"Bhubaneswar is gradually becoming cosmopolitan with emergence of many corporate houses like infosys, Tata, Mahindra Satyam, Reliance. The pre-historic temple city is now an eclectic mix of old and modern buildings. The growing number of vehicles on road and busy lifestyles of people are testimony of the economic evolution the city is experiencing"
We had this very nice story and positive trend lines to back up our idea of starting a home food delivery chain ,which me and my friend conceived one evening while searching all over the place for a simple and healthy dinner. We thought to ourselves that despite being locals, if it's such a painful process to find a decent place to have dinner, imagine how much of a suffering the migrant workforce ( primarily in the IT sector) must be going through every day. We both were thoroughly convinced that there is a strong business opportunity and plunged into starting our venture, a home food delivery chain that takes care of your everyday dinner needs.
My friend quit a better paying job in Bangalore and took up a job with one of the few IT companies that are there in Bhubaneswar. Then the hunt started....a house for rent where the owner would allow us to run a business, kitchen equipment from different sources, a cook, delivery boys, bikes, delivery boxes, website developer, creative designer.....the list goes on. We wanted to be as scrappy as possible to keep the investment and operation cost low as were getting into a highly price sensitive segment with very thin margin. So cost efficiency was one of the key driving factors of all our decisions. However, we never wanted be another "dabbawala" or tiffin service. It was very clear that quality of food and presentation ( compact branded disposable trays) is something we would never compromise.
After a toil of three months we were ready with the basic infrastructure, four employees, website, etc.It was a hell of an experience for us as the support system and the level of professionalism you get in a small town is by no means geared towards making an entrepreneur's life easy. First day of our operation, we got three orders and trust me it felt like writing IIT entrance exam all over again. Ensuring the right quality, packaging, on time delivery was no easy feat on the first day. We learnt, expanded the team, hired one manager, grew to delivering 70-80 meals a night within 6-7 months. We needed more delivery boys than we thought because with unplanned layouts of Bhubaneswar, deliveries took lot longer than we had expected. We had to hire more people to build back up as every week couple of delivery boys would leave us and for what.. They all wanted go back to their villages and have an easy life getting Rs1/kg rice government provides. None of them qualified to be BPL (Below Poverty Line), but they had somehow managed to get their names on the list. Thanks to the corruption and free-food-for-all programs of the government, no one wants to earn their bread now. We had to hire a manager from a local MBA college to ensure efficient operations and better customer service. All this made our salary cost touch the roof and the books would look deep red at the end of the month. We increased the price of the meal by merely 5 rupees. We thought it's just 5 rupees, our customers would be okay. But we were wrong. The orders dropped by 30%. We had to do something different to turn around the business, the only feasible option we could think of that time was to enter into corporate catering. Again on papers the proposition looked great, single point delivery that saves our logistics cost, guaranteed orders that protects us against the demand variability. We started and within couple of months we were delivering in top 2 IT companies of Bhubaneswar and few more small sized businesses. But again handling relationship with admins of the companies was a nightmare. They would think as if they have done a big favor to us providing the business and would expect something in return. If you don't succumb to that then their demands keep increasing..demands like - you need to send two more people to clean up the tables and used plates, you need to add another item as there are complaints from employees about the quality of your food etc etc..We held our head high and kept fulfilling their demands rather than doing any back door deal. But all this comes with a cost.. The profitability from corporate operations took a hit. Despite all odds we managed to build a business, which at least employed 20 people and was able to meet it's operational expenditure from the revenue generated.
Then over the course of next few months we realized, to maintain the efficiency of operations and quality of delivery, one has to be dedicated full time. No matter how many managers we hired, how much we trained them, the level of professionalism and delivery was far from our expectation. We couldn't attract good talent because we were no big brand. We weren't willing to pay unreasonable salary for the average skill sets of the people who wanted to work with us. Also to be frank our profit margins din't provide us the luxury to afford fat pay cheques and as the saying goes "you get monkeys for peanuts". Getting the right resource and making them stick took almost half of our time and we could never bail ourselves out of that spiral.
