3 Things Every Entrepreneur Needs to Know Before Starting a Business
When Tanya Zhykharevich and Jack Yip decided to join forces and open RED, a sushi restaurant in Madison, neither of them had ever owned a business before, but they shared a dream of raising the bar of dining experiences in Madison.
Zhykharevich says the biggest surprise was how hard it all was.
“I knew it would be hard, but I didn’t know it would be that hard,” she says. “We really opened our restaurant twice, the first time in 2011 and then again when we moved. Both times it was really hard.”
Now eight years into this journey, she has a few tips to share with other entrepreneurs looking to start or expand a business.
Find the right people
Zhykharevich says she quickly discovered that finding the right people is what makes all the difference in a successful restaurant.
“I wish I had known that you have to create the right atmosphere and environment and provide competitive wages for your employees,” she says. “Sometimes it takes 10 interviews to find the right person. Don’t settle.”
RED now employs more than 80 people and offers health insurance to its full-time employees, something Zhykharevich is very proud of.
Don’t be scared of debt, but do your homework
How you fund your venture can have a huge impact on your success. Zhykharevich has the experience of both bootstrapping and taking on funding. She says she is glad she and Yip did not take on debt other than credit cards in the beginning.
“Not knowing anything about financing helped us to stay frugal and make do with what we had,” she says. “Now, understanding how business works, I’m not as scared of debt.”
The move to 316 W. Washington Ave. required funding in order to provide the wow factor that Zhykharevich and Yip wanted out of the new space. So Zhykharevich went to Oak Bank for a loan.
“If you feel like your business is over the hump and you have an opportunity for growth, then seek the relationship with the bank,” Zhykharevich says.
Linda Zimdars, senior vice president of business banking with Oak Bank, says it’s smart to begin a relationship with a bank long before you need funding.
She suggests asking other business owners who they bank with, and setting up a meeting even if you don’t have all the details of your business plan ready. But you need to come in with a realistic attitude, knowing you may have to do some work to become bankable.
At Oak Bank, bankers make decisions based on the situation, rather than on a hard-and-fast formula, Zimdars says.
“Bring in a strong, detailed business plan and projections, and let the bank help you build a plan for financing,” she says.
The impression you make on the banker matters, because commercial lending is all about relationships.
“I truly love the relationship with Linda,” Zhykharevich says. “She trusted in us, and we know we can always come to her for advice. Without her we wouldn’t have been able to open the second restaurant.”
When your business grows, the challenges grow
With the move to 316 W. Washington Ave., RED grew from 46 seats to 125 seats. Zhykharevich says the impact of tripling the space didn’t hit her until afterward.
“I realized, ‘Oh my god, it IS three times bigger,’” she says. “It’s not just the space, suddenly staff, expenses, inventory, everything tripled. We had to implement new systems to stay in business and maintain quality and retain our employees.”
Those unexpected expenses that often come with a major expansion or a new business are why it’s crucial to have cash reserves when you take on funding, Zimdars says.
“Unexpected expenses should be expected, and having liquidity will help you weather the storms,” she says.
Growing RED into the dream Zhykharevich and Yip imagined almost 10 years ago has been a constant challenge, but Zhykharevich says she wouldn’t give it up for a second.
“Every day is a little bit of survival mode,” she says. “But I love it. I love being a business owner. It’s so rewarding, so creative, so challenging.”
Oak Bank has been deeply rooted in the Fitchburg and Madison community for over 19 years, meeting the financial needs of homeowners and businesses by offering top-notch service, quick answers and unique solutions, all while supporting over 100 local nonprofits each year. Working with Oak Bank, you’ll create a relationship with a financial expert who takes the time to get to know you and your unique situation. We know there’s no “one-size-fits all” solution. We work hard to craft tailored innovative solutions. You can’t be the best, if you’re only the same! Visit oakbankonline.com to learn more.