WHAT I WISH I KNEW ABOUT SMALL BUSINESS
Episode 2: The Real Cost of Running a Small Business
With Chryssie Swarbrick and Angie Markou from Two Franks
Host: Liz Nable
Brought to you by AMP Bank GO
======================================================================
COLD OPEN
---------
Chryssie: Your business is a cake. Everyone just takes a little piece, and some of the pieces keep getting bigger. And then you're looking at your plate and it's empty. No crumbs left. Everyone takes a tiny piece, but collectively it takes everything. That's the biggest problem. When the slices keep getting bigger and you're like, "Well, your cake's gone."
LIZ'S INTRO
-----------
Liz: Welcome to a special six-part miniseries, What I Wish I Knew About Small Business Before I Started. This special six-part series inside Media Magnet is brought to you by AMP Bank GO, and I'm your host, Liz Nable. AMP Bank GO is backing Australia's small businesses to get a fair go with tools and support that actually make day-to-day business life easier.
In this new series, we're stepping back from just media and PR to talk about the real lessons of running a small business in Australia right now: the money, the systems, the visibility, the learnings, and the mindset shifts we usually only discover the hard way.
Today's episode starts with a story you might recognise. A neighbourhood cafe in Coburg in Melbourne's suburbs, created by two sisters in the old butcher shop across from their childhood home. A line out the door in winter. Thousands of locals following their every move on social media. Media features and incredible community love. And yet it's closing.
In fact, as of the date of the broadcast of this episode, it's actually closed.
In this conversation, you'll hear Angie and Chryssie from Two Franks talk about what most of us don't see. The 13 months of rent before they even opened. The reality of starting in the red. The cake of their business being sliced thinner and thinner by rising costs. And the moment one sister sat down to write a letter to the other saying, "I don't think this is going to work anymore."
If you've ever looked at a busy small business and thought, "Huh, they must be killing it," this episode is going to change how you see things. And if you're in the thick of it yourself, juggling wages, rent, super, supplies, and your own sanity, I think you'll feel very seen.
This series is brought to you by AMP Bank GO, a bank backing Australian small businesses and genuinely wanting to understand what life on the ground looks like. As always, I have full editorial control. They're just here to help us get these conversations into more ears.
Let's get into what I wish I knew about small business with Angie and Chryssie from Two Franks.
THE STORY BEHIND TWO FRANKS
---------------------------
Liz: Hi, ladies. Thanks for joining the show.
Chryssie: Hi, Liz. Thanks so much for having us.
Liz: I'm thrilled to have you. I've been following you on social media, I've seen all the media about you. This is a really special episode of a really special series, and yours is a really special journey, and probably quite an emotional one. Thank you for being here at such short notice, because you guys are on my hit list of who I wanted to have on the show.
Chryssie: Thank you. We're so happy to be here.
Liz: Tell me a bit about the business.
Chryssie: The name of our business is Two Franks. It's a cafe located in Coburg, in the northern suburbs of Melbourne. We've both had a few other small businesses in the past, so we're quite creative, entrepreneurial people. We're always having ideas that we love to act on and give a go.
Angie was more retail background and I was more services. We'd worked on a few projects together, but we weren't planning on opening a hospitality business. With our Greek background, food and hosting plays a really big part in how we were raised, so it's in our bones. But it wasn't something we were actively pursuing. It was more right place, right time.
When we were growing up, we grew up in Coburg, in this house, and across the road was a strip of shops: a fruit and veg shop, a double-fronted milk bar we loved, a butcher shop, and a yarn store called The Yarn Barn. One by one, over the years, these shops closed. The fruit and veg shop got turned into housing. The milk bar closed and got knocked down, which was heartbreaking. The Yarn Barn got sold. And then there was just the butcher shop left.
For 40 years, our family had been on that street. There was nothing around. No hospitality offering. Nowhere for people to gather. Every time we'd come back to Mum and Dad's, we'd say, "There's nothing here. We'd love to have something here."
One day I was at Mum and Dad's house and there was a For Lease sign on the butcher shop. I'd never seen it come up for lease in the 40 years our family had been there. I called Angie and said, "Look, the butcher shop's up for lease. What are we going to do?"
We decided very spontaneously that we couldn't let it go without giving it a shot. We couldn't picture anyone else getting into that space apart from us.
