Business Advantage Volume 2 Number 6 : Page 4

BUSINESS SUCCESS REVISITING YOUR COMPANY’S BUSINESS PLAN By Diane Rumbaugh Creating the ULTIMATE Business Plan (ask anyone who has opened or has owned a business during the last five years). One of the keys to a successful business is first, creating a solid business plan, and second, instead of shoving it into a drawer once the business is open, executing the plan and constantly revising as needed. Sometimes, business owners are so involved in the daily details of their business that they often fail to step back and think strategically. “This can stunt a business’ growth. It’s the difference between constantly working to just get through the day and being the chief executive--someone who is involved in the business but not working the details,” says Jim Laube, president of RestaurantOwner.com, an online resource for independent restaurant owners. “This is especially important if the business involves multiple locations.” Laube suggests that businesses, even those that have been operating for many years, devise a strategic plan. “Things change, the market changes, customers’ tastes change; your marketing and your business have to evolve,” he says. “Schedule quarterly meetings with your staff away from the office to discuss strategy, goals and objectives and share ideas.” GETTING THE ITCH Owning a restaurant, catering service or other foodservice business is the dream of many would-be entrepreneurs who have the itch to show off their culinary skills. Research varies as to how many restaurants fail after the first year (the consensus is about one in four restaurants will not survive). After three years, the failure rate is about 50 percent. The statistics are not that different from the failure rates of other small businesses. That’s where business plans can make or break, not only a restaurant, but any type of business venture. PAINTING A PICTURE “You don’t get what you want, you get what you picture and a business plan paints a very valuable picture,” says Trevion Blanding, COO of Small Business Owners of America (www.SBOOA.com), a business development organization that helps business owners obtain financing and develops business plans for its clients. “Anyone looking for investment capital needs a business plan. The Small Business Administration (SBA) requires a business plan from potential borrowers as part of the application process.” Hopes and dreams are not what make a business a success 4 BusinessAdvantage May 29 -June 11, 2013

Roadmap To Success

Diane Rumbaugh

Creating the ULTIMATE Business Plan

Hopes and dreams are not what make a business a success

(ask anyone who has opened or has owned a business during the last five years). One of the keys to a successful business is first, creating a solid business plan, and second, instead of shoving it into a drawer once the business is open, executing the plan and constantly revising as needed.

Sometimes, business owners are so involved in the daily details of their business that they often fail to step back and think strategically. “This can stunt a business’ growth. It’s the difference between constantly working to just get through the day and being the chief executive--someone who is involved in the business but not working the details,” says Jim Laube, president of RestaurantOwner.com, an online resource for independent restaurant owners. “This is especially important if the business involves multiple locations.”

Laube suggests that businesses, even those that have been operating for many years, devise a strategic plan. “Things change, the market changes, customers’ tastes change; your marketing and your business have to evolve,” he says. Schedule quarterly meetings with your staff away from the office to discuss strategy, goals and objectives and share ideas.”

GETTING THE ITCH

Owning a restaurant, catering service or other foodservice business is the dream of many would-be entrepreneurs who have the itch to show off their culinary skills.

Research varies as to how many restaurants fail after the first year (the consensus is about one in four restaurants will not survive). After three years, the failure rate is about 50 percent. The statistics are not that different from the failure rates of other small businesses. That’s where business plans can make or break, not only a restaurant, but any type of business venture.

PAINTING A PICTURE

“You don’t get what you want, you get what you picture and a business plan paints a very valuable picture,” says Trevion Blanding, COO of Small Business Owners of America (www.SBOOA.com), a business development organization that helps business owners obtain financing and develops business plans for its clients. “Anyone looking for investment capital needs a business plan. The Small Business Administration (SBA) requires a business plan from potential borrowers as part of the application process.”

Blanding says every business plan should contain the following elements.

Executive Summary - objective and mission
Company Summary - ownership
Market Analysis - competition
Summary of Management Team Expertise
Financial Projections (three to five years)
Marketing Strategy
Services - menu selection (for a foodservice operation)

“For restaurants, you will want to include the type of food you are serving,” says Blanding. “What you serve will affect costs. A five-star steak house will have a lot higher costs than a deli. For a start up venture, most lenders, including the SBA, want to see your plan to bring in revenue so you can pay back your loans.”

“A business plan explains what the restaurant will be, the experience level of those operating it, the competitive landscape in the local market and its unique selling points that hopefully will bring success,” says Rohit Arora, CEO of Biz2Credit (biz2credit.com) and an expert on small business finance. “Lenders need to be convinced that the restaurant has a strong chance of success and that it will be viable for more than just a couple of years.”

