Serious Side Business Experience

nirajn123

Reposting from Boost your income board -

Hello,

Anyone who is involved in running one or more side business(es) e.g. Shops, Cafes while they are/were still in full time work? I am looking to at few options - buying existing retail business, franchise etc.

I have my own company and have some flexibility but it is still full time work, no issues with taxes etc. as I plan to do this new venture under a new ltd company and have an accountant who can help, finance (to an extent) is not an issue as well, I have limited help available from family to cover illness etc - but it is just that - limited (few hours per week).

Appreciate if anyone can share experiences on -
1. How much time per week is realistic
2. How stressful?
3. Hiring people - Do's/Don'ts
4. Is retail the right area to be considering - e.g. other easier sectors?

paddyrg

Shops and cafes are often owner-operated precisely because the margins are thin and they have to do 60-hr weeks.

If you're looking to invest in a sideline which is managed for you, are there a few people in a similar position where you could form a consortium and get a franchised hotel or similar? Or become a silent backer for a franchised store manager who wants to take his own franchise?

There are no end of businesses looking for cash who would take a silent partner in order to finance an expansion, it's up to you to sniff out which are a good bet and which are lemons.

Prothet_of_Doom

There's a mini mart near us that is part of a small local chain, of about 5 shops. My understanding is that the staff are all on minium wage, that there is one manager covering all of them, and the owner has other business interests, and rarely gets his hands dirty.

Pennywise

It will all depend on the mix and quality of staff you recruit (not necessarily how much you pay them as money doesn't guarantee quality). You need to look at yourself critically to evaluate yourself as a "manager", i.e. how good you are at managing other people, setting up systems, supervising them, are you a good judge of character? etc.

For a small shop or cafe, you may not need a "manager" to run it for you, but you do need one or more of the staff to be able to take the lead and have initiative to deal with the daily "extras" such as stock ordering, cashing up, etc. which aren't onerous if you have clear systems and instructions.

A small shop/cafe is very unlikely to need a proper manager and won't be able to afford one anyway. You have to set it up so that you, personally, do the top level management (marketing, setting up systems, setting up trade accounts, dealing with the accountants, solicitors, bankers, insurers, etc) - all of which can be done away from the shop so you don't "need" to be there. Don't do anything that one of the shop floor staff can do.

Then recruit staff who aren't just going to sit there looking at their iphone all day. Given the working hours and peak times, you're probably looking at several flexible part time staff rather than full timers. That opens up a pool of talent from the retired to students to parents, all of whom may want a bit of extra money, but not really wanting full time work. If you have a "pool" of part time casual staff, then it's easier to fill gaps when someone is off sick or on holiday.

I know two shops very well (I'm their accountant and regular customer as they're a few doors from my office). Both are privately owned but the owners are seldom anywhere near. Neither have a "manager". One, a small bakery, has 4 part time staff, working 3 days each, any 2 in the shop each day - there is no staff turnover - the same people have worked there for the past four years at least. They're all paid just 50p over the NMW, yet they're all really good, established good rapport with customers, deal with ordering, cashing up, etc themselves and arrange themselves to cover for each other. By rights, that wage shouldn't attract decent staff, but the owner manages to find the "right" people by being selective at the recruitment stage. Looking at the accounts, paying more isn't possible nor would be the owner working in it himself because he earns more working elsewhere than he could from the bakery. The other shop, a Spar, is different in that it has a couple of "supervisors" who deal with the ordering, cashing up, stocking, dealing with reps, etc., and then a large pool of casuals. The "supervisors" work alternate day shifts and barely meet but between them manage the staff rotas and recruit the casuals when the "pool" gets too small. The supervisors effectively "manage" the shop and are paid £8 per hour as opposed to the staff who are on NMW. Again, long term serving staff (even many of the casuals) who know their customers. The whole shop is, again, fully systemised so that all the staff know their role and the owner doesn't have to get involved in the day to day running.

So, to the OP, what you suggest is quite possible, but you'll almost certainly not have the funds to afford a "manager" to run the shop due to low margins etc. You'll need to systemise it to "empower" the shop floor staff to do more than just serving and you'll need some kind of "supervisory" position(s) for one of the staff to take the lead when necessary. Just make sure that you don't allow yourself to get bogged down into the day-to-day running - keep it at arm's length so it's not you who has to go in when someone phones in sick and it's not you who has to go down each day to cash up.

DKLS

A cafe isnt what I would consider a sideline, I have a relative who runs a very popular and successful Cafe in North Yorkshire, he hasnt had a holiday in the past five years and is up at silly o clock to start baking each day.

He loves it but it is all time consuming.

nirajn123

Thank you all for the wealth of advice.

Paddyrg: I did not thought about investing into existing business, although I would love to have a say in the business. There isn't anyone I know atm, but local business forums might throw up some options.

Prophet of Doom: I guess when you do one, you could five - as long as you have a system, and a supervisor/manager type of person.

Pennywise: This is very helpful, staffing is the key. I manage for living (a very well paid bunch of people though) so I guess that is not so much of a problem. I am glad that you made the point about having that someone to do the day to day running of the shop than me - as so far I kept imagining myself doing most of that - uncovered potentially a fatal flaw in my grand plan - pearls of wisdom and all that. If you don't mind asking - in each of these cases, are the returns worth risk in your opinion including the ups and downs or one is better off buying a rental property (which btw I don't want to do)?

DKLS: I think it is a style of managing. I work with two senior people - one is much more relaxed and let his people get on with things while he focuses on important elements. The other - always around, holding meetings, asking every little details - they have more or less have same degree of effectiveness but you can guess who has an easier life. Again the point Pennywise made about who the sick employee calls matters if you want to do it as a side or a main business.