| "Businesses with fewer than 20 employees have only | | | | inevitable; whether or not you embrace it is a different |
| a 37%chance of surviving four years (of business) and | | | | story. |
| only a 9% chance of surviving 10 years. Restaurants | | | | The mistake of not embracing change does not just |
| only have a 20% chance of surviving 2 years. Of | | | | affect new business owners - people who have been |
| these failed business, only 10% of them close | | | | in business for 25+ years must continue to embrace |
| involuntarily due to bankruptcy and the remaining 90% | | | | change. There is always something new to learn - |
| close because the business was not successful, did | | | | who your best customers are; changes in tastes and |
| not provide the level of income desired, or was too | | | | preferences; what marketing ads are most effective; |
| much work for their efforts." | | | | are you staffing efficiently; and the list goes on. |
| -excerpt taken from an article written by Rob Holland, | | | | Businesses change and so do people. Your market |
| 'Planning Against a Business Failure' | | | | can be changing on a daily basis. Failure to keep up |
| As a new restaurant owner (or soon to be), that | | | | with these changes will unquestionably lead to losses. |
| quote must have sent chills up your spine. Everyday, | | | | Consider running a business as a constant learning |
| people are pouring their entire life savings, betting their | | | | process - never stop learning! |
| children's education funds, and risking their marriage to | | | | Mistake #4: Lack of knowledge, tools, and resources |
| fulfill a life long dream of opening their own restaurant. | | | | Another cause of business failure is the lack of |
| No doubt, there are risks involved - lots of risks. It's | | | | knowledge, tools, and resources that help |
| important to not tumble into the traps that have | | | | restaurateurs succeed. Knowledge is powerful - it can |
| already robbed the dreams of so many restaurateurs. | | | | give you priceless information that can assist in making |
| Making mistakes is a part of learning - as the old | | | | informed decisions. Knowledge can come from your |
| saying goes 'learn from your mistakes'. However, time | | | | education in college/university, generating reports, |
| and time again entrepreneurs continue to make | | | | monitoring trends, networking with others in your |
| mistakes and not learn from them. Just like people, | | | | industry, and acting on the information that comes your |
| organizations tend to make mistakes repeatedly; are | | | | way. Subscribing to informative magazines and visiting |
| adverse in setting up a guard against making mistakes; | | | | websites that are directly related to your area of |
| and tends to focus on the bad while overlooking the | | | | business are also quite valuable. Attending tradeshows, |
| good. Business owners often forget to look on the | | | | seminars, and workshops will help you identify |
| bright side to see what they are doing right. | | | | upcoming trends and obstacles in the restaurant |
| Mistake #1 (and the biggest one): Failure to Plan | | | | industry. |
| I cannot place enough emphasis on the importance of | | | | An area where businesses fail on a daily basis is the |
| planning. This critical success factor is often | | | | failure to keep up with learning about new/potential |
| overlooked by current jobs, life styles, personal | | | | customers. Even after all the business planning, |
| schedules, and other important details that go into | | | | developing marketing campaigns and promotions, and |
| opening a new restaurant. Business and market | | | | monitoring and increasing growth - failure to keep an |
| planning should be the first and foremost step to take | | | | updated record of your customers' key demographics |
| when deciding to pursue a new venture. By doing your | | | | and trends can result in you missing out on amazing |
| due diligence and taking the time to research the full | | | | opportunities. Trends change and the information you |
| potential of your products, service and customer base | | | | worked so hard to gather may be outdated before |
| will give you a clear picture of whether or not your | | | | you know it. |
| dream is destined for success or failure. | | | | You will need a 'business toolkit' to survive in this fast |
| Business and market planning will also give you an | | | | paced playing field. Tools refer to the accessibility to |
| insight into the barriers and obstacles you may | | | | critical information that helps you run your business. It |
| encounter along the way. You get to know the players | | | | can range from advice counsel, specific documents |
| that exist in the industry and how to compete in the | | | | (application forms, legal documents, and financial |
| game. You will know what types of funding you need | | | | spreadsheet templates), employee management and |
| (because you will need funding!) - what government | | | | training. In this day and age, technology is a must. |
| funds and bank loans will you require at start up? You | | | | Computers, data systems, and Point of Sale systems |
