If it’s one thing I’ve learnt from doing business is that you will NEVER succeed if you treat it like a hobby. Those who can make the transition from hobby to business are the ones who will prosper.
I don’t have an MBA and certainly didn’t attend business school. So what gives me the authority to write this article? Two words: personal experience. Besides being a former small business owner myself, I’ve also witnessed first hand how NOT to run a business. This article is about the later.
Once I was of legal drinking age (18 years old in Singapore), I didn’t waste any time and started working part-time as a server and occasional bartender at a local pub. The pub owner was actually my buddy’s uncle (let’s call him Uncle Peter) who needed help desperately, especially on Friday and Saturday nights. It was a perfect fit for me and once I got the green light from my parents, I readily agreed to work for him.
Uncle Peter always dreamed of opening his own pub with live band music and karaoke (it was pretty big back then). He loved music himself. It was his passion. He played the acoustic guitar (extremely well I must add) and you would often find him crooning away songs from the likes of James Taylor, Dan Fogelberg and Neil Young.
Uncle Peter was in his early forties and had an illustrious career in the banking industry (which apparently he disliked). Call it a mid-life crisis. One day, he decided to quit his banking job and with two sleeping partners, took over a pub.
Uncle Peter thought is was heaven sent and he could finally fulfil his lifelong dream. The pub would come fully equipped at a very reasonable takeover fee. Absolutely no alteration required. All he had to do was to acquire the necessary licences and he could be up and running within a month.
This is the story of Peter’s Pub and the three valuable lessons I learnt while working there part-time for almost two years:
- Your Business is NOT Your Playground
- You CAN’T Build a Business Based on Friendship
- Business is Business, so Don’t Get Emotional
1. Your Business in NOT Your Playground
Peter’s Pub had a spacious interior of at least 4,000 square feet. The previous pub owner spared no expense. It was fitted with an impressive bricked and marbled-top bar that spanned across the pub. It had a centre stage for a four-piece band, a state-of-the-art sound system, karaoke system, a fully-equipped kitchen and even a pool table nicely tucked away at a corner. The furnishings, decor and lighting were all tastefully done.
I have to say that Peter’s Pub was unique. Not just due to its inviting ambience, but it was a place where everyone was literally a friend. It reminded me so much of the popular 80’s American TV sitcom, Cheers. The sitcom was based on a pub in Boston. It ran for 11 seasons and starred Ted Danson, Woody Harrelson and Kirstie Ally.
I’ll never forget the slogan of Cheers: where everybody knows your name. It perfectly describes Peter’s Pub. To the patrons, it was home away from home.
I have many fond memories of Peter’s Pub. Till today, I reminisce about the good old times and wish the story I’m about to tell had a happy ending. So what actually happened?
Peter’s Pub was highly successful in its early years with a substantial base of patrons who were big spending, heavy drinking working professionals of all ages. Business was booming and Uncle Peter and his partners couldn’t be happier.
I’m not sure exactly when it started, but Uncle Peter allowed some of his best buddies to run a tab at the bar. And I don’t mean for the night with a credit card. A few of his friends apparently ran up a tab of tens of thousands of dollars over weeks and months.
Uncle Peter himself also ran up quite a tab of his own, treating many of his relations who visited him at his place of business.
It didn’t end there. Both his partners also did the same, entertaining their clients at the pub every now and then and running up a tab that didn’t seem to end.
In short, Uncle Peter and his partners treated their place of business like it was their playground. Peter’s Pub was their place of entertainment. It didn’t matter if the day’s takings could not be settled at closing time. So long as everyone was having a roaring good time, all will be sorted out later.
Frankly, I was none the wiser while working there. It wasn’t until eons later, when I became a business owner myself that I realised what a mess it must have been back then.
I do remember this one incident. The new bookkeeper was coming in for her first audit. Apparently, the previous one was incompetent. It was pre-opening hours and I was prepping for the happy hour crowd.
I can’t recall exactly what was said but I did overhear the bookkeeper telling Uncle Peter that the accounts were in a complete mess. She added that she has never seen anything so bad in her entire career. Was it really just due to the incompetence of the previous bookkeeper?
The bookkeeper told Uncle Peter that the accounts were in a complete mess.
What actually inspired me to write this article was the news of the collapse of cryptocurrency exchange, FTX and trading firm Alameda Research founded by Sam Bankman-Fried (aka SBF). At the time of writing, the debacle of FTX had gone viral — billions of dollars had been lost in a matter of days. It was a media frenzy and it will probably take a while before the full story is uncovered.
Whether fraud was committed or not, whether mistakes were made due to ignorance or negligence, whatever the truth may be, at the moment it seems that SBF and his management team treated their multi-billion dollar enterprise as if it was their playground. Does this sound familiar?
The flashback of Peter’s Pub hit me like a ton of bricks.
The lesson I learnt: You can and should have fun at work. But where money is concerned, the difference between business and personal expenditure should be like night and day. There are no excuses. You need to run your business like a business, not like a hobby.
