Pick up two service business marketing plans and one thing becomes immediately apparent. A “service”…
Writing a Successful Restaurant Business Plan
How crucial is a restaurant business plan? The answer is obvious when looking at the statistics. University research indicates that approximately 27 percent of restaurants will fail in the first year. There is a great likelihood that many of them were started by entrepreneurs who never bothered to write business plan because they were in a hurry to open the restaurant. That can be a very serious mistake.
Staying on Track – Restaurant Business Plan
It is the restaurant business plan that forces an entrepreneur to consider each of the critical success factors, like five years of operating costs and a marketing plan that will keep a steady flow of customers coming to the establishment. Having a great menu, a willingness to work seven days a week, or a great interior design is just not enough to achieve long-term success.
Without a restaurant business plan it is almost impossible to acquire investors or get approval for a bank loan. Also, lack of business planning means there is no long-term operating plan in place, so the business owner is likely to spend valuable time from day-to-day just trying to stay on track. It is like going for a long hike in the wilderness without a compass.
Getting Down to Work
If creating a restaurant business plan seems like an impossible task, there are expert consultants who can guide entrepreneurs through the process, including the writing. That does not excuse the entrepreneur from business planning. Conceptualizing the restaurant is important, but turning the vision into a realistic business plan is challenging. Experienced consultants are the link between the entrepreneur’s vision and intent, and the development of the business details needed to create a true operating guide and business case for investors and lenders.
Executive Summary – The Executive Summary is actually written last because it summarizes the rest of the business plan. This is the first page of the planning document and is intended to capture the interest of the reader. This is often one of the hardest sections of the business plan to write because it must get right to the point with key business aspects.
Company Description – The description of the business includes explaining the legal structure, business concept, description of the intended site, layout, capitalization needed for startup, sources of funding, and description of the menu (include a sample). The most difficult element in this section is describing the business concept. It is tempting to wax poetic about the restaurant, but it is important to stay on task while writing the description. The concept includes things like ambiance, service style, seating capacity, lighting, and other elements that differentiate the business.
Management Team – In many cases, restaurants fail over time due to bad management. Just think about personal experiences when service was poor or the restaurant ran out of certain food items. The management team overview describes who will follow the business plan and manage costs, staffing, operations, and financial matters. Each key employee should be named and their experience described. If management agreements are in place, they should be described.
Industry Analysis – What is the exact target market? This section gives an overview of the industry relevant to the type of restaurant opening. The National Restaurant Association is a good source of information and statistics. Other sources include the Chamber of Commerce, the Department of Labor, and the U.S. Bureau of the Census. The profile of the typical customer the restaurant wants to attract is presented. Also, the location details and competitive analysis are included.
Marketing Plan – How will the entrepreneur market the business? Marketing strategies include promotions, loyalty programs, emailed discount coupons, direct mail, print and billboard advertising, charity involvement, website marketing, and networking.
Operations Plan – The nitty-gritty elements of a business is presented. They include staff hiring and training, day-to-day operational factors like food vendors and customer service, inventory control, cash control, security and safety, accounting, legal, and much more.
Financial Plan – Yes, projected financial statements must be developed. This is the section that often drives entrepreneurs to get professional help because of the importance of the financial planning to the business owner and investor. The statements include the income statement, balance sheet, cash flow statement, and others. If the rest of the sections have been properly developed, the five-year proforma financial statements are actually fairly easy to develop with some basic accounting knowledge.
It is wise to ask anyone who reads the restaurant business plan to sign a confidentiality agreement. The agreement will help the entrepreneur keep the restaurant concept secret until time to announce an opening. This was a very brief overview of the restaurant business plan. The best advice an entrepreneur can take is to get assistance from business professionals with experience in business plan writing. There is just too much at stake to risk getting the details wrong.
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