Here you stand at the crossroad of a new start-up or expansion of your restaurant, and the challenge of raising capital lies comes down to one thing: a solid business plan.
After all, no funding means no restaurant.
But the good news is that whether you are currently undertaking a business plan (or will in the near future), here are three easy ways to sharpen your plan and increase your chances of securing investment.
1) Quantify, Quantify, Quantify
Most business plans are filled with general statements like, “The restaurant has seen steady growth since its opening three years ago.” This is fine and shows your growth, however a better way to write this statement is to quantify it:
Annual restaurant sales have increased 42 percent over the past three years.
With just a quick trip to your calculator you now communicate that you know your numbers, which adds a heightened level of trust to your reader. But don’t stop just at revenues – go through your plan and include numbers wherever possible:
“Mr. Smith was restaurant manager in his previous position.”
“In his past position as restaurant manager Mr. Smith supervised a team of 10 staff, where his responsibilities included …”
“The restaurant has steady sales.”
“The restaurant maintains an average daily sales of $350.”
“Mexican cuisine is a rapidly growing industry.”
“Mexican cuisine restaurants generated $X million in the U.S. last year and are projected a further 4.2 percent growth over the next five years.
Quantifying your business makes you more knowledgeable and trustable in the eyes of an investor, thus increases your chances of receiving funding.
2) Highlight Your ‘Commercial Viability’
Your job as a restaurateur is to have passion for your menu. Every reader wants to hear the story of your restaurant and the delicious unique flavors you will serve. However, the biggest mistake most restaurant owners make is too much focus on these details – such as your décor and location and menu – and too little focus spent on the restaurant’s commercial viability.
Every investor or bank loan manager is asking themselves whether or not your restaurant will make a solid investment as they read your plan. Your job, therefore, is to leave them with a reassuring “yes.”
But don’t just say it – prove it.
- Show where trends are moving in the right direction for your business.
- Show what gap you are filling in the market.
- Show a solid marketing plan that backs up your revenue projections.
Imagine what details you would want to hear if you were the investor, then include them.
The reader should walk away from your plan feeling that your restaurant is a rock solid investment opportunity – therefore this should be your central focus.
3) Passionate and Professional
All too often restaurant owners fall into two different camps when writing their business plan: overzealous or overly serious.
It’s a tough tightrope to walk for most people, especially if it is their first time writing a business plan. Many feel they must be professional, but then get too serious and sap the plan of all passion. Others go in the other direction and write with all passion, yet lose professionalism and credibility along the way.
The secret of course is to convey both passion and professionalism.
Don’t be afraid to show your passion: Every investor and bank manager wants to see your passion and excitement for your restaurant. Passion means commitment, which will get you through the difficult times that lie ahead.
But present a professional document with hard numbers: If someone is going to invest $500,000 into your business they need to see a solid plan with solid numbers. Your loan manager’s neck is on the line when they sign off, so your business plan is the insurance policy that she’s made a solid investment decision.
Passion with professionalism is the magic combination for an effective restaurant business plan.