“Always have friends with a high net worth. You never know when you are going to need their help.” – Paul Ettinger.
The changes to Caffe Nero over the last 12 years have been tremendous. It was an existing business with 5 stores and the management has grown it to over 400 stores today. It operates predominantly in the UK and has expanded into the Middle East. When discussing how he got into the business, Paul cheekly said “I was asked to run the kitchens for 6 weeks.” He never left. Paul offered advice to the audience, saying simply “for those wanting to get into business – do not start a business, go out and buy a business.” Excellent advice as few companies survive the two years.
He said to ask yourself the following:
Are you ready for this business?
Do you have the money to succeed?
Are you prepared for extreme changes?
Do you have the stomach for sleepless nights?
If the answers are yes, then you have what it takes to succeed. Caffe Nero’s story is failry well known. What I found interesting was their continuous effort with cash flow, something all businesses can understand. When they needed money, they borrowed; when they needed money again, they sold stock; when that proved burdensome, they bought the business back. Each time they took outside financing, the shackles and demands of an outside investor made the business less fun, as outside investors rarely understand the passion of the owner and managers. They realized the best people for the business was them, but money always proved to be in short supply. One experience he cited with a bank was putting the lenders to work in each store. The lenders ran a store for a period of time, so they could understand and learn how Caffe Nero was relevant to their customers. That experience made the relationship stronger and beneficial to both parties. The alternative, working with banks and investors who didn’t understand your business, your philosophy was not something anyone enjoys.