Liz: So you signed the lease. Got a good deal, I'm imagining?
Chryssie: We beat out 14 other applicants for this building. It was in very high demand. We pitched really hard. We did a presentation showing the owners what we wanted to put in the space. We listed out our plan for the first year, second year, what we wanted to do. We told them our story. And Angie called the real estate agent every single day.
Angie: I said, "It's mine. It's not going anywhere else." The special part of what we were offering was that we were honouring the history of the building. The name Two Franks comes from the two butchers that were there while our family had owned the house across the road. Both of them were coincidentally called Frank. So we honoured them, the history of the building, and the community by calling it Two Franks.
Chryssie: Both Franks have come in. The first Frank, who was much older, passed away last year, but he managed to come in while we were there, and he was wrapped. We got photos with him. The other Frank comes in all the time as well.
THE 13-MONTH COUNCIL DELAY
--------------------------
Liz: So how long ago was this?
Angie: We got the keys four years ago. Unfortunately, it took 13 months of back and forth with council for them to approve a permit to change it from a butcher shop to a cafe. So I paid rent on an empty shop for 13 months, which already had put us behind opening. A lot of plans we had for the space in terms of kitchen and equipment, we couldn't do. Just budget. That had put us behind already.
Liz: This is an entirely separate podcast episode. So before you've even started, we've created this environment in Australia where it's so hard. You haven't even opened yet, and you've paid 13 months worth of rent. You're starting off on the back foot.
Angie: And Liz, that doesn't include all the fees and the permits. You have to pay all those before you even know if they're going to be approved.
Liz: But it hadn't been a butcher shop for a while, it was closed and up for lease.
Angie: No, it was a butcher shop for 100 years.
Liz: But it was closed and up for lease. So you're changing it from within a retail category?
Angie: Change of use. From a butcher to a cafe. And it took 13 months.
OPENING DAY: A LINE IN WINTER
-----------------------------
Liz: So four years ago, you've obviously gone gangbusters. Super busy, really popular. A lot of people who haven't run a small business will say, "Well, if your business is closing, you're not running it very well, or it's not busy enough." But you guys didn't have that problem.
Angie: No. That was the least of our problems. Chryssie comes from a fantastic background in media and PR.
Chryssie: I have a degree in communications majoring in PR, and I've worked social and content for 15 years. So as soon as we got the keys, we started documenting our journey. We set up the socials. We had the handle on the window for people walking past.
Even though it took 13 months to open, we opened with 5,000 local followers. We had a line out the door on the first day. It was the middle of winter, and people were lining up to come and see us because we'd built that community for a year before opening. We did some pop-ups along the way while we were waiting. So that put us on a really good trajectory.
THE NUMBERS
-----------
Liz: Both of you had businesses before, but I didn't pay much attention to the numbers when I first started. We were doing well in our first business, or I thought we were, but we weren't actually making any profit. Can you give us any insight into how on top of that part of the business you were?
Angie: I would say we needed to be across it a little bit more. We were focused on getting open, getting people through the door, selling our products.
Chryssie: It was a steep learning curve. We were so green going into it. Now looking back, we definitely would do things differently. But the focus was finally being open, and getting people through the door. A lot of the background stuff, we probably should've...
Liz: Talk to me about the trajectory of the business over those four years.
Chryssie: The key thing to mention is that when the space came up for lease, we were going to be the only cafe in that area. In 40 years, there was nothing. From the time we opened until today, at least three other cafes opened up in a one-kilometre radius. Even though there'd been nothing for 40 years.
Liz: So from day one, you had a line out the door. How many coffees were you selling?
Chryssie: Our biggest day was 444 coffees in one day. In a little suburban cafe, we're not on a main strip. It was just locals. There was two or three of us on those sorts of days. I'd say between 300 and 400 on a good day. Thirty-five kilos of coffee a week is the average, which for our location is amazing.
Liz: And the two of you were working seven days a week?
Chryssie: We weren't open seven days at first. We were closed Saturday and Sunday. Then we added Sundays, then Mondays, and we went to seven days. We started splitting the week, one or two days crossover, and had staff supporting us. There was always one of us there.
Liz: But you started in the red because of the council delays. When did you get to the black, or did you just keep reinvesting?
Angie: We kept reinvesting. There were a lot of weeks where we wouldn't take a wage.
