart because of these types of requests. So to answer your question I personally wouldn’t do it again, to my family at least. Disappointment heals, but losing retirement money doesn’t.

If you DO decide to support them, then you will need to put together a plan.  Make sure you seek advice from an industry professional who can give you guidance and mentoring. You need to have a detailed plan on the business model and on the financial agreement, making it a business decision not a family handshake.  Do they have a clear business and marketing plan in place, have they thought through financial modelling?  Have they done their homework on location, competition and point of difference? The hospitality industry has one of the highest turnovers and failure rates all from a lack of planning and not understanding exactly what can go wrong.  Have they investigated the processes and procedures and tools required to not only cook amazing food but manage a kitchen and front of house.

I have seen when the Grandparents are left with the running of the business because it was all too hard for the young ones.

My advice would be take a long trip and spoil yourselves as you have earned it with the decades of work behind you, let the Grandchildren have a few more life lessons or at least a little longer to really think through the consequences!


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