Lessons I Wish I'd Known Before My Business Failed

JESSE KRAMER

CONTRIBUTOR

It was easy to forget about the difficulties of building my business, Brooklyn Taco Co., when I was catering for The Daily Show with Jon Stewart every month. It was a great achievement to have my favorite celebrity craving my handcrafted tacos. Getting Stewart to laugh at one of my impersonations of a lunch lady was also pretty great. But the feeling of success faded quickly.

In February 2015, Brooklyn Taco closed. Immediately, I found myself obsessing over the whys and what-ifs.  Five years of experience building a food business taught me unforgettable lessons, but they were taught too late.

With absolute certainty, I know that Brooklyn Taco could have grown beyond a local brand if we had followed the principles below.

1. Swallow your pride.

I had too much pride to share ownership of Brooklyn Taco with an outside investor. Brooklyn Taco had an offer in the beginning for around $400,000 for 80 percent. At the time, it seemed like I was selling off everything that my partner and I had built. Today, Brooklyn Taco is a dormant brand.  If you asked me if I would rather have 10 percent ownership in a prosperous company or half ownership in a failed company, I would take the former. Of course, giving up equity comes with its own risks, but take the time to think about it -- just don’t assume that it’s best to keep your company entirely in your own hands.

2. Starting too small can be a curse.

Starting small seemed like the healthy approach. We created the concept with $30,000, including rent, equipment and branding. The plan was to slowly grow and use the earnings to fund a larger operation, but in reality, a space that is too small to generate substantial profits is like treading water until you are too tired to stay afloat and you go under. This is the exact situation that occurred with Brooklyn Taco. A small space with low rent seemed perfect until we realized we lacked sufficient cooking capacity and seating to generate enough profits for expansion. We had a consistent business, but with no opportunity to increase production capacity, we were doomed from the beginning.

3. Choose your location carefully.

Initially, New York City seemed like the perfect place to start a new food concept. It offered a high volume of people, access to big press outlets, tourist traffic, millions of food-centric locals and plenty of vacant real estate available to open new locations. Yet, rents in NYC are so volatile that it is hard to create a business plan that will sustain growth. Starbucks has felt the pressure too, changing its business model for NYC locations to focus on smaller more efficient spaces.

Rent was only one of the hurdles that stunted our growth.  Staffing in NYC became the biggest struggle for Brooklyn Taco. How could I expect my business to attract and retain valuable employees when I couldn’t afford to pay them enough to meet their basic living needs?

Opening Brooklyn Taco in my hometown in Connecticut was not as exciting as opening in New York, but it was an idea that I should have seriously considered.  It is hard to accept, but the cost of operating a business in a major metropolitan area can be so prohibitive that you can make more money opening in a small town.

4. Explore new ways to boost your bottom line.

Brooklyn Taco did not have a beer and wine license nor did it have a liquor license. Alcohol was not part of the original plan when we established the company; we were purely a food-driven concept. It was not until we started putting the numbers together for investors that we realized that a beer and wine license or liquor license would have increased our profits significantly. The reality is that alcohol is shelf stable and has high profit margins; food is quite the opposite. The importance of alcohol in a food operation was reiterated after consulting multiple restauranteurs as we started to explore opening additional locations.

While we were never able to move on those plans, the lesson we learned was important: as a business owner, you need to always be looking at ways to protect and grow your bottom line.

5. Build a business that needs you to grow but can run without you.

Brooklyn Taco had huge breakthrough in the beginning of June 2015 when we were accepted into a two-month outdoor summer market, Broadway Bites, located in Herald Square.  Rent was extremely high -- $10,000/month for a 10-foot square booth -- but we had an incredible opportunity to make a lot of money while testing our tacos out in the Midtown demographic. Two 96-hour work weeks into the market, I had learned the ropes.

Now let’s fast forward to our last day, the breakdown and cleanup. I was exhausted beyond belief and didn’t know that a disc in my neck was herniated. My shoulder muscles became partially paralyzed due to nerve damage. Surgery was my only option -- and the only thing that wasn’t included in my business plan. Brooklyn Taco was forced to function without me and it didn’t work. I had spent so much time building my business on the ground level that I had created a company that could not survive without me.

6. Do not start a business with your significant other.

There is an undeniable and irreversible toll of trying to mix business with pleasure. A fight at home can carry into the business, and in our case a fight eventually led to a breakup. My girlfriend and I separated, but we remained in a business relationship and it was toxic.

The hardest part was accepting that we could not continue to operate a business with this dynamic. Neither she nor I were willing to run the business alone, and angel investors were not lining up like we had hoped. This was the end of Brooklyn Taco.

Despite such an arduous path from the beginning to the end of Brooklyn Taco, I do not have any regrets about the journey. I started out as a nervous amateur cook who knew little about what it takes to run a business to a savvy owner and seasoned chef who created one of the most recognized tacos in NYC. I hope that some day, Brooklyn Taco has the opportunity to rise up again and show everyone its greatness. That’s the beauty of mistakes -- if you learn from them, you’ll never fail to build something better.