Liz: So were you paying yourselves?
Angie: The previous businesses I had, I never took a wage for the first three or four years. Part of the conversation going into this was that I needed to be paying myself something. Otherwise, it would be detrimental to my family. So we were paying ourselves a wage, but there were many, many weeks where we missed out. Everyone else comes first. Our staff always got paid properly, and then if there was enough to pay us a wage, we would.
THE MASK EVERYONE WEARS
-----------------------
Liz: Did you tell anyone that you were behind the whole time? When I first started my first business, I always felt like such a fraud. It looked like we were killing it, but I knew what was going on in the background.
Angie: You want to present to everybody that your business is successful, that this idea you had is working. I'm a pretty honest person, so I'd have conversations where I'd say, "Oh, it's pretty tough." But especially in the early days, you really want to come across as everything's great, look at the support, it's all working, it's beautiful.
Chryssie: Also, it's so fast-paced. You're running on adrenaline. You're going day by day. Right, let's get through this day. Let's get through this week. You don't have time to pause and look at the big picture as often as you'd like. That's why it gets out of hand. Because you're trying to do everything really quickly. It's an hour-to-hour, day-to-day business, just trying to survive.
Angie: And Liz, that doesn't include 9, 10, 11pm on the laptop doing wages, rosters, social media, ordering. There's so much else that isn't just in the time the cafe's open. You're wearing 10 different hats.
Liz: When you're employed by someone else, you're not in survival mode. When you're a small business owner, every time you take time out of your business, it's time off your own clock. Everything is your skin in the game. It's a mindset the average person doesn't understand.
Chryssie: You're never switched off. We had a conversation the other day where we said working for yourself makes you such a great employee. You get empathy. You get an understanding of what it's like to shoulder all of this. People who've only ever worked for someone else, they just don't get it in the same way.
REALISING SOMETHING WAS WRONG
-----------------------------
Liz: Your story is particularly of interest because the business was always busy. When did you realise you were treading water and something was really wrong?
Chryssie: Angie realised first. I was more operations in the business, and Angie was more admin and finance. There's just so much to do that we were in our lanes, managing spot fires in our respective departments.
Angie: I knew because we started putting personal money into the business some weeks to make it work. I'd have to say to my husband, "Spot me for the wages this week, I can't afford all the wages." This happened at least 18 months ago. I really wasn't ready to let it go. I thought, "I can still make changes, I can make this work." And I did. Profits were improving. But with all the price rises on the back end, all the changes coming through, it's just a realisation that it's getting more challenging. And it's preempting a complete collapse. I've come to terms with the fact that no matter what I do, I don't think it's going to work.
THE LETTER
----------
Chryssie: I left the business about 13 months ago. The start of last year. We were closed over Christmas and New Year's, and I was thinking about how things were going. It just seemed insurmountable. It wasn't going to get better.
So I wrote Angie a long letter. I said, "Look, I don't think it's going to work. I'm so happy to stay and support you for the next few months. What do you want to do? Do you want to work together and close it? Do you want to work together and sell it? Or do you want to keep it going and see what you can do with it?"
Angie elected to keep it going. I ended up staying on another few months till May last year, but I didn't see it getting better. I just saw people spending less. I saw more challenges in the future. And 12 months later, this is where we're at.
Angie: My reasons for keeping it going were multiple. I'd invested so much money into the business, time and effort. I had debts. I couldn't just walk away from that without trying to trade out of them. But also emotionally, I wasn't ready to let it go. We'd done so much to get it to that point. And I don't think Chryssie was either.
Chryssie: It was also managing the relationship. I could feel it being hurt, tensed. So I decided to step away while it was still amicable. Because I thought, if we stick this out together, it's going to affect my relationship with my sister. The pressure is just huge.
THE FEELINGS OF FAILURE
-----------------------
Liz: I might ask you to be a little bit vulnerable here. Were there feelings of failure that came into play? Did you have nights where you thought, "How have you not made this work? Why is everybody else doing well and not me?" I know a lot of that is in our heads. Can you share, because a big part of this podcast is for the listeners to feel like they're not alone.
