Small business planning accounts for all the particulars that make each operation unique. In addition to industry-specific considerations, small business owners may also benefit from several universal strategies, known for helping diverse, independent, commercial ventures. Among these essentials, there is no substitute for creating a sound business plan.
A well-conceived plan is important for any small business startup, but food and beverage operations rely most heavily on detailed planning and preparation. The volatile, competitive industry is prone to fluctuating overhead and seasonal business patterns, so without strong business planning, restaurant entrepreneurs are less likely to overcome these challenges.
Do I Need a Business Plan?
It’s hard to put a value on sound business planning. One of the key first steps framing any business, the process forces you to look at every aspect of your venture and to recognize important connections within your organization. Without comprehensive business planning, it’s easy to overlook critical details, which can have costly consequences for your restaurant or small business.
There’s no question your startup ambitions and long-term small business goals will benefit from comprehensive, detailed planning. The resources you devote to developing your business plan will come back to you many times over, as higher profits and business growth. Details about your restaurant concept or existing operation can help flesh out the particulars of your plan, but a complete food and beverage business plan always projects and accounts for these central small business concerns.
Planning Pays Dividends
Writing a business plan compels you to answer difficult questions about your restaurant operation or proposed food and beverage venture. Where will you find funding? Have similar restaurant ventures paid-off for investors? Is there proven demand in the area surrounding your proposed location?
Questions you’re unable to answer may be deal breakers, pointing to fatal flaws in your business concept. When insurmountable challenges submarine your ideas, the business planning process can help you recognize them before they become costly mistakes.
In addition to crystalizing valuable information for startup entrepreneurs, a well-executed business plan also provides tools for ongoing analysis. A few of the ways a business plan serves your startup or established food and beverage business.
- Monitor Progress – A good business plan projects a performance baseline. As your operation evolves and your restaurant matures, the information used to conceive your plan provides a valuable reference, upon which to evaluate your progress. How has your core concept evolved to accommodate demand? Do payroll projections included in your business plan reflect actual staffing costs? Have sales kept pace with expectations? Detailed planning makes it easy to answer these and other questions, at a glance.
- Keep Moving Toward Goals – Just as your business plan allows you to measure progress with hindsight, planning also plays an important role looking to the future. An effective business plan establishes milestones for your business, giving you targets toward which to strive. As you grow, you can use the goals to motivate employees and push yourself to do better.
- Recruit Talent and Investors – Prospective employees and investors want to know as much as possible about your business. A business plan captures all the relevant details, in a single document. A comprehensive plan shows sales projections, so you can use it to highlight your success meeting and exceeding the revenue forecast contained in your plan.
Avoiding Common Business Planning Missteps
Despite the proven value of business planning, the process is still overlooked by many hospitality entrepreneurs. The fact is a well-crafted business plan dramatically increases your chance of finding long-term financial success in the food and beverage business.
The competitive advantage gained from comprehensive small business planning can’t be overstated, when compared to ventures launched without plans. In order to maximize the benefits of your plan, avoid these common business planning mistakes.
- Devil’s in the Details – The business planning process includes a look at the future, projecting performance, sales, and other business potential. Without the aid of a crystal ball, it’s critical to consider as many specifics about your business as possible. Glossing over important details during the planning phase invalidates your business plan, and can mean the difference between profitability, and premature failure.
- Short-sighted Approach – Business plans are often associated with startup concerns such as funding, and with early financial projections for new commercial concepts. As important as the early days are for any new business, an effective plan goes beyond the first couple years of operations. Incorporating long-term goals is essential for any restaurant business, because the industry is notorious for short runs and rapid downfalls. A short-sighted approach not only leaves you unprepared for challenges, but without a business plan to guide you, you may also be ill-equipped when good fortune brings growth and expansion.
- Underestimating Costs – Every small business owner wants to succeed, so it’s hard not to be biased when evaluating your enterprise. Despite wanting low startup and overhead costs, underestimating expenses in your business plan can only lead to trouble. Overgeneralizing can lead to conservative estimates, so if you’re unsure about a projected cost, further research may be required, in order to nail down realistic spending projections.
- Meager Marketing – Seasoned small business operators understand the balancing act required to promote sales, without throwing all the profits at piecemeal marketing. An accurate business plan accounts for marketing expenses, but also points up cost-efficient strategies for promoting your food and beverage operation. Loyalty cards and other programs unique to your establishment compliment print, web, and social media campaigns, comprising a multi-channel marketing strategy that should be spelled-out and priced in your business plan.
A comprehensive plan helps small business owners anticipate expenses and project operational requirements. Though a business plan isn’t a legal requirement, crafting an accurate draft reduces uncertainty and provides a baseline blueprint you can use to build your hospitality business.