Every business gets built in stages. The challenge is to stay focused on the stage you're in--while preparing for the ones to follow.
We're dealing with multiple stages right now at Kobeyaki, the Asian fast-casual restaurant chain I'm building with three partners--Brian Kelly, Brian Konopka, and Sal Barrera. Our first restaurant, in the Chelsea neighborhood of Manhattan, has been a huge success. Now, we're moving on to the second stage: starting up two more restaurants in other parts of Manhattan.
But our goal is to go national. And to do that, we're going to need outside funding, probably from a private equity group. The question is, What should we do now to put ourselves in the best position to get the right kind of backing later? I didn't have the answer. So I took note when Brian Konopka mentioned that he knew Gary Levy at the CohnReznick accounting firm. Levy is one of the leading experts on the hospitality and restaurant business industries. "Can you get us a meeting?" I asked.
Levy generously offered us an hour of his time. By the end of the meeting, it was clear to me that he was exactly the person we needed to guide us through the next stages of the business. But for him to serve as our adviser, we'd have to hire him as our accountant. Brian Kelly whistled softly. "That could be really expensive," he said.
"Well, it's your call," I said. "But it seems to me his advice is worth it. You'll have at your fingertips whatever information you need to build this business." They agreed, and the investment began paying off almost immediately. Among other things, Levy answered my question about how we should prepare for getting private equity. "You need to prove the concept," he said.
"Will we prove it if we open seven profitable stores in New York City?" I asked. "Putting all of them in great Manhattan locations doesn't prove the concept," Levy answered. "They'll want to see if it works elsewhere. At least two of the seven should be outside New York."
After we discussed locations for a while, I asked him if he could get us a meeting with some potential investors, so I could ask them directly what they look for. He thought that was a good idea. "But not yet," I said.
I'm sure Levy could get us a meeting now, but I'd much rather wait until we're beginning to create buzz and look like a hot concept. I figure that will be after the three restaurants are up and going strong--maybe in a year. Meanwhile, we'll stay focused on Stage Two.