Angie: It's natural to feel like that when you have a dream that doesn't go the way you thought it would. I've dabbled in those feelings, absolutely. But when I take a step back and look at what we created, and especially now that we've announced the closing, we've been absolutely overwhelmed by love and support from hundreds of business owners. Not only in Australia, but overseas: New Zealand, Ireland, Sweden. People sending us messages saying, "We all feel it. Thank you for speaking up about it." Because it does feel so alone. It does feel so isolating.
Chryssie: A long time ago I came to the realisation that everyone is putting on a front. Even the most successful businesses, the most successful people you know in your life, are probably in debt and struggling and behind closed doors feeling like failures. Everyone's got imposter syndrome, in my theory.
The other thing is, we have this obsession with longevity being a sign of success. And we've talked about this a lot since the closure. Just because something doesn't last doesn't make it worthwhile. Whether that's a relationship, whether that's a business. You have to look at it as: this is its story. What have we learnt? What connections have we made? What has this given us that we can take into the future?
It has been worthwhile, even if it feels like it has failed. And I don't think it has, because we have scratched that itch. We'll never be left wondering what if. It has been a wonderful passion project. The community rallying around us, the messages we're getting, has really helped that feeling.
Angie: People come in crying and hugging me. Big grown burly men coming in saying, "We're going to miss you so much. Can I give you a hug?" Giving me gifts and handwritten cards.
Liz: This is the beauty of small business. I don't know anyone who goes and hugs the CEO of Coca-Cola. This is an integral part of the communities we have.
Angie: What makes me feel good is that we didn't go into this to make money. It would've been a nice bonus. But we really went into it wanting to give back to the community that brought us up. The feeling of gratitude that comes from both sides is so overwhelmingly beautiful that regardless of the ending, that is what I'll take out of it. It was worth it just for that.
THE CONTRIBUTING FACTORS: WHY BUSY WASN'T ENOUGH
------------------------------------------------
Liz: Let's talk specifics. You were busy. You were making money. You had revenue turning over. You had demand. What were the factors that contributed to you seeing the writing on the wall?
Angie: Every single cost on the back end has gone up, and some go up twice a year. Subscriptions to the POS system. Fire protection insurance. Building insurance. Business insurance. Water. Gas. Spotify. External HR company. Every single cost on the back end went up all at the same time.
Then the changes that came through on the 1st of July really affected my cash flow. That was the ice on the cake.
Chryssie: And then unexpected things like plumbing issues, the war in the Middle East. All the fuel costs going up. All the fuel surcharges from delivery people going up. Not only from the government, but world events you don't expect or prepare for. Like COVID. These things that are beyond your country and your government having an effect on your small business.
Angie: Each individual rise is manageable. But when it's all at the same time, plus customer spend going down... When we first opened, customers would come seven days a week and get a pastry and a coffee. Then it changed to seven days a week, coffee every day but pastries maybe five of those days. Then it changed to them coming five days a week. You could see it in real time. Absolutely understandable, we're in a huge cost of living crisis. But it's all of these things all at once.
Chryssie: It seems unfair in hospitality in particular, because coffee has been held up as this martyr for bad money spending. Like you could afford a house if you stopped drinking coffee out. The media is so obsessed with making coffee the enemy, or supporting your local cafe the enemy. There was an article recently about how $6 for a cup of coffee is too expensive.
Liz: What drives me insane about that is small businesses, cafes, hairdressers, nail salons, retail, we're the ones who can least afford for our customers to stop supporting us. But big businesses, banks, insurance companies, telcos, they're the ones where customers should be cutting costs. They're posting billions in profits, yet the first thing customers do is stop the coffee.
Chryssie: One of the changes coming in this year is that you can't do credit card surcharges anymore. Instead of telling the banks to cut that cost, we have to shoulder it. Who can afford the extra $10,000 a year, the bank or us?
Liz: When it was positioned in the media, it was positioned as bank surcharges being banned. But bank surcharges are not being banned. Banks will still charge the surcharges. Small businesses will be banned from passing them on.
Chryssie: Correct.
Angie: In the three years we've been operating, we only put our coffee prices up once. And I was terrified. I slept on it for months. We put it up by 50 cents and I was terrified.
PAYDAY SUPER AND THE PROJECTION
-------------------------------
Chryssie: You had to do your projection for the next financial year. Ten thousand extra in credit card surcharges. Everything else going up. An extra 4% on wages. And Payday Super.
