Dreaming Restaurateur (and hotelier) – Part A

-This article focuses on restaurant opening but the process is similar if you consider opening a small hotel-

I am often asked (by both students and friends that consider a career change) for my views and insight about opening a restaurant.  I smile at the thought of the number of people who think this is an easy job, I mean what could go wrong right? 

Depending on the area you are opening your restaurant you may be dealing with anything from competitors that are overly eager to see you closing down, to certain groups that offer you their “protection” services (often from themselves). So apart from the vision, passion, ability to learn quickly, ability to work hard for little returns in the early years, and financial and legal know how, you also need the character and ability to persevere against all odds… did I mention luck? 

Research the area you are considering opening your business especially if you are not a local.  If you are a local then the odds are in your favour but do not assume you know everything you need to know about the area even if it is your home town.  I am assuming you have a great idea for a concept that  really puts you ahead of competition.

Before you go crazy and spend all your savings do a feasibility study.  You do not need to hire a really expensive consultant to do this for you, the information and understanding of each element of a feasibility study is already freely available on the internet. If you can read this blog then all you need is time and an appetite for learning.

Financial and legal know how, can be the steepest learning curve for someone without a business background.  Before you consider hiring a professional do all the research you can so that the time you pay for, is good value for money.  You want a professional to cover parts you couldn’t quite understand not start you off from the basics. For example in the UK the licensing act of 2003 is freely available here.  Of course further down the road you will need to understand employment law but you are still at the early stages, we have not even started with the business plan yet.

If you have done your homework right, a lot of the feasibility elements will find their way into the business plan and all you will need to do is expand in the areas you consider most important.  There are plenty of templates out there but I suggest to not use them and only have a look to see if you are missing a key section.  For some good advice and forms  links click here.

Consider your audience and build the business plan appropriately, you may need 2-3 versions of the same business plan for different audiences.  Consider the business plan your secondary tool for raising finance.   Did I say secondary?  Yes.  Not many investors are kind enough to go through a whole business plan, the most you can expect is 60seconds before your business plan is binned. So create a presentation that will allow a reader to see your project greatness within the first few seconds…(return on investment projections really help here).  Consider this presentation ( I like a one A4 PDF presentation although some people prefer powerpoint)  to be the "bait" that will allow you the opportunity to explain your concept further.

Even if you have your own finance ready I suggest you go through the trouble of doing the steps I mention above, because if you find that no one is willing to invest into your business then you need to take a step back and consider if it is lack of vision from them, or lack of concept viability from your idea.

If you manage to secure funding stay alert cause the best (and worst) is just around the corner….

...to be continued… (for part B click here)