Ming Tsai opened his award-winning restaurant Blue Ginger in 1998 in Wellesley, MA. Ming has also authored several best-selling cookbooks and is the host of Emmy-nominated Simply Ming.
Here Ming discusses his path to entrepreneurship, the importance of community and why the devil is in the details. Ming also shares his advice for small businesses in our exclusive Q&A below.
If you had an extra $500 in your monthly budget at the end of the month after covering expenses, how would you spend it?
I would suggest you don’t spend it. I would suggest you save it. One of the keys to opening a restaurant [is to] open with a surplus of cash that you can survive on for three months doing zero covers. No one opens and does 200 covers. What happens to businesses that fail within the year is that they opened three months late so then…they’re three months under with no revenue and they have to bust out 250 covers a night and they end up doing 100. Then the only way to survive and make payroll and rent is to start cutting costs. So then you start buying cheaper wine and charging more or buying lesser quality meat and charging the same price, and that’s a downward spiral. You’re closed within six months.
So start with a surplus of cash. When I borrowed from the SBA, for example, I budged to open with $200,000. They asked what it was for and I said to guarantee my success. That shouldn’t be unique, that should be cut in stone. A bank should demand you have extra cash because something always goes wrong when you open a restaurant. It could be anything. It could be equipment, it could be that you needed more people, etc. You get one chance to make your first impression. That’s it. If [your customers] have a bad experience, they’re not going to say, “you know what, they’re new, I’m going to come back next week and try it again.” No, if they have a bad experience, they’re going to tell their 10 to 50 friends, so you just lost maybe your neighborhood. So, it’s so important to make sure you have some extra cash. If you make some extra cash, keep it, save it. You’ll need it.
What percentage of a small business loan should be insurance for your success?
I don’t think it’s a percentage, I think you have to see what your hard, fixed costs are. So that’s rent, that’s payroll, now it’s health insurance, it’s electricity. I have to pay this minimal amount of money to just keep the doors open with zero covers. So that [amount] times three months is what you need to make sure you have a great shot at being successful.
It’s important to not dream so big and open your dream restaurant and have every single piece of equipment you’ve always wanted because there’s a big difference between spending $1.5 million and $1.2 million and $800,000. You may think you just have to make a little bit more money, but no, it’s not that. It’s the pressure you put on yourself that you have to clear 20%, which is really hard in a restaurant, and then you have to sustain.
How do small businesses take advantage of their size?
First off, the whole SBA loan program. That is the reason I’m here…The whole program of SBA loan is fantastic.
Secondly, being a small business, you can keep it tight. You have much more control when it’s a small business. We’re still a mom and pop, granted a big mom and pop, but we’re still a mom and pop and by keeping it small, we can still have control over everything. I can determine at that moment which direction to go, and those directions can cost you or save you thousands of dollars every time. When you are a small business, you have to be hands on. You can’t pay gazillions of dollars for a general manager and chef and then go to Bermuda. It doesn’t work that way. Because people stand taller, always, when the owner’s in the house. Period.