| need to formulate financial plans on how to effectively | | | | give you greater insight into your business allowing you |
| use your funds. You will have an idea of when you | | | | to make better business decisions now and in the |
| plan to break-even and how fast you plan to expand. | | | | future. How can a restaurant succeed without all the |
| A detailed business plan will also assist in obtaining | | | | necessary tools to make that organization work? A |
| investments. You need to confidently show that you | | | | plumber would not be able to fix a clog without his |
| conducted research and have planned strategies on | | | | handy toolkit... and you will not be able to run a |
| how to reach repayment. | | | | restaurant (at least not successfully) without your |
| This is essentially the road map on how you will | | | | business toolkit. |
| achieve success. Think about it: you see the big picture | | | | Your resources are the backbone of your business. |
| - your own restaurant running efficiently, making you | | | | Resources are any person or any organization that |
| profitable, and giving you the kind of life you've always | | | | contribute to the success of your restaurant. This |
| imagined. Now, how are you going to achieve that big | | | | includes lawyers, accountants, staffing agencies, your |
| picture? What steps do you need to take to reach | | | | networks, the Internet, tradeshows, and most |
| that end goal? Your plan should tell you (1) where you | | | | importantly, your staff. These VIP (very important |
| are now, (2) where you want to be, and (3) how you | | | | people) can make or break your restaurant. There is |
| plan to get there. By completing your business plan, | | | | also an abundance of resources available to |
| you will have reports on your business field, the | | | | restaurateurs - some are free while others you have |
| industry, trends, risk analysis, marketing needs, target | | | | to pay for. For example, you can attend tradeshows |
| markets, competitors, and financial overview. Your plan | | | | that relate to the restaurant industry - this will give you |
| will tell you how to make your restaurant successful- | | | | knowledge. There, you will be able to learn about new |
| this is the roadmap of your future. | | | | technology advancements that can help you run your |
| Mistake #2: Not taking preventative measures | | | | restaurant more efficiently - this can contribute to your |
| It happens all the time - business owners get too | | | | business toolkit. |
| caught up with the venture itself that taking | | | | Mistake #5: Not realizing the time consumption involved |
| preventative measures to avoid failure are often | | | | Although this mistake is rarely mentioned, it is one of |
| overlooked. Restaurateurs must ensure they are | | | | the main culprits that cause restaurants to fail. Opening |
| keeping up with changes that may affect the business. | | | | a new business is incredibly time-consuming, and not |
| Costs must be periodically reviewed to ensure they | | | | just at the beginning. It is an on-going responsibility for |
| are within budget. This goes for overhead as well. | | | | as long as you want to stay in business. It entails |
| Owners/managers should prepare reports on sales | | | | serious time commitment and requires you to make |
| projections, cash flow forecasts, labour reports, and | | | | sacrifices on a weekly if not daily basis. Pressure from |
| benchmarking actual performance to the actual plan. | | | | family and spouses are often the reasons that |
| Where was it off and how can business be | | | | restaurants do not make it pass their first year of |
| improved? Regular progress meetings should be held | | | | business. A successful restaurateur must be able to |
| in order to detect future risks and identifying the | | | | balance their family life and work life. That is why more |
| preventative measures to take to minimize potential | | | | often, those who do decide to pursue this type of |
| losses. | | | | venture or either single, divorced, or have a heck of a |
| Mistake #3: Refusing to accept changes | | | | supportive family that will be there for them. |
| Embrace change! Easier said than done, right? But in | | | | Failed owners were most likely unable to sacrifice |
| the world of owning your own restaurant, this is no | | | | missing another one of their kid's schools play, another |
| longer a choice - it is mandatory! The world of | | | | birthday or anniversary, and pressure to spend more |
| business is moving at a lightning speed and those who | | | | time with family. So before you hop onto the 'let's open |
| do not keep up will be left behind. Just when you've | | | | a new restaurant' bandwagon, be 110% sure that you |
| adapted to a new trend or adjusted to a new way of | | | | will be able to balance and devote time to both running |
| doing something, it is time to change again. There is no | | | | your business and maintaining a healthy relationship |
| 'break time' in this playing field. Constant change is | | | | with your family. |