On April 29, 2014, I took part in the Failure Conference as one of the speakers.
The idea behind the Failure Conference is to show that failure and setbacks are a natural part of entrepreneurship. The speakers talk about how they got back on their feet, how they moved forward, and how something that initially felt like a failure can sometimes turn out to be the beginning of something new and much better.
Agnes Huvos, one of the organizers, contacted me because they wanted to have more female speakers and thought I might have a story that fit the theme of the conference. In other words, a business that didn’t succeed, ended in a major loss, or was simply experienced as a failure by its owner.
Unfortunately, or fortunately, I also have a business that can be considered a failure, and that’s what I talked about for ten minutes.
After my talk, I spoke to someone who told me that I had really discouraged them. They said my story was very sad and that they felt I had basically talked people out of pursuing their dreams.
I’m sorry that this is what came across from my presentation. That was absolutely not my intention. What I wanted to talk about was the fact that you need to be careful when you turn a dream into a business, and there are certain things you really need to pay attention to.
Here is roughly what I said:
Most people have some kind of dream or desire. Something they would do, buy, or somewhere they would travel if they ever had the opportunity. A desire is a desire partly because it feels a little out of reach. Once it gets closer, it becomes a goal.
One of my own dreams was to open a chocolate café like one I had discovered abroad, but which didn’t exist in Hungary. A place that worked like a classic café, warm and welcoming, filled with chocolate, fantastic teas and coffee. Somewhere you could visit as a guest and always want to come back to.
I had encountered places like this abroad, but nothing quite like it existed in Hungary. It remained a dream rather than a goal because I knew absolutely nothing about hospitality or running this kind of business. I couldn’t even imagine myself starting such a business. I only knew this world from the customer’s side.
Then, in 2006, the moment came that you sometimes feel might only happen once in your life. Suddenly, everything seemed to be in place for one of your dreams to actually come true.
These situations usually involve a huge amount of risk and courage. You can always decide not to take the opportunity, but then there is always the fear that you’ll spend the rest of your life wondering what would have happened if you had just tried.
For me, that moment came in 2006, when I found out that it might be possible to get a commercial space on the newly renovated main square in Vác.
Everything happened incredibly quickly. We had to make a decision within two weeks. We figured out how much money we could raise and where we could get it from, started researching what the requirements for such a place were, and tried to learn at least the basics.
After two weeks, my boyfriend at the time and I said yes. And that was the beginning of the story of Choco Cafe Vaci Csokizo.
We had three months until the newly renovated main square was officially opened. We knew a lot of people would come to the square, so it made sense to get the café up and running before then. It wasn’t easy.
We had to transform an old government office with fluorescent ceiling lights and linoleum floors into a warm café with wooden paneling, parquet flooring and the atmosphere of an old-fashioned coffee house.
At the same time, we had to obtain all the necessary permits and complete the required training, because at that time you also needed professional qualifications to open this kind of business. We didn’t actually receive all our permits in time for the opening of the square, but two weeks later we were finally able to open.
And our calculations turned out to be right. We opened at 4 p.m. on a Friday, and that very evening, and throughout the entire weekend, we were completely full.
At the beginning, we were absolutely hopeless at running the place. But people liked it because we were friendly and enthusiastic, and eventually we learned how to do things properly.
Practically every weekend was almost constantly full. For a café with 30 seats inside and another 30 on the terrace, that wasn’t bad at all. Weekdays weren’t nearly as good yet, but the weekend turnover was enough to generate a reasonable income.
We had four full-time employees and another three working part-time, mainly on weekends.
We made an enormous number of mistakes while learning what running a hospitality business actually meant. There are also plenty of things you simply never learn, because hospitality is one of those professions people often say you either have a natural talent for or you don’t. But the important thing was that our customers were happy.
People came from Budapest and even from Slovakia specifically because of our fantastic hot chocolates, which we developed and made ourselves.
We used around 1,500 kilograms of high-quality chocolate every year just for the hot chocolate drinks.
The business was doing very well. It looked like we would recover our initial investment in three to five years according to our pessimistic calculations, or in one to two years according to our optimistic ones.
Unfortunately, the economic crisis hit in 2008 and changed everything. Our turnover dropped by around 10% every month.
One important factor was that Vac is essentially a satellite town of Budapest. As the crisis hit, many people started cutting back on what were basically luxury expenses, such as going out for chocolate and coffee. Budapest was affected much less by this.
This is where the fact that the café was really a hobby business, the realization of a dream, became important. People tend to hold on tightly to their dreams. They don’t like changing them, especially when they have actually managed to make the dream look the way they imagined it.And that’s exactly what happened to us.
Despite the economic crisis, we didn’t change our business strategy. We continued doing everything the same way. We charged the same prices and sold the same products. We should have made some difficult and uncomfortable decisions. We should have optimized our staffing, our products and our opening hours.
But nobody likes having to compromise on their dream. So we didn’t make those difficult decisions, even though they were actually unavoidable if we wanted to save the business.
Looking back at the experience, I’ve realized that there is a point in every business that starts as a hobby or a dream when you can no longer manage it in the same way you did before.
It is very important to recognize that point, because if you don’t, it can ultimately destroy the business. For me, that point is when you are no longer able to finance the business out of your own pocket. From that moment on, it is no longer a hobby. And you cannot continue treating it like one.
About three years after opening the chocolate cafe, we realized that we were exhausted from constantly fighting with the financial side of the business and dealing with employees. In reality, this was the point where we gave up on the dream. There was still an opportunity to change the way we ran the business, rationalize it and turn it into a properly functioning company. But by then we had realized something important: we hadn’t actually wanted to build a business. We had wanted to make a dream come true. Once we gave up on the dream, the business itself was no longer interesting to us, so we decided to sell it.
We managed to sell the place within three weeks.
And perhaps the best proof that we had actually created something good, with good solutions, good products and a strong identity, is that the new owner didn’t change anything. They simply gradually optimized the business. And after five years the café is still operating.
I think one of the biggest lessons from this whole experience is that when a business isn’t doing well, it doesn’t necessarily mean that the idea is bad, the execution is bad, or the product itself is bad. Sometimes the problem is simply the way the business is being managed.