Angie: Payday Super is huge for cash flow. We used to be able to pay super quarterly. If you had a really good week, you could put money aside into a separate account to be able to afford to pay super. If you had a bad week, it didn't matter because you could balance it out. Every quarter you could pay your super and it would be done.
Now with Payday Super, it's weekly. If you have a bad week, you still have to come up with that 12% super on top of the wages to pay every week.
Chryssie: We don't have a problem with these policies. Every employee deserves their future. It's just one little piece of the cake. It all happened at once. And when you're doing projections and there's tens of thousands, if not $100,000 that you know you're going to have to come up with in the next 12 months, when you've reached a point in your business where you can't really increase revenue... You can't keep putting up the price of coffee.
Angie: Coffee and food is particularly difficult because people can go and cost the raw ingredients. They say, "Well, I can buy milk for this much, coffee beans for this much, this is how much a cup of coffee should cost." But that's not factoring in all the other expenses.
THE DECISION TO CLOSE
---------------------
Liz: So did you call Chryssie and say, "We've got to close?" How did that happen?
Angie: I think we were in person. I said, "I think I have to call it." With everything about to change, and I was getting six emails a week: bread prices going up 6%, milk going up, 4.7% up on some raw ingredients.
Chryssie: It was a gradual conversation. A little bit at a time every time we saw each other. Then one day Angie was like, "I think we're closing." And then, "Yes, we are closing." It wasn't one single conversation.
THE ANNOUNCEMENT
----------------
Liz: How did you decide to tell your community?
Chryssie: We did it together. We did a post first. We were quite raw and honest in that post, talking about our history, our connection to the community, the changes coming in that made it not viable to continue. We finished by thanking the community. It really touched people. The post is at 320,000 views now. We got a massive response.
Being so open and honest and connecting with your community, no matter what stage of the business you're at, has been so valuable. It's almost like they've guided us through these last few weeks. It'd be horrible to put up a goodbye post and no one cares, and you've got five comments. But we had an outpouring.
Liz: In a way that makes it harder, doesn't it?
Chryssie: It does. It's almost like you don't realise, you don't value something till it's gone. We knew people cared. We did a survey. But this extreme, we didn't realise until we were saying goodbye.
KEY LEARNINGS FOR FOUNDERS
--------------------------
Liz: What are some of the key takeaways? What would you do differently, or what do you wish you knew back then?
Angie: Know your strengths. And then get support or delegate everything else. Don't try to do things you might not be great at. For example, the finances. I'm not a finance person. I don't know numbers. I didn't have time to sit down and do spreadsheets and work out my exact profit and loss. I needed somebody else to be on top of that.
The person you delegate to, make sure they're on top of it. A good accountant.
Also, if you're working in the business, you can't work on the business. Being an owner, you want to be in it, on the floor, interacting with customers. But the more time you're spending mopping the floors, the less time you're actually spending on the things that help you make a profit.
Liz: I could have spent 100 bucks on a cleaner, and my time, which is probably worth 300 bucks an hour, could've been better spent sitting with an accountant.
Angie: Don't spend your time on things other people can do for you, so you can actually do the really important stuff.
Chryssie: Following on from that, having very clear, direct processes in your business and empowering your team so it can run without you. That's the goal. You should be able to not be there for the day, and they should be able to solve things in a way that's on brand and still gives the right customer experience. You need to document everything: every process, all your expectations.
Also things like a guide to problems. What do you do if the grinder's not working? Your first thing shouldn't be to call the owner. It should be, clean the grinder first. If that's not working, call the coffee supplier. Have an action plan for each potential problem. Because little problems just eat up all of your day.
Liz: And systems help you recruit. Once systems are in place, you can hand someone an operation manual to train them, rather than spending a week with them and then they quit a month later.
Chryssie: I think our particular challenge was that we were learning ourselves. We had high standards and expectations. But the actual mechanics of it, we had to learn as well. We had a period of time where we were really reliant on our staff to know more about certain parts of the business than we did.
Liz: So a good accountant. It doesn't sound like you had a great one?
Chryssie: The first accountant we had didn't have experience in small business. He gave us really generic advice, which is why we didn't set up our company properly.
Liz: So an accountant with small business experience. Not from a Google ad. Anything else? Being coachable?
