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.