Adds Arora, “Many entrepreneurs underestimate how much money it really takes to start a business. Inevitably, there will be surprises, mistakes and delays that drain the entrepreneur’s budget. The business plan must include realistic budget estimates.”

Mark Estee, owner and chef of Campo in Reno, Nevada, knows how important a business plan is to the success of a restaurant. “The first time I opened a restaurant was in 2002 and I just cared about cooking French fries,” remembers Estee. “Now, I use it to balance between good business practices and profitability. I use it to watch labor costs, take care of equipment and control cost of goods. My managers are all tuned into the business plan.”

Estee knew he needed a solid business plan before opening Campo, but did not know where to start. “I surrounded myself with people who were knowledgeable and wasn’t afraid to ask for help,” says Estee.

Estee, who is also chef and partner in Campo in Mammoth Lakes, California and owner of two Burger Me! Restaurants in Truckee, California and in Reno, says his business plan helps him systematize his restaurant. “It helps me gain the confidence from investors, managers and employees,” he explains. “Everything isn’t just all in my head. I look at it daily to make sure we are sticking with our mission and we are doing what we said we would do.”

FINDING HELP

The SBA (sba.gov) offers a free step-by-step process to create a business plan. It includes templates for an executive summary, company description, market research, product/service line, marketing and sales and financial projections. “If you can’t put together a business plan on your own or seek the resources to help put one together, you probably shouldn’t open a restaurant. Odds are, it will fail,” says Laube. “A business plan lets you prove to yourself that the idea you have makes economic sense and that you can convert the idea into a profitable business. Too many people open a restaurant because they fall in love with an idea, but executing that idea is the trick. Not only do you have to produce consistently great food, but have to control food costs, labor costs and address a host of other business issues. A business plan provides a strategic, tactical roadmap. If you don’t think things through On the front end, in the heat of battle, it’s tougher to make good decisions.”

When Misty Young heard that a small breakfast and lunch restaurant called Squeeze In in Truckee, California was for sale, she jumped at the opportunity. “My husband Gary and I had dreamed of owning that very restaurant. We talked about it all the time. Then, by chance, the owner of Squeeze In mentioned he was thinking of selling it. As soon as I realized it was for sale, I began making notes and started the bones of the business plan,” she says.

Young had very little cash so she knew she had to be very thorough and creative with her business plan to convince others she had what it took to be a restaurant owner. She drove around Truckee, checked out competitors herself and obtained market research and tourism numbers from the Chamber of Commerce. She did economic and demographic research and traffic counts along the nearby highway. She obtained information from the National Restaurant Association about industry growth; she analyzed her financial requirements and put it all in her plan.

“By the time we went into the sales negotiations, I had done between 60 and 80 hours of intense work,” says Young. “The seller also owned the building. We negotiated the lease at the same time we negotiated the purchase. We were able to sign a 10-year lease because we were so organized. The lease easily could have been much shorter. The seller believed in us based on our plan.”

Young, who has now owned Squeeze In for 10 years and has opened three others, initially invested $125,000 into the restaurant, borrowing most of the money from a family member. “We paid off the family member within a year,” remembers Young. “We had projected to increase revenue from $500,000 to a $1 million in the third year but got there in the fifth year. It’s important to include specific goals in the plan so they can be met, but you also need to make adjustments.”

Young sees her business plan as a “living, breathing document” that keeps her on track. She brought in her daughter and son-in-law as business partners to run day-to-day operations. “I needed to focus on my strengths, which are systematizing and looking at the big picture,” she says. “No business, particularly a restaurant, can be successful without a firm foundation in operations and financials through systematic planning. That includes reviewing the business plan to make sure you’re on track. If you don’t review it occasionally, you’ll naturally veer off course. It’s like the flight plan for your restaurant. Competitive analysis is also important. For independent restaurants like ours and like many other Smart & Final customers, competition is increasing, not just from chains, but now from fast food restaurants, food trucks, personal chefs—they are all our competitors.”

NEVER TOO LATE

“Time and pride are the main reasons existing restaurants don’t have adequate business plans,” says Blanding. “Time, because they are too busy running their business and pride because they think they’ve been open forever so why should they create a plan now? It’s never too late. Business plans allow you to update your restaurant with fresh goals and discover new ways to get your business to the next level.”

Read the full article at http://trendmag2.trendoffset.com/article/Roadmap+To+Success/1423527/162254/article.html.

Previous Page  Next Page


Publication List
Using a screen reader? Click Here