7 Business Plan Mistakes All Restaurants Should Avoid
A strong, detailed business plan can quite easily make or break your chances of success and not writing one is setting yourself up for failure from the beginning. Research shows that all too often writing a detailed business plan is overlooked by those hoping to open a restaurant. Give yourself a competitive advantage and ensure your new restaurant stands the test of time by keeping these seven commonly made mistakes in mind:
Not writing one or including enough detail
The first, and easiest, hurdle to fall at it to simply not write a business plan at all. When you have a goal such as opening a restaurant It's natural to want to get started as soon as possible and it might seem as though a rough plan will be sufficient. However, the reality is that over half of all restaurants have failed within three years of opening, with 26% failing in the first year.
If you're going to take a shot at your dream it's also important you go into as much detail as possible, the reality is there are multiple points at which you could fail in the early stages of opening a restaurant and not paying enough attention to the details can cause you to trip at any one of these. There will be numbers to crunch, permits to apply for and endless market research to consider and the more time spent and information gathered the better. A rich, qualitative business plan will highlight any weak spots in your business model and make for a smoother start-up period. A strong business plan can also be used to attract investors and secure funding such as loans.
Not focusing on the long term
As so many restaurants fail in the first few years it is important you not only consider the start-up phase of your business but also focus on the long term. Alongside the initial push needed to launch a restaurant, any business plan you form should also include procedures to ensure the sustainability of your restaurant. It is important to consider financial returns, how you will ensure your restaurant becomes self-funding and your long term aims as a start-up and include these in your business plan.
Location, Location, Location
Ensure the location of your business is highly visible to potential customers, while a premises in a less popular or frequented area may be cheaper it is simply not worth any savings you might make by compromising. "Location is everything when drawing in patrons and it's important that your restaurant is in a prime location to be spotted by hungry passers-by who could become loyal customers. While a marketing campaign is an incredibly effective way of attracting customers don't underestimate the importance of an appealing storefront in a busy area," says Bethany Barnes, a business writer from Write My X and OriginWritings.
Being realistic about the costs
When creating your business plan be as specific as possible regarding the associated costs, leaving anything vague creates room for costs to turn out higher than expected and this can cause havoc. A poorly constructed financial plan also has the potential to put potential investors off.
It is vitally important to leave space in the budget for unexpected or costs as these are likely to arise in some form; ultimately the best strategy is to overestimate all costs when writing the preliminary budget. A general rule is also to set aside a contingency fund for unpredicted costs or emergencies.
Not empathising your businesses competitive advantage
There are thousands of other people out there trying to make their dream restaurant a reality but the reality is not all of them will be successful in doing so. Ensure your business plan highlights what makes your restaurant stand out from the crowd and how your plan will give you the best possible chance of success. There are a variety of ways you can differentiate your restaurant from your competitors', including: location, concept, cost and menu items. Make sure you build a solid argument as to how these differences will give you an edge. Also ensure you include information regarding your experience and what makes you the ideal candidate to implement your business plan successfully, that way any potential investors reading your business plan can build confidence in the competitive advantage of both the plan and it's enactor.
Not creating a marketing strategy
Implementing a sound and well planned marketing strategy is the key to the success of any new business and should not be overlooked when opening a restaurant. When done correctly it will not only bring in new customers but encourage repeat customers as well, through schemes such as a loyalty program. "Other things to consider when building a marketing strategy are: your restaurants website, creating relationships with local charities and organisations, digital marketing, and social media. All of these are incredibly useful tools to encourage visitors to your new business and successful marketing might well make the difference between success and failure," says John Phillipe, a marketing manager at 1Day2Write.
Not paying attention to the red tape
While it may not be the most exciting aspect of making your dream a reality, focusing on the 'red tape' like paperwork and permits is an integral part of making it a success. A key part of your business plan needs to focus on any permits, regulations and compliance requirements. Falling short in these areas can seriously stall your restaurant opening and incur unexpected costs, so it's important you give them the attention they need.