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* Rest. Biz 101:
Opening Up Your Own Restaurant
* {By Rick Kouns, the "Restaurant Profit Planner"}


Complete Business Plan
Lack of a thoughtful, detailed business plan or no business plan at all is the fundamental reason for new restaurant failure. Profit is not arbitrary, it is planned. Before you make any real investment, you have to plan for all the scenarios first on paper. To draw an analogy, for those who live in New York, you do not get in the car all of a sudden and say, “I am going to the beach in San Diego.” Before you go anywhere, you need a clear roadmap to determine the best course. You also need to determine how much it will cost, and you need to have a contingency plan in case of emergency during your trip, like getting a flat tire. Restaurateurs need a similar roadmap to minimize the chance of going the wrong way.

A detailed business plan is essential for convincing potential investors and/or banks to provide you the funds to make your dream restaurant become a reality. A proper business plan should address the following areas:

Company History
  1. Give a brief description of your company's history. If you are starting up a new restaurant, you need to include market research.
  2. Type of Company- Corporation, Limited Liability Company, Partnership, Sole Proprietor
  3. Names and addresses of owners and percentage of ownership
  4. Officers' credentials

Products/Services
  1. Give a brief description of your restaurant or company's products and services.
  2. Explain what makes your restaurant distinctive.

Markets/Competition
This should be subdivided into the following three sections:
  1. Market size
  2. Growth potential
  3. Competition

Financials
  1. If you have been in business already, include two previous years' operating results and your projections for the next three.
  2. If you are a start-up business, include your best projections for the next 5 years.
  3. All financial statements must include the following:

      a) Profit & Loss Statements
      b) Balance Sheet
      c) Statement of Cash flows
      d) Schedule of Return of Investment
      e) Other supporting schedules

Creating a thoughtful business plan forces you to think through your restaurant business and determine if it can be a profitable, long-term venture. Be sure to package your plan in a professional manner - this could be the first and only impression that a potential investor or bank has to determine whether you are worth their investment.

 

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