Angie: Absolutely. You have to be open to advice. You don't have to take it. Know your strengths, and if there's someone more knowledgeable than you in that field, listen to them.
Chryssie: We sought advice from a lot of different people who'd been in business, or knew the area, or knew coffee. We were always out looking for support.
The other thing we really stuck to was being very careful, when you're looking to cut costs, not to affect your quality. That happens in a lot of small businesses. They panic and say, "We're going to get cheaper milk. Cheaper coffee." But that's what drew people to you in the first place. What are your wins? What do you have to preserve? What can you drop? Maybe worse napkins.
Liz: Big companies do this all the time. Change the recipe to use cheaper chocolate. But because they're big and they've got scale, it doesn't matter.
WOULD YOU DO IT AGAIN?
----------------------
Liz: Looking back, would you have done anything differently in that lead-up process?
Chryssie: I think it's an error of the system. You have to put out thousands of dollars before you're even in, and they still have the opportunity to reject you. That uncertainty, the communication. It wasn't our fault because the building had been a butcher for 100 years, and the keys had been handed over decades ago.
Angie: If there's multiple people wanting a space, my suggestion is to double-check that you can get the permits before you even sign a lease. But if there's competition for that space, it's chicken or the egg. And each council is different. Some councils are more forgiving and quicker and more supportive, and others aren't. I've opened businesses in four councils now, and the City of Melbourne was the easiest to open a small business in. The rest have been so challenging and so frustrating.
Liz: What date does the cafe close?
Angie: This Sunday. Three days' time.
Liz: By the time people hear this podcast, you'll have had your last day. You will be sorely missed. It's sad that a business that has proven it's in demand, credible coffee, service and food, and two great owners, is closing. It's a sad state of affairs when we're closing businesses that are making money.
Angie: And making a difference in the community. And we're not alone. It's an increasingly common occurrence. We're just seeing more and more empty shops.
Liz: Last question. Would you do it again knowing what you know now?
Angie: Yes.
Chryssie: Absolutely. It's been worth it. What we've gained is far more than what we lost. In 10, 20, 30 years, we'll still look back really happily on this time and this project that we got to do together, with our parents across the road. I'm sure we'll still be bumping into customers at the supermarket. Definitely worth it.
Angie: I'm calling this phase, Liz, grief and relief.
Liz: Grief and relief. There are so many people listening who have dreamed their whole life of pulling the trigger and opening a business. There's such a small minority of us who do it, who have the balls and the courage to pull the trigger, and potentially fail. Not that you've failed, but potentially it doesn't work out, or you don't sell it for a million dollars. So to pull the trigger and do what you've done, and had such massive success, is kudos to both of you.
Chryssie: Thank you. Really appreciate it.
GOODBYE MESSAGE
---------------
Liz: Do you have a little goodbye message?
Chryssie: We're just so grateful for this adventure that we've had. The fact that we can go to regional Victoria or a new hairdresser, and they'll have heard of us. Or we've got people in Sweden who are like, "When I lived in Melbourne, you were my favourite place, and I'm going to wear your Two Franks scarf over here in my Swedish hometown." It's that ripple effect across the world. We are so grateful to have been some small part of people's lives.
Angie: If any of this conversation that we've started helps people understand just how important it is to support small business right now, then I think we've done a great thing. That's the reason we're speaking out. Small business needs support and needs help. Each small business is someone's dream.
Chryssie: If we live in a world where it's only the big businesses and the only place you can get coffee is Starbucks, what a miserable place to be living.
Liz: What a miserable place to be. I have this sneaking suspicion that this is not the last we're going to see of you two.
Angie: We'll have a little wine.
Liz: What are you up to now?
Angie: Having a rest. Have a little wine or a tea or whatever is your poison. And then I can't wait to see what's next.
Liz: Thank you so much. Appreciate you having on the show.
OUTRO
-----
Liz: Thanks for listening to What I Wish I Knew About Small Business Before I Started, a special six-part miniseries from inside the Media Magnet Podcast and brought to you by AMP Bank GO.
If this episode helped you, follow Media Magnet wherever you get your podcasts, and go back to catch the other episodes in this series. And if you know a small business owner who's learning everything the hard way right now, please share this episode with them. It might be exactly what they need today.
I'm Liz Nable, and I'll see you in the next episode.
======================================================================
END OF TRANSCRIPT
======================================================================
