Coffee culture ... David Shepherd and Gianpaolo Federici found success with their cafe, Essenza, in Healesville, Victoria. Photo: Glenn Hunt
When entrepreneurs dream of making it big, they often look to expand internationally. However, one entrepreneurial couple has shunned the idea of going offshore and have proven that you can start building a mini business empire in a country town.
Last year, David Shepherd and Gianpaolo Federici moved from inner-city Sydney to the town of Healesville, located in the Yarra Valley in Victoria (about 90 minutes from Melbourne). They began by buying a bed and breakfast business in October 2011. By last November, they had opened a cafe, Essenza, in the main street of the town. They also run an online store selling hampers featuring coffee tea and chocolate called www.KafeKulcha.com.au. Next month, they open an 80-seat restaurant in nearby Mont De Lancey. And they have plans to purchase one house every year to operate as a bed and breakfast.
"It's important to constantly strive to improve and maintain consistency in all aspects of your business. Eventually you pull together a very tight business that rewards you big time."
"When we were considering moving on from Sydney, we were thinking London, New York, Paris," says Shepherd, 43. "But we came to Healesville and saw an opportunity. It's a beautiful town near the wineries and we just love it here."
Healesville may seem like an unlikely town from which to build an empire. However, the couple are building a business which they hope will ultimately fund their retirement in about 10 years. Before starting their businesses in the town, Shepherd was in a senior corporate role as national key accounts director for Sensis. Federici was an officer with the Australian Federal Police. They gained experience in hospitality when they ran a cafe in Darlinghurst in Sydney from 2004 to 2006.
After visiting the area on holidays in 2010, they decided to take the plunge in May last year. They not only moved states, but traded in their busy urban life in inner-city Sydney (population 4.6 million) for Healesville (population 9700). Although the town might be small, it services nearby towns and is a popular destination for tourists on weekends.
A rocky start
The pair were prepared to invest their life savings into starting over and initially had their hearts set on purchasing a 25-bedroom lodge which already included accommodation and a restaurant. However, the deal didn't go through. "We initially wanted to have everything under one roof," says Federici.
So they had to adapt and decided that if they couldn't open a one-stop-shop function centre, they would run several smaller businesses. It's a strategy that has proven to be a smart one as they've been able to fine-tune the systems in each business before moving on to build the next one.
Not long after buying a bed and breakfast business called Barolo, they were walking past a dark and narrow laneway in the main street of the town. "It was full of boxes and crates," says Shepherd. "It had been used for storage for many years."
Despite the area being only 18 metres by 2.4 metres, they saw that it had potential. "We thought of the laneway cafes in Melbourne, they're quirky, tiny places where you can go for great food and coffee. That was the vision we had for this space."
The result is a tiny, bustling cafe called Essenza. It's a bet that's paid off. "We had a revenue projection for the first 12 months and we hit that within two months," says Shepherd. "So it's exceeded our expectations in terms of the number of people passing through."
Benefits of country life
One of the key factors for success has been a much lower cost for overheads compared to what they were used to in Sydney.
"Our rent is less than one-tenth of what we were paying in Sydney, our insurance is half the cost of what we're used to, and we have more revenue than before," says Federici. "It puts you in a better position straight away. You can make money here."
However, Federici emphasises that robust systems are vital. "It's important to constantly strive to improve and maintain consistency in all aspects of your business," he says. "Eventually you pull together a very tight business that rewards you big time."
Shepherd adds that it's also easier to build networks in the country.
"We source locally so that means dealing with people up and down the street," he says. "If something goes wrong, you can just walk around the corner to fix it. We've found people very welcoming here and very supportive. It's something we weren't sure about, especially being a male couple, but we've had no issues. We find that people really do want us to succeed and that's been great."
The change of lifestyle has also been a welcome one. "We're still working as hard as we did in Sydney. But now it only takes us five minutes to drive to work, not an hour sitting in crazy traffic."
Challenges of doing business
While the benefits seem plentiful, Federici adds that there are also challenges.
"There's no real sense of urgency so there is a little bit of a country mindset instead of a city way of thinking," he says. "Plus it's very difficult to find highly skilled staff. We also find that most of the people who apply are female, but we think that it's important to have a balance of males and females on staff.
"There's a lack of services in the area," he says. "At first it was quite a shock. There aren't that many places to go to dinner. There's a lack of entertainment."
However, the pair emphasise that the benefits far outweigh the obstacles - and that they have a new perspective on what's important.
"In Sydney, we lived in an environment where you were judged and motivated by the acquisition of goods," says Shepherd. "A bigger house, a nicer car, a better television. Since moving here, we've found that's vanished for us."
Federici adds: "If we opened a cafe like Essenza in Sydney it would have failed. In Sydney, this cafe would be considered very average. But people here - and I think people in Melbourne - are quite forgiving. It's normal to have cafes in laneways and car parks."
Shepherd continues: "We also know this is a place we can be ourselves. We can be successful but we don't have to be big and glamorous and flashy to impress people. In 10 years' time, we hope to have our little empire and then be able to sell the group of businesses that we've built between now and then. Then it's our dream to buy a house in Italy and retire there."
Follow Valerie Khoo on Twitter @valeriekhoo