When planning to open a business, a person usually starts reading stories told by successful entrepreneurs. Or attends all sorts of courses and trainings in which they teach how to become successful. But learning better from those who failed. Unfortunately, people do not like to talk about bankruptcy.
Roy Shlomo, founder and CEO of Kale Me Crazy, a chain of health food restaurants, remembers the day he lost everything and is not shy about talking about it. He believes that day gave him invaluable experience that helps in life.
Successful start
Following the example of several successful businessmen, he started his business with a small kiosk in a shopping center. In 2006, Roy expanded his business by acquiring another 13 stalls. Monthly revenue amounted to 300 thousand dollars. This amount is enough to buy a house in the USA. Roy never thought he could make that much money in such a short amount of time.
He, who grew up in a family with modest incomes, felt himself omnipotent. It seemed to him that he could double or triple the profit as soon as he decided to do it.
Roy bought a new car and invested in real estate in Florida. Moved to Las Vegas. In 2007, on the eve of the global financial crisis of 2008, he entered into a lease of premises and opened a jewelry store.
The fall
The crisis, which was predicted by analysts and economists for several years, came as a surprise to him. Investments rapidly depreciated. No one was interested in jewelry at the height of the crisis. The rent had to be paid monthly. To keep the business afloat, money was also needed.
In less than a year, Roy became bankrupt. He could not even pay the rent. I had to file an application with the bankruptcy court.
Now Roy Shlomo understands that not only the crisis caused his bankruptcy. The main reason was his mistaken trading decisions.
Analysis and Rethinking
To create recipes that allow him to survive, Roy analyzed all his decisions and saved where possible.
Two years later, borrowing the missing amount from a friend, he opened a new business: he founded a company selling yogurt. He did business very carefully, sold the company three years later and embarked on a new adventure: in 2013 he opened the company Kale me Crazy, a chain of stores selling juices and healthy foods.
Today, he owns twenty-one stores in Atlanta and builds five in other US cities. He has learned for life four rules that must be adhered to in order to achieve success in business. And gives advice to beginners.
Capital protection
Now he advises everyone not to rush with reinvestments of the first earned money. Managed to make money - that's great. But he felt the need to have a "airbag" in the form of free money from his own bitter experience.
He considers his biggest business mistake to reinvest the first profit in a hurry, without a serious analysis of the real estate market. He was blinded by the desire to get more money.
To build a sustainable business, it is not necessary to start small, but you need to make informed decisions. Now Roy says that if he thought then, he could be one of those who made a lot of money during the crisis. But he hurried, and lost everything.
The best decision to save your capital is to wait for a good opportunity.
Appreciate what is
Bankruptcy taught Roy Shlomo to value money more than ever.He gives an example with people who win the lottery or receive large amounts of inheritance, and lose everything in a short time. This is a psychological moment that is characteristic of all people who are not used to big money: they subconsciously seek to get rid of them. By this, he explains his reckless investment decisions of those years.
Even a person who knows how hard it is to make money will never learn it until he loses everything. He advises everyone to learn to control costs and always have some amount in reserve. This allows a person to get used to the fact that he always has money.
Learn to calculate risks
Roy Shlomo emphasizes that you never need to sign a lease, store opening or any other commercial contract until all the risks and value of the business are assessed.
He recalls that when he opened his jewelry store, he was fascinated by the large number of people and tourists who go to the store. Therefore, I signed a lease agreement with a high fee, without thinking that this would be the income of the owner of the premises. Roy decided that if a lot of people go to the store, then a large sales volume will allow him to pay such a high rent. As soon as the crisis erupted, he was unable to pay the landlord's bills.
In the store, as the entrepreneur now understands, the number of buyers and sales does not matter. The only thing that matters in trade is net profit, and only when it is already in the pocket of the store owner.
Do not hurry
Roy says that when a person is obsessed with an idea or is delighted with something, it is difficult for him to take a break to ponder over the details and calculations.
But for a store, even located in a very good building, to become commercially successful and bring good profit, a combination of many factors is necessary. We must evaluate the purchasing power of the residents of the area, the availability of similar stores with similar goods nearby. Even parking can affect sales.
According to Roy Shlomo, bankruptcy was the most stressful and dramatic event in his life. But thanks to her, he gained invaluable experience, which allowed him to become a major entrepreneur.