Entrepreneur Research Paper Example | Topics and Well Written Essays - 1750 words

Entrepreneur - Research Paper Example Small opportunities are the beginning of great enterprises but it is often fraught with pitfalls and challenges (Solovic, 2004). This is precisely what Fashion Cafe faced in the 1990s. Fashion Cafe is a themed restaurant and according to a Dunn & Bradstreet publication, the failure rate of all restaurants is high and the failure rate of themed restaurants is even higher (Greer, 2008). About half a million businesses start-up each year and more than this number also fail each year. Reasons could vary across firms and sector but there are certain common mistakes that most entrepreneurs make. 1.2 Fashion Cafe Fashion Cafe, a glitzy theme restaurant, was founded in 1995 by Tommaso Buti and his wife. This was a theme-park restaurant with an animated environment and having a store on the side. This themed restaurant serving burgers and appetizers, was founded by supermodels and fashionistas. They offered and served $20 salad made exclusively for Naomi Campbell (Businesspundit, 2009). Fashi on Cafe was in the restaurant business which itself is tough, and the theme restaurants face even tougher challenges. Supermodels like Claudia Schiffer, Naomi Campbell, Elle Macpherson, and Christy Turlington joined hands with Tommaso Buti and the brain child was Fashion Cafe (Businesspundit, 2009). The vision behind the themed restaurant was to market food and sex as used to be with night clubs and restaurants. This time the owners planned it by way of offering burgers and chips to suit the body-conscious crowd. The theme was to use the girls as enticement and the entrepreneur thought that it would be easy to raise the money to foot their bill. Investors were easily attracted because each felt they owned the models. Because of the stars around the venture gained publicity on CNN and BBC. Buti raised $3 million within a short period and run only three restaurants – in New York, London and New Orleans (Berkman, 2011). Inside the restaurant lights flash, movies play and then th ere was a display of dresses, shoes and coats worn by the owners – the supermodels (Reichl, 1995). These could be bought at the store which was on the side. While the menu card was seven-pages the menus on the card demonstrated frugal meals to suit slim figures and models. At the same time, they planned to sell goods such as dresses and coats through the store in the side. Fashion Cafe was over-franchised and has been accused of mismanagement (Businesspundit, 2009). 1.3 Situation over time Staff paychecks were bouncing and they struggled to hire good people. They reached a state when suppliers refused to deliver on credit (Berkman, 2011). The entrepreneur siphoned out funds to create assets for himself. The restaurant spent too much on refurbishing instead of providing cash for day-today running expenses (Willock, 1998). Super models that had invested and had been attached to the chain started resigning one after the other. The Cafe did not allow the stakeholders access to th e accounts which goes against the norms of any company. The CEO Tommaso Buti has been accused of stealing funds from the company and diverting the corporate assets for personal benefits (Kelly, 1999). They have also been accused of defrauding the investors and the owners have been charged of wire fraud, conspiracy, money laundering and transporting of stolen property. The project had huge amount of investments with good financial backing but no business planning. It closed down three years after it was opened. 2. Reasons for failure 2.1