Ambition is a wonderful thing - in the right hands. Leave the nest too early and you will likely end up dead.
We have written a few pieces on Hopstuff, it has to date been a success - an almost unique situation for a Crowdcube funded business. But now we hear that the founder has asked for advice on a listing in the next 12-18 months and raising some cash against assets - for a new project.
Hopstuff doesnt make money in the real world - its projections do. Its current valuation of £14m is based on what might happen next. We think there is a good chance that the required happenings may come about but only if they concentrate on getting there....not something else. The company is talking about a new raise early this year - as well as the news on a listing and asset sale. Profits are projected - they always are.
Their plans are already very ambitious - and have taken a slight fork. They are now due to be opening bars (taprooms they call them) in number, even though the original two have not yet been truly tested. We did suggest to him that he might want to rein in the ambitions a little and consolidate but like most entrepreneurs he knows best. He still thinks his comparison to Brewdog is a valid one.
So why the headlong rush? Is it a Millennial thing?
We dont know. But we do know that the reason that many successful early stage businesses go bust is because they over trade. They over extend their risk based on false, often untested assumptions. He must have his reasons.
Now is not the time for new projects or enquiring about future listings. Now is the time to deliver on your last set of projections and for ensuring as far as possible that plans for new openings work. It's like they havent learnt a thing from the delay in opening the new brewhouse and the lease issue with the Taproom - things never go to plan.
How many businesses have we commented on that have had similar ambitions that have failed miserably. Taylor St Baristas, River Cottage, Rushmore Group, Ethos Global, One Rebel, Hen Restaurants, Pizza Rossa, Chilango etc etc have all promised and tried to expand via new openings and all have failed - some with dire consequences. We cannot list one that has succeeded to date, apart from The Dirt Factory, who 2 years after funding have still not opened their first unit. Getting it right is not easy and for sure out of 5 new units, one at least will end up a dog for reasons that are perhaps not even apparent now. Well that's our experience from 30 years opening new units of various kinds.
The hazards are many - all untested by Hopstuff. The rewards enticing.
This will of course fall on deaf ears. But just so we can say told you so. Alternatively you the investors might want to drop him a line. And of course, if we are wrong, then much humble pie and hat eating will be on the menu. Our record speaks for itself.