Dele Momodu, the publisher of Ovation magazine and a renowned media mogul, recently opened up about a significant financial setback he endured when he ventured into the restaurant business in Accra, Ghana. Speaking on the Building Wealth with Femi podcast, Momodu revealed that he lost over $500,000 on this venture, calling it a painful lesson in the unpredictable nature of diversification.
In his discussion, Momodu reflected on his attempt to expand his entrepreneurial portfolio beyond media and publishing, a strategy often seen as a way to generate additional revenue streams. However, he cautioned that diversification doesn’t always yield the expected results, and in his case, it led to substantial financial loss.
“The time I lost money was when I tried to diversify,” Momodu shared. “People often think diversification guarantees more money, but that’s not always the case. Unless you’re really lucky, you can lose everything.”
The business he invested in was a high-end restaurant called House of Ovation, located in the heart of Accra. Momodu envisioned the establishment as a top-tier dining spot that would resonate with both local and international guests, in line with the prestigious Ovation brand.
“I built a beautiful, upscale restaurant with great ideas, exceptional food, and hired top-notch chefs. It was meant to be a premium dining experience in Ghana,” he explained.
Despite meticulous planning and investment in modern facilities and quality interior design, the venture encountered numerous setbacks that ultimately led to its downfall. According to Momodu, things went awry on multiple fronts.
“Everything that could go wrong, went wrong,” he confessed during the interview.
A major issue that contributed to the failure was a massive delay in receiving essential kitchen equipment that was imported from South Africa. Momodu had spent $60,000 on customized industrial kitchen tools, including refrigerators, cutlery, and other equipment necessary for a restaurant of international standards.
The equipment, which had been shipped in late 2006, didn’t arrive in Ghana until January 2007. However, the shipment faced long bureaucratic delays, and the equipment wasn’t released from the port until 2010. This prolonged delay severely impacted the restaurant’s ability to operate as planned, adding to mounting costs and financial strain.
“Do you know when they finally released it to me? I got it out in 2010,” Momodu recalled, shaking his head.
By the time the equipment was available, the restaurant had already incurred substantial losses, and the operation was no longer viable.
Reflecting on the experience, Momodu admitted that it taught him valuable lessons about the risks of entering unfamiliar industries and the importance of being prepared for unexpected challenges. Despite the setback, he believes such experiences are part of the entrepreneurial journey.
“It was a hard lesson,” he said. “But I’ve learned that before investing in new ventures, it’s crucial to do thorough research, understand the market, and be prepared for anything that could go wrong.”
In his final advice to aspiring entrepreneurs, Momodu stressed the importance of recognizing that no business venture is without risk, especially when venturing outside one’s area of expertise.
His story sheds light on how operational and logistical issues, even in seemingly well-planned ventures, can derail even the most promising of business ideas.