Why You Need a Restaurant Business Plan
When you start a business you have to know what you are getting yourself into. The restaurant business can throw many surprises at new owners so you must do your research and know exactly what to expect. Many owners of restaurants that failed within the first year will blame their failure on a lack of planning. If you spend some time researching and writing a business plan for your restaurant then you will be more likely to see your business succeed.
There are many reasons why it makes sense to prepare a business plan prior to opening a restaurant. Some benefits will seem obvious to you at first but others may not yet have occurred to you. In the following article, we highlight some of the reasons why you need to put together a restaurant business plan before you take the plunge and open up the local eatery that you have been dreaming about.
When you start a restaurant you will have to make a lot of different decisions. Some of these decisions can be difficult or expensive to reverse at a late date so you must be sure that you make the correct choices the first time around. By doing the right kind of research and planning you will be able to make informed decisions instead of just guessing. Imagine opening an Italian restaurant and then discovering that there are too many Italian restaurants located nearby or that there is a trend towards Asian style cuisine over European food among households in your area. In some cases, you would have to correct a poorly informed decision by totally re-branding your business and paying for new interior decorating, a new logo, new menus and much more. Your business plan should let you know the right path to follow at the right time.
Clarify Thoughts and Ideas
By writing a business plan you will be able to turn your loose ideas into something more concrete. As you research and write you will allow some of your ideas to evolve and you may come up with new ideas altogether. You may even decide that the ideas that you had originally are not viable at all and look at a totally different business model or industry.
Prove the Viability of Your Proposal
While a business plan is essential for proving the viability of the proposed business to yourself as the future owner, you may have to provide proof to other parties as well. Lenders will want to know more about your business before you can borrow funds from them. Equity investors will want to know what kind of return they will be getting on their investment before they invest. You may even find that a business plan can come in handy when it comes to negotiating a lease with the owner of a commercial space that you would like to rent.
Identify Difficulties and Challenges
It is easy to dream about the restaurant that you would love to set up and how glamorous it must be to own a restaurant. However, you may be viewing the prospect of being a restaurant owner through rose tinted glasses without imagining the difficulties that go along with it. Some business plan formats encourage you to perform a SWOT analysis. In such an analysis you look at strengths, weaknesses, opportunities, and threats. By asking the right questions you will come to learn about the weaknesses of your business model and how you can strengthen them. You will also be challenged to analyze some of the threats that could affect your restaurant and to come up with contingency plans to deal with them.
Assess Startup Requirements
It is important to understand that launching a new restaurant is a process and a business plan can help you to manage this process. You must have a clear idea of what you need and a schedule so that you can proceed to set up an operational restaurant in an organized manner. There are many things that have to happen in logical order before you can open your doors to diners. To fully understand each step you will need to know your startup costs, where the funding will come from, how you will acquire equipment when you will hire staff and much more. There will also be actions that you have to take to comply with local rules and regulations relating to restaurant owners.
Understand Exactly What You Want
You need to know exactly what you want before you can map out a path to get there. Your restaurant business plan will help you to set some realistic goals and targets. Goals could be related to monthly gross or net profits, restaurant capacity levels or customer satisfaction for example. Once you have set some reasonable goals you can then look at putting systems in place to achieve them.
Make Your Restaurant Marketable to Potential Buyers
There comes a point in most restaurant owner’s lives when they decide to sell their restaurant. When this day comes you can be sure that prospective buyers will want to examine a huge amount of information about the business before they decide to make an offer. If you have an up to date business plan it could make it easier to supply most of the information that a buyer would need. If your plan does a good job at explaining the present situation in the restaurant and outlines a way forward to further growth then it could become an invaluable resource for you and the new owner.