My friend for few months couldn't devote as much time with his increased professional and personal responsibilities. We had to trust people to run the daily operations only to realize later that the word has lost it's meaning in today's world.We again tightened our grip on the operation . Within few weeks things were back to normal. But we started asking ourselves the question - " what is normal and if this is normal what's the new normal". Will we ever be able to reach the new normal being part-time entrepreneurs. Also in a business where service is the core is it the right thing to manage it part time and expect it to become a multi-million dollar business. If we do it full time, will we be able to scale it beyond Bhubaneswar? Will we ever become a brand where people are willing to pay a premium for for our food like they pay 250 bucks for a pizza? Will we ever be able to change price sensitivity and mind set of people in a small town? I am not exaggerating this, but we were shocked to see employees of respectable IT companies walk down a mile to have their lunch in a nearby filthy unhygienic "dhaba" ( small roadside restaurants) for 30 rupees to avoid paying 50 rupees for the lunch at their cafeteria. If such high salaried people don't have a concept of hygiene and quality, why anyone ever would pay a premium for our food in this market? There were many such questions like this popped up and we could never find an answer to them. Then after a lot of deliberation, we decided to sell it off . A two and half year journey of two part time entrepreneurs came to an end. We never reached our destination, but we thoroughly enjoyed every moment of the journey.
Now that I have walked that path, guess it makes me little wiser to leave few advice for the future entrepreneurs. And because I was a consultant I have to synthesize and give you the three things you should never forget ( for consultants everything has to culminate to 3 or 5 bullet points,No offence my consultant friends :)
1. Part time entrepreneurship is good to test a concept, but never enough to build a business. So if you are convinced with your idea and passionate enough then take the plunge.
2. Never start your business in a tier-2/3 city. There is no ecosystem for beginners and you will be the last person any one would chose to invest.
3. If you are getting into a service business, your biggest capital investment should be your human resource ( Most of us commit the mistake of counting people expenses as opex) Don't get into the mindset of hiring better resource once the money flows in, the money will flow in only when you have best of the resource.
Signing off
A part time entrepreneur
We had this very nice story and positive trend lines to back up our idea of starting a home food delivery chain ,which me and my friend conceived one evening while searching all over the place for a simple and healthy dinner. We thought to ourselves that despite being locals, if it's such a painful process to find a decent place to have dinner, imagine how much of a suffering the migrant workforce ( primarily in the IT sector) must be going through every day. We both were thoroughly convinced that there is a strong business opportunity and plunged into starting our venture, a home food delivery chain that takes care of your everyday dinner needs.
My friend quit a better paying job in Bangalore and took up a job with one of the few IT companies that are there in Bhubaneswar. Then the hunt started....a house for rent where the owner would allow us to run a business, kitchen equipment from different sources, a cook, delivery boys, bikes, delivery boxes, website developer, creative designer.....the list goes on. We wanted to be as scrappy as possible to keep the investment and operation cost low as were getting into a highly price sensitive segment with very thin margin. So cost efficiency was one of the key driving factors of all our decisions. However, we never wanted be another "dabbawala" or tiffin service. It was very clear that quality of food and presentation ( compact branded disposable trays) is something we would never compromise.