2. You Can’t Build a Business Based on Friendship
We all adored Uncle Peter as a person. He had a way with people, was quite the entertainer and I was always in awe of how much energy he had. As a supervisor, he sincerely cared for the welfare of his staff, was not demanding and overall a really nice boss to have.
Three words to describe Uncle Peter: He had heart. He treated his staff more like his friends, less like his employees. In fact, his employees were his friends. The line between the two was often obscure.
He treated his staff more like his friends, less like his employees.
As an employee, it was a dream job where fun was concerned. Business-wise, let’s just say the day-to-day running of the pub was far from professional.
Don’t get me wrong. I’m not saying that it was mayhem at the pub every night. In fact, it was quite the opposite. No matter how crowded it got on certain nights, operations were generally smooth. Everyone got their food and drinks, had an awesome time and were able to pay their bills at the end of the night without delay. There was rarely any complaints about the service.
In essence, all the staff at Peter’s Pub played multiple roles and were happy to do so without prompting. For example, the karaoke jockey would serve food and drinks when not at her console. A server (myself included) would be seen behind the bar tapping beers and pouring mixes when the two bartenders were overwhelmed. All of us did whatever we could to keep our customers happy. One for all, all for one.
So what was the problem? It sounds like Uncle Peter had put together a dream team. Well… it was not apparent at first, but as time went on, cracks began to show.
For one, work punctuality was getting from bad to worse. Everyone was guilty of it, including myself. No biggie, right? There would always be someone at work to cover for you. On top of that, the boss is so understanding, I’m sure he wouldn’t mind at all.
Then there was the bar. The general rule for most pubs is that the bar is out of bounce to all staff except the bartenders and of course the manager. The reason: security and accountability. You don’t have to be in the business to know that theft, wastage and spillage at the bar will easily eat into profits.
Professional bartenders might rush through pouring drinks and not notice or even care if they over-poured or spilled a drink, let alone servers like myself who have less experience mixing drinks. I can only imagine how much revenue was lost because the bar was literally opened to all.
To cut a long story short, in time to come, Uncle Peter ran into more problems with staff discipline and there was an unfortunate case of theft from the bar.
The lesson I learnt: You can’t operate a business based on friendship. Or rather you can’t base it solely on friendship. No one is saying that you cannot treat your employees like your friends. Just that boundaries need to be drawn, roles have to be clearly defined and discipline has to be maintained. If you were to just go with the flow and trust that everything will somehow work out, you will likely end up losing control of your business.
3. Business is Business, so Don’t Get Emotional
During my second year of work at Peter’s Pub, business started to take a turn for the worse. The novelty had worn off and some of the regulars stopped returning. New walk-in customers were a rarity as the location wasn’t exactly the most convenient. It occurred to me that the regulars were mostly personal contacts of Uncle Peter and his partners.
There were attempts to revive the business with a multitude of marketing campaigns, e.g. drink promotions, special events and even a membership programme, but nothing seemed to work.
I stopped work at the pub later that same year. I wasn’t needed as much and was scheduled for compulsory enlistment into the military soon. Before I enlisted, I would drop by Peter’s Pub for a drink every now and then.
During one of my visits, I had a heart to heart with Uncle Peter. It was just us two. He had a little too much to drink that night and starting confiding in me.
‘Business is not good and the landlord wants to increase rent next year. But I will persevere no matter what,’ he said adamantly.
‘Why not just close it if it’s not making money?’ I asked.
He replied, ‘I can never bear to let this place go.’
He went on to talk about how beautiful the pub was. How perfect everything was. Peter’s Pub was his baby and he wasn’t going to give up so easily. I have to say that I really admired Uncle Peter’s fighting spirit, but was it really worth it?
Business continued to deteriorate and it started bleeding. Instead of pulling the plug, Uncle Peter plowed in more of his own funds to keep the business alive. Although he had lost the support of his partners, he was still hopeful for a turnaround.
It was not meant to be and after another gruelling year, the pub sadly folded. Uncle Peter lost a painful amount of money, especially in the final year of operations.
The lesson I learnt: I couldn’t see it then, but it’s crystal clear to me now. The problem was, Uncle Peter had too much heart in his business. Yes, that’s right — too much heart. In hindsight, Uncle Peter got sentimental and simply couldn’t move on. If he could just bite the bullet and decide to fight another day, he would have avoided the financial blackhole entirely. Business is business. Don’t get emotional.
Years later, I would become a business owner myself, starting two businesses with Mrs Wow. If you have read Our Story and Business Adventure Part 2: The Defeat, you would know that our first business was a flop and we didn’t hesitate to cut our losses. We definitely persevered in the face of adversity, but the difference is we knew when to let pragmatism take over.
In business, the pragmatic approach to problems is usually better than an idealistic one. There’s no loss in closing an unprofitable business that has no chance of working out. Live to fight another day.
Are you thinking of starting a business with your spouse? Before you take the plunge, do read: Running a Business as a Married Couple: How We Made It Work.
You may also like: Why Some Businesses are Doomed to Fail from the Start | 7 Things to Know Before Starting a Business | Beyond 9-5: Discover the 7 Income Streams for Lasting Wealth
