What does it take to turn an idea into a successful business? Fiona Connor chats to business owners about the challenges and the successes.
Sid Sahrawat explains how he and wife Chandra branched out on their own in the restaurant business, setting up Sidart and then Cassia in Auckland — and how they dealt with the economic shock of the pandemic.
What were your first steps?
We needed funding first and foremost, and a location. I met an angel investor through the cafe I used to stop and grab coffee at each morning. He loaned Chand and I the seed capital for Sidart with a profit share and interest until we repaid the loan.
We also decided to take a second mortgage out on our house to secure the loan. Despite the risk, I think this was ultimately a good decision as giving up wasn't an option or we would lose the roof above our heads. A condition of the investment was Chand was to keep her teaching job. Although she helped with setting up the business, I was the only one paying myself a salary.
Was the space rented or leased?
Sidart was leased. I looked at different spaces to buy a business and found the perfect space, a Nepalese restaurant called Himalaya in Three Lamps plaza. I showed Chand the space, it was tiny, only seating 30 guests but had stunning views — I knew it was the right space.
The business that was in the location was for sale so we paid for the business assets and rented the space. Chand had to work with a tight budget of $50,000 to transform it into a formal dining space. Eventually in 2016 we expanded Sidart to the tenancy next door and created room for 50 guests.
Be very careful around leases, check the wording carefully and definitely get good legal advice. Try and get a fresh lease or negotiate one with the landlord rather than resigning to an old existing lease. Think of the worst case scenario and how the lease would respond in that case.
How did your first business help you open your second?
In 2012, we paid off the loan we had with our angel investor and started putting aside what we would've been paying back in terms of principal and loan repayments for our next project.
That created a bit of seed capital, that along with the business doing well allowed us to open Cassia. We found a distressed business that had been seized by the landlord and we approached them to purchase the business assets and took on the location lease.
How do you ensure you have enough turnover to keep going?
It's getting very hard. The old formula used to be 30% labour cost, 30% cost of goods and then 40% was for your rent, utilities including any profit. The old formula is not relevant anymore.
With the cost of living crisis, increasing labour costs and impending recession, it is a matter of holding on in 2023 like we did in 2009 when we first opened Sidart. You have to keep refreshing what you do, market your business and ensure you stay relevant to the consumer so that they still come through your doors.
What's the key to making a profit and saving for emergencies?
Well first of all, insure yourself well so you won't be dipping into your savings in an emergency. A pandemic you can't insure for, so that is why you keep profits as savings for a rainy day.
You have to forecast and if you see your books in the red start taking action to fix the problem. An example is high costs of goods — evaluate your suppliers for better pricing and check your menu for wastage. The key is having a pulse on your business at all times and not letting a problem fester too long.
How did you handle the pandemic?
I think the pandemic was like a tsunami. You could see it coming but couldn't escape it. Chand envisaged that we would need to do takeaways fairly quickly and was setting our restaurants up for it when the level 4 lockdown was announced. It was quite hard in 2020 not knowing the lay of the land and being very uncertain about the future.
As business leaders you are used to forecasting, budgeting and having a plan for the staff but we had to think on our feet and were entirely reliant on the government steering the health response. We found it hard to give staff the certainty but tried our best with weekly zoom catch-ups and updates.
In level 3, both Chand and I decided to do deliveries ourselves because we didn't want to ask the staff what we wouldn't be willing to do ourselves. The pandemic has meant our cash reserves were wiped out but we came out on the other side with our businesses intact and not losing any of our staff.
How have weather events affected your business?
Cassia was flooded twice in the space of 10 months, the first time was in March 2022. Our neighbours The Jefferson Bar never recovered.
The second time was the January 27 floods, this time it was more devastating as the weather impact was felt during dinner service at 6pm. We quickly realised we were going to need to evacuate everyone for their own safety. We desperately tried to save what stock we could, and with the rain still pouring, and my heart beating out of control, we left for the night — I didn't sleep a wink.
We knew it was going to be a while before we could get up and running again. We are a family, and no one was going to lose their jobs despite the closure. Then we had to plan for the future, and we made an interim plan for a pop-up Cassia at the French Café. That lasted for eight weeks.
What can people learn from how you kept your business going?
We have put our staff and our brand at the centre of every decision we have made. At times it feels like the easier options would be to hang up the aprons and close — but we have come back to why we shouldn't and have persevered, and found a way to keep going.
As long as you have the passion to get up and keep going you should because even the bad times can't last forever, and you just need to find a way to get through this.
What's the most valuable piece of advice you can offer?
There are a lot of things you can control and tweak in a business to adapt it to challenges but be ready to turn lemons into lemonade because things like the pandemic and weather events are just things you cannot control. You can only control your response to them. My advice would be to lean on your friends and community for support when things get tough. The best help you can get is already around you so don't be too proud to put up your hand and ask for it.