Business Plans: A Practical Idea For Your Restaurant's Success (1/2)

Contributing Editor Hank Weiner Hank is a counselor working in the Oakland, California office of SCORE, and writes about issues faced by small restaurant operators. He has lived and worked in Asia for 25 years and subsequently managed a joint venture restaurant company that opened six Asian themed fast food outlets in California in partnership with Taiwanese interests. Questions can be directed to Hank at eastbayscore@yahoo.com, Subject Line: Attention, Hank Weiner. A good business plan can help determine where you are, where you want to go and how you will get there. A common definition for a business plan is “a road map to success.” This is not a bad analogy. Think of it this way, if you want to drive from San Francisco to New York City you could do it by just heading east. Eventually, after wasting a lot of time and money (at $2.50 per gallon of gas!) you might eventually get there. Now think how much easier and more efficient the same trip is with a proper road map. That is what a business plan is for your company. Written business plans are not a common procedure in many small businesses, especially in Asia but they are the basis for a successful business. Business owners or potential entrepreneurs often ask,” if we have a restaurant already or an idea for a restaurant then we already have a ‘plan.’ Isn’t that good enough?” And the answer is “No.” There are very specific reasons for getting the plan out of your head and onto paper: Sell yourself on your business: While writing a business plan, you validate your ideas and become more confident of your success. Conversely, though, you may also find that this business will not work or will need substantial “re-tooling.” My first restaurant venture was in partnership with Asian investors who initially questioned the need for a plan. However, they quickly saw the benefits when we uncovered many new ideas and opportunities in the course of researching and writing the plan. As a result we “scrapped” our original menu in favor of a much better and more successful idea. Sell potential finance sources and/or partners on your business: If you need additional financing or help from investors or partners, you must be ready to demonstrate what your goals are. If you are planning on applying for an SBA* loan (which most restaurant financing requires), you will need a written plan. Show prospective landlords what type of tenant they will get: Landlords leasing prime real estate space often require business plans before agreeing to a lease. There is usually competition for this space and landlords need to insure that they get tenants that will succeed and meet their lease obligations. Have a written record for future reference. Plans are written both to raise money and to manage an existing business. A written plan provides a continuing reference for managers and employees for the future operations of the restaurant. A typical plan covers these topics: Opening or Executive Summary: A short and concise summary of your plan. While this section is placed first, it is the last part written as it must summarize what follows. The Concept: A description of your business strategy such as your type of cuisine, pricing, competitive factors and proposed location. Market Analysis: The type and size of the market for your proposed business. Marketing Plan: How are you going to reach target customers and promote your business? This is such a key factor for a successful restaurant that we will devote a future column just to this subject. Management & Staffing Plan: A description of the key managers and employees of your business. Facilities Plan: An outline of your physical facilities. Financial Plan: A detailed projection of your financial requirements and your expected profits and losses over the next few years.