We received a question from a reader who asked:
I am in the beginning phases of starting a restaurant. I’ve got the concept and the food nailed down, but I am not sure about the business plan. I have looked at different business plan outlines, but I haven’t found one that’s easy to follow. Do you have any advice as to where I might start? –Tom B.
Great question, Tom. As regular readers of this blog know, we talk about how your brand is the sum of all that you do. Your brand is bigger than your logo, tagline or your marketing efforts. Having a strong restaurant brand means you’ve got a winning concept, you serve really good food and you deliver an awesome experience. On top of that, these things all need to be aligned with your business goals.
With your concept and the food part nailed down, you can focus on your business plan. Here’s a time efficient approach we recommend.
The business planning can feel overwhelming. Often fears surface, too. This is understandable since a plan is a critical part of any businesses’ future and writing that plan will take time and energy. Entrepreneurs like you are hungry to find the best advice. Just take one look through Amazon, bookstores or the Internet and you’ll find hundreds of books on writing business plans and lengthy business plan templates.
While those tools are helpful, we’re going to give you some essential preliminary steps to ease into business planning before you start filling in templates or doing any math. Answering these questions will make writing your restaurant business plan easier because you’ll have a better handle on your vision and goals for your restaurant.
This is the best first step because you will uncover a lot of information that will eventually go into your business plan. Because you are thinking about the big picture, you won’t be constrained by a template.
Here are 5 “big picture” questions that will make writing your restaurant business plan easier.
1. Why you want to start this restaurant? – this is an important first question. In his book, Start With Why, Simon Sinek introduces the concept of the Golden Circle in which “why” is at the center. Businesses that are successful answer the question, “why are we in business?” with a reason that is inspired and is meaningful to their customers.
While a business exists to make money, according to Sinek, it can’t be the driving factor in your why. So, ask yourself why you want to start this restaurant. Do you want to provide a place for those in your neighborhood to get together? Do you want to introduce a healthy dining option? Do you want to showcase a new type of cuisine? Do you want to provide a memorable experience?
If you have a strong why, you’ll be more likely to build a loyal customer base and strong word of mouth referrals. You may also find that you avoid the business pit falls of competition and price-cutting since you have a compelling reason for being. You can check out his TED Talk here.
2. What is the lifestyle that you want? You’ve heard the stories about how the life of a restaurateur can be one in which you’re consumed by your business. Are you prepared for this possibility? Or, do you see yourself as the one who will start the restaurant and then hire people to run it? When you answer this question, do it in detail. Be sure to cover what you want your work and personal lifestyle to look like. How much time do you want to spend working? What type of work do you want to do? Will your family be involved in the business? Do you have a family? How much free time do you want? How much money do you want to earn? How long will your commute to work be? Do you want to go on vacation? Do you want to manage people?
Answering these questions will help you build out the leadership and team section of your business plan. It will also help you think through the financing section – you will see how much money you need to earn and how much you may need to put in or raise to build out team.
3. What are your goals for the business? Do you want to own one restaurant? Will you be building out the first location and concept in the hopes of creating a franchise? Do you want to own multiple restaurants of different kinds and create a restaurant group? Do you want to build the restaurant and sell it? Answering these questions will help you in the finance section. You will be able to see how much time, money and marketing effort you’ll need to put in. It will also help you build out the exit strategy section because you’ll see whether you want to build a restaurant that will stay in the family or if you’ll be building a powerhouse business that you can sell.
4. What support do you have in place? This is a question that can serve as a reality check. Write down what kind of support you have in place. Do you have financial support? Do you have friends and family that will support you? Do you have a community filled with customers that support your business? Do you have the right education, knowledge or experience? Who is in your network? Do you have staff you can hire? This will help you fill in the parts of the business plan where you are set. It will also help you see if you’ll be able to achieve the lifestyle that you want (see question #2). In order to achieve that, you’ll need support.
5. What resources will you need? In the previous question, you’ll be taking stock of what you have. Now you need to account for what you’re going to need. Will you need partners, employees or other contacts? What will you need in terms of money? How about education, training, or experience in the restaurant business or other areas of business like marketing, HR or finance? Will you need to make new contacts in your business such as partners or suppliers? Answering this question helps you see areas where you’ll need help. You will be able to address any holes in your business plan and figure out ways to fix them. This is especially helpful if you’ll need to raise or borrow money. You can address these questions before an investor does.
If you answer these questions, it will help you sort out big picture items and revisit your goals. If you dive right into a business plan template and follow someone else’s business model, you might be making up plans or numbers that don’t align with your goals. Then, you’ll follow the plan you’ve built and it might not make any sense once you start executing it. If you set your goals first, you can figure out how to get there and how to align your marketing plans and a financial model to that goal – not the other way around.
By starting with these questions, you’ll gain clarity on what you want this restaurant to look like and how you want to grow it. You’ll also have a better idea of what you need to do to achieve that vision. Your plan will start to make a lot more sense and so will your financial projections.
Anyone who is starting a restaurant can start with these questions to get the big picture of their business plan prepped. Also, any one who has a restaurant and has hit a bump in the road can use these questions to re-engineer their business model. Sometimes, you have to just take it down to the basics to get started or make change happen.
You might be thinking that these questions are too basic, and that it won’t help you with your business planning. Give it a try anyway. Answering the questions will at least get you unstuck in your business planning process. You have nothing to lose by going through this exercise – set aside an hour and jot down some answers. It’s much less time-intensive than filling in a business plan template that you still might find confusing ten hours later and much less costly than following a flawed business plan.
In part two of this series, we’ll dive deeper into what you need to include in your business plan and we’ll share some resources with you.
Did you like this article? Sign up for free updates from the blog and receive our FREE e-book “25 Things Customers Think (But Won’t Tell You)” by entering your email in the box at the top right corner of this page.
You’ll also be the first to hear about our upcoming free webinars and courses where we’ll share more step-by-step tips on how to create a successful restaurant brand.