(This will be a continuing series on my and my spouse's efforts to start a business. Look for us Saturday mornings.)
In my last diary, I recounted how my spouse and I had looked through a few business ideas, including a number of franchises, and had instead settled on opening a restaurant. The next step was organizing the thing. Little did I know how complex that would be!
To start, let me reiterate I've been a student of an employee my whole life. Becoming an entrepreneur hasn't been an easy step by a stretch because we're basically on our own, with no set guideposts, and, frankly, no one to tell us what to do and when to do it. Freedom is a wonderful feeling, but it's a lot of work!
At any rate, I knew enough to know that we needed a good business plan before signing any checks. But what, exactly, was a business plan, and what need to go into it?
Well, as it turns out, the business plan is a document that serves two purposes. First, it explains to the reader (primarily yourself) exactly what the business is, what market it serves, why its existence is justified, and, most importantly, how it's going to make money. Second, it acts as a marketing tool. Potential investors are going to want answers to those questions I just mentioned, particularly how the business will make money. In addition to investors, however, banks want to see the business plan to see if lending you money makes any sense, and even landlords want to see the plan to see if you'll be an economically viable tenant that won's conflict with businesses the landlord already has going (more on that point in a minute).
So if you haven't produced a business plan before, how can you find out how to generate one? Well, this is the perfect example of "the internet is your friend"! I did a search for "example business plans" and found the website Bplans.com. They have a number of different example business plans, including ones for the restaurant industry. (I need to note right now that I have no interest in any of the companies or websites I mention, unless otherwise noted; I'm just recounting steps I took to get where I am so far.)
Now Bplans is a service, and they are trying to sell you a business plan-generating tool. For some people, this would be great. I opted to cut-and-paste one relevant business plan into my business plan, largely whole; that, at least, gave me a place to start.
When I read through what I'd pasted, I realized a lot of the language wasn't relevant to what I wanted to do, so I modified it. I also realized I wanted the plan organized somewhat differently, so I reorganized it in a series of steps. None of this was according to plan, however; it was the result of starting to dig into the business to decide what I wanted it to be, and organizing the plan around that vision. To this day, the plan changes on a weekly basis, though more slowly than at first, as our ideas about what we want to do change. We are giving ourselves some time to work the conceptual aspects of the business out so that we will be as happy as we can be with the business when it gets started for real.
So how did we organize the plan? First we explained what the business was; that is, what type of food, hours, what role alcohol would play, how the place would look, the philosophy behind the menu, etc. Then we described what types of community residents would be interested in our cuisine and atmosphere, and why. Next, the plan explained how we would market our restaurant to the people we had identified as our market. We'd never make any money, and people would never know how good our product was, if they didn't know about it! We had several good ideas, and we put them in the plan, in order of importance. We chose a general area for the restaurant, one that was high-traffic, to give our place a good chance of succeeding (we're currently looking into a couple of available spaces right now).
The most important section, however, was the financials - startup costs, projected labor costs, and projected earnings. This was the section that caused some real hand-wringing! I literally had no idea where to begin. Fortunately, after doing a number of web searches, I came across a page giving access to downloadable restaurant financial software from Restaurantowner.com (essentially a set of linked Excel spreadsheets that not only give you the tools to do financial modeling, but suggest expenses that you might not have considered). Other restaurant financials packages are available from, for example, VirtualRestaurant.com, and similar sites.
I felt better having found this; I wasn't totally alone! Plus, going through the financials gave me a clearer, and more sobering, picture, of how the restaurant would be started and run.
The final part of the business plan would have seemed to be the most fun - the menu! What, exactly, were we going to serve? That question turned out to be more complex than I could have imagined. More on that next time.