A New Restaurant

When I was taking my Entrepreneurship class when I was working toward my MBA the professor asked a question that really surprised me.  “What is the purpose of a business plan?”  Seemed like an easy question.  We write business plans to present our business to potential investors, so they will help us fund our business.

Turns out that attracting investors only scratches the surface; your business plan serves a much greater purpose. 

While getting money for your business is a good thing, it’s not the only thing.  Your business plan has already been hard at work long before you start talking to investors.  In fact, your business plan really isn’t for the investors at all; that’s just a side job it takes on.  The business plan is for you and your restaurant.  Most investors have already made a preliminary decision about whether to invest during your presentation.  Reading your business plan is just due diligence. 

The main purpose of the business plan is to get you to think through all of the details involved in opening and operating your restaurant.  The greatest value is in going through the exercise of writing it.  By the time you have written, edited, and rewritten the business plan, you will know your restaurant inside and out.  You’ll know what to expect during the first couple of months after the opening.  You won’t be in a panic when you close out your first month and see that you’ve lost money.  You already ran through all of the scenarios, so this isn’t a surprise.

Once your business opens, you have your plan handy to use to benchmark your restaurants performance, and to make sure things stay on track.  When things issues arise that require a decision, you have your business plan to help remind you of what your goals are, and what you are trying to accomplish.  It can act as a compass to keep things moving in the right direction.

I’ve said it before, and I’ll keep on saying it; don’t take shortcuts on your business plan.  It’s the best tool you have to increase your chances of success.

Yesterday my post was on buying a restaurant versus starting one from scratch. I’ve also recently posted an article about assessing the location of your restaurant. Today, I have a homework assignment for you that will tie those two posts together.

Go to one of the web sites that advertise restaurants for sale. Here are a few to get you started, or you can just Google “restaurant for sale (your city)”.

Craig’s List
Business Nation
Business Broker
BizBuySell
Restaurants For Sale

Look through the list and see if there are any that look interesting. Pick one that is close to your area and see if you can get some information about it. Many times the ad doesn’t include an address, so you will have to find out where it’s located before you can go on. Email the owner and ask for more information. I usually let the current owner know that I am interested in buying a restaurant, and I need more information in order to do some research to see if this is the right opportunity for me.

You might also want to ask the owner why they are selling the restaurant. Try to learn as much as you can about the operation. Reread the post on location, then drive by the restaurant to determine if it’s in a good location.

It’s good practice. Give it try and see what you can learn.

It’s been a dream of mine to own a restaurant. I’ve spent a lot of time dreaming and planning. One question that I keep coming back to is, should I start from scratch or buy an existing restaurant? There are pros and cons to each, but overall, which would serve me best? (more…)

Whether you’re starting a new business or trying to raise additional financing for an existing business, you need a good business plan. Most entrepreneurs know this, but still, a lot of them get it wrong. Here are 10 of the most common mistakes people make with their business plans.

      1.  The One-Size-Fits-All Business Plan

There are quite a few computer programs designed to make writing a business plan easier. The problem is, they also make it easier to write a cookie-cutter business plan. This isn’t a knock against the software; the problem is with the user. (more…)

A few facts and figures based on the American Restaurant Associations 2007 projections:

There are over 935,000 food and beverage establishments in the US. They will serve over 70 billion meals and snacks. (more…)

One thing to consider before you open your new restaurant, or any business for that matter, is how well you understand what you’re getting into. I’m not talking about general business knowledge. Yes, we understand that starting a new business means long hours. We understand controlling labor costs and keeping a close eye on inventory. Those are things that are common to most businesses. What I’m talking about is an understanding of the things that make your industry unique. (more…)

The last of the three types of business structures we’re going to talk about is the corporation. While it does take more time and expense to set up, and requires more work to keep up with the paperwork needed, for many businesses it’s the right choice. (more…)

Yesterday I talked about Sole Proprietorships, and some of the pros and cons associated with that type of business structure. While it is the quickest and easiest way to get strated in business, it’s not necessarily the best.

It’s possible that you need to partner with someone to be able to afford to start your business. (more…)

Yesterday I posted a little piece on the three different types of business structures: Sole Proprietorship, Partnership, and Corporation. Today I’m going to go into a little more detail about what the sole proprietorship is, and if its right for your restaurant (more…)

Whenever people talk about starting a new business, one question that always comes up is what kind of business structure is best.  Should I run is as an individual owner, or set it up as a corporation? If I have individual investors, do they become partners in my business?  How do I decide which type of business structure to use? (more…)