After a toil of three months we were ready with the basic infrastructure, four employees, website, etc.It was a hell of an experience for us as the support system and the level of professionalism you get in a small town is by no means geared towards making an entrepreneur's life easy. First day of our operation, we got three orders and trust me it felt like writing IIT entrance exam all over again. Ensuring the right quality, packaging, on time delivery was no easy feat on the first day. We learnt, expanded the team, hired one manager, grew to delivering 70-80 meals a night within 6-7 months. We needed more delivery boys than we thought because with unplanned layouts of Bhubaneswar, deliveries took lot longer than we had expected. We had to hire more people to build back up as every week couple of delivery boys would leave us and for what.. They all wanted go back to their villages and have an easy life getting Rs1/kg rice government provides. None of them qualified to be BPL (Below Poverty Line), but they had somehow managed to get their names on the list. Thanks to the corruption and free-food-for-all programs of the government, no one wants to earn their bread now. We had to hire a manager from a local MBA college to ensure efficient operations and better customer service. All this made our salary cost touch the roof and the books would look deep red at the end of the month. We increased the price of the meal by merely 5 rupees. We thought it's just 5 rupees, our customers would be okay. But we were wrong. The orders dropped by 30%. We had to do something different to turn around the business, the only feasible option we could think of that time was to enter into corporate catering. Again on papers the proposition looked great, single point delivery that saves our logistics cost, guaranteed orders that protects us against the demand variability. We started and within couple of months we were delivering in top 2 IT companies of Bhubaneswar and few more small sized businesses. But again handling relationship with admins of the companies was a nightmare. They would think as if they have done a big favor to us providing the business and would expect something in return. If you don't succumb to that then their demands keep increasing..demands like - you need to send two more people to clean up the tables and used plates, you need to add another item as there are complaints from employees about the quality of your food etc etc..We held our head high and kept fulfilling their demands rather than doing any back door deal. But all this comes with a cost.. The profitability from corporate operations took a hit. Despite all odds we managed to build a business, which at least employed 20 people and was able to meet it's operational expenditure from the revenue generated.
Then over the course of next few months we realized, to maintain the efficiency of operations and quality of delivery, one has to be dedicated full time. No matter how many managers we hired, how much we trained them, the level of professionalism and delivery was far from our expectation. We couldn't attract good talent because we were no big brand. We weren't willing to pay unreasonable salary for the average skill sets of the people who wanted to work with us. Also to be frank our profit margins din't provide us the luxury to afford fat pay cheques and as the saying goes "you get monkeys for peanuts". Getting the right resource and making them stick took almost half of our time and we could never bail ourselves out of that spiral.
My friend for few months couldn't devote as much time with his increased professional and personal responsibilities. We had to trust people to run the daily operations only to realize later that the word has lost it's meaning in today's world.We again tightened our grip on the operation . Within few weeks things were back to normal. But we started asking ourselves the question - " what is normal and if this is normal what's the new normal". Will we ever be able to reach the new normal being part-time entrepreneurs. Also in a business where service is the core is it the right thing to manage it part time and expect it to become a multi-million dollar business. If we do it full time, will we be able to scale it beyond Bhubaneswar? Will we ever become a brand where people are willing to pay a premium for for our food like they pay 250 bucks for a pizza? Will we ever be able to change price sensitivity and mind set of people in a small town? I am not exaggerating this, but we were shocked to see employees of respectable IT companies walk down a mile to have their lunch in a nearby filthy unhygienic "dhaba" ( small roadside restaurants) for 30 rupees to avoid paying 50 rupees for the lunch at their cafeteria. If such high salaried people don't have a concept of hygiene and quality, why anyone ever would pay a premium for our food in this market? There were many such questions like this popped up and we could never find an answer to them. Then after a lot of deliberation, we decided to sell it off . A two and half year journey of two part time entrepreneurs came to an end. We never reached our destination, but we thoroughly enjoyed every moment of the journey.
Now that I have walked that path, guess it makes me little wiser to leave few advice for the future entrepreneurs. And because I was a consultant I have to synthesize and give you the three things you should never forget ( for consultants everything has to culminate to 3 or 5 bullet points,No offence my consultant friends :)
1. Part time entrepreneurship is good to test a concept, but never enough to build a business. So if you are convinced with your idea and passionate enough then take the plunge.
2. Never start your business in a tier-2/3 city. There is no ecosystem for beginners and you will be the last person any one would chose to invest.
3. If you are getting into a service business, your biggest capital investment should be your human resource ( Most of us commit the mistake of counting people expenses as opex) Don't get into the mindset of hiring better resource once the money flows in, the money will flow in only when you have best of the resource.
Signing off
A part time entrepreneur
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