While those numbers are grossly inflated (most of the research I’ve seen is about half that), there are still many variables that determine your chances of success in starting ANY business. With restaurants, there are even more.
If you’re looking to be a successful business owner rather than a sad statistic, preparation is the only way to do so. Before you begin the process (and go and do something stupid), here are eight questions you should answer.
1. How much will it cost to open your restaurant and to sustain it for a solid year? This isn’t just about identifying opening costs. If you can determine the total operating costs over the course of a year, you’ll get an accurate idea of how much you need to bring in. It’s important to have a bottom-line number because, as I’ve said before, it takes time to get the word out and build a brand.
2. What makes you special? Food? Service? Ambiance? All of the above? To succeed in this business, you have to have a differentiator. Nail that down before you start, so you can start to build a culture around what makes you great.
3. Have you properly planned? You don’t necessarily need a 20-page business plan, but you do need to summarize the basics of your business: who your staff is, what you’ll deliver, where you’ll operate and how you’ll do it. Don’t overlook anything. Of course, you will also need a comprehensive financial plan to support the concept
4. Do you have experience in the restaurant industry? You better know what you’re getting into before you start. It’s extremely common for prospective restaurant owners to have a misconception about the glamorous life of a restaurateur (Hint: it’s not so much.).
5. Do you have (lots of) time and energy? It takes a tremendous amount of both to succeed in this business. Be prepared to give up evenings and weekends for the good of your business.
6. Have you done enough market research? Get the stars out of your eyes and go check out the competition in the area you want to be in. Per question #2, you need to understand how to differentiate yourself.
7. Are you going to lease or buy? If you lease, which most people do, you’ll need assistance in the negotiation from both an attorney and a real estate broker.
8. How will you market your restaurant? To get the word out, you’ll need to execute a great marketing plan on a consistent basis. Keep in mind that the best form of marketing out there is word of mouth. After you have your restaurant running smoothly, then you can implement a more comprehensive marketing program. If you think you have to buy up advertising to get people in your doors, then you’ll also need to rethink question #1.
If you can’t answer all of these questions (and several more), then you’ll probably need an expert to help you fulfil your dream. Or you might consider franchising with a company that has most of the answers built into their business model. Or maybe consider NOT opening a restaurