When you’re planning to start your own business, especially in the restaurant industry, the recipe calls for 24/7 hard work, 100 percent dedication and lots of cash. If you’re opting for the gig economy direction — say, if you’re taking on last-minute, in-home catering gigs for small groups — you may be able to dip into your savings to cover basic startup costs. But if you’re opening a restaurant, you’ve got a lot more to consider. If you find your financial larders are bare, you can still continue to fan the flames of your lifelong dream of owning a restaurant.
Know your financing options
Starting a business is a risky endeavor, and opening a restaurant means renting or buying expensive real estate and investing in pricey equipment. Many banks and credit unions may shy away from approving a high-value loan for a fledgling business. The Small Business Administration (SBA) will become your new best friend when it comes time to investigate financing opportunities. Fundera explains that the SBA does not provide loans, but instead partially guarantees a number of commercial real estate products, including the CDC/504 and the SBA 7(a) loan programs. While these loans may seem similar on the surface, take the time to get to know the rules and requirements before applying.
Develop a business plan
It’s simply not enough to know how to cook and to please people’s palates. You’ll need to have a business plan in place that outlines your target market, pricing, needed equipment and employee requirements. Your business plan should also include specific policies and procedures, and touch on things such as menu items and how you’ll source ingredients. ShopKeep’s list of restaurant owner priorities is a quick five-minute read that covers everything from customer service to cleaning practices, all of which should be included in your business outline. By making these decisions now, you can avoid costly mistakes later.
Master the art of budgeting
As a small business owner, you have to learn how to budget more than just cash. You’ll need to learn how to divide your time as well as delegate your employees’ talents. Strategic hiring practices can help you plan your employees’ needs and is something Silver Chef advocates heavily to save money, along with purchasing used equipment and overestimating your operational costs.
Consider the unconventional
When you think of a restaurant, your vision likely includes a kitchen, dining room and waiting area along with color-coordinating accents, ceramic plates and a full waitstaff ready to please your customers. But that may not be your best option. Consider starting small by operating a food truck or pop-up culinary event business. Money Crashers contributor Suzanne Kearns notes that today’s food trucks go beyond the taco stand. It’s an opportunity to get your name and products in front of a diverse range of people at events in your city or across the country.
Keep your employees happy
Foodservice is one of the hardest jobs there is, and as such, it experiences a high turnover ratio with each rotating staff event costing upwards of $5,000. That’s a lot of money that could be put to better use. Give your employees the tools and compensation they need to be successful and pay their bills. Empower them to make decisions, and give them an input on operational procedures that affect them directly. Even if you have to pay each employee a higher wage, it’s worth it in the long run and will save you money over time.
Don’t neglect marketing
While certain pieces of your marketing plan absolutely cost money, there are many low- and no-cost strategies that can help you grow your business by engaging your customers. Social media makes it easy to get in front of the masses by creating ads and events that draw people’s attention. And don’t count out good old-fashioned email marketing, which Upserve’s Restaurant Insider explains remains an effective online marketing tool.
A final thought: if you or your key staff don’t have experience in the restaurant industry, you’re destined to struggle — and will probably fail. Make sure you understand all of the responsibilities that go along with the job. By knowing what you’re getting yourself into, you can be better prepared to whip up a heaping batch of success.