Once we realized that the traditional funding sources were closed to us, we turned to friends and family. We put together an investment opportunity letter to send to them. We wanted to ensure that no friend or family member was giving us money they couldn’t afford to lose. I had it in my mind that we would pay our investors back out of our profits, but that is where I made my mistake.
Happily, friends and family responded to our letter, and $5,000 and $10,000 checks started coming in. My parents did most of the legwork on this and we celebrated each person who believed enough in our dream to invest. We felt so encouraged by the outpouring of support! This was really happening!
During this time, renovation was going on in the building we had leased. It had been built in 1917 and we hoped to uncover a lot of the original features of the building. One day, I stopped by to see the progress. As I walked past the dumpster that was sitting outside near the sidewalk, I saw large chunks of crown molding inside. I was shocked and ran in to ask the contractors what was going on. They said they were supposed to remove all the original plaster molding because there were parts that were damaged. I was so sad (and a little mad). I checked with the architect and he had made no such direction. The demo team, in their zealousness, had knocked them all out. At this point there was nothing I could do. The damage had already been done. I went back to pull one of the plaster pieces out of the dumpster so I could remember what it looked like. The thought still makes me sad, but I had to say to myself - c'est la vie! The fourteen foot ceilings are still gorgeous.
The mistake we had made in structuring the investments we received from others was that we weren’t clear that they were equity investments, not debt arrangements. Our investment letter talked about both an investment and a loan. It was confusing. My intention was to pay back investors with a share of profits once we were profitable, but we talked about our expected return as if it was a given. We also hadn’t taken the step to offer formal shares in return for their investment. We should have either added each investor to our LLC or created a S Corporation and issued shares. This was a novice mistake we made that caused confusion and also restricted our cash flow.
Most of our investors were ok with waiting for profitability. But because we have never generated a significant profit, we ended up paying them all back over the years regardless, except for a couple of investors who offered us their original investment as a gift. The investors didn’t gain much from giving us their money, in fact they probably lost money if you factor in inflation, and we are forever grateful for their belief in us. They were true angel investors.
During this time, we had a lot of people praying with us for the startup. We wanted to align our vision with the work God was doing in the area. We wanted our place to be a blessing to the community. So many important people in our lives prayed with us. My mentor at the time, Sharon, prayed with me for months before we opened. Our church family were the first customers when we did our soft opening in April 2003.
The hardest work we had to do now was to come together as a team. We formally structured the business with four owners each owning 25% - my husband, Kevin, me, and each of my parents, Greg and Ruth Ann. It is probably an understantement to say we didn’t always agree. One day I might share the story of when one of the owners threw a head lettuce at another owner’s head.
The remodeling continued and by the winter of 2003, we were very anxious to see it completed. In the meantime, we experimented with the menu, which I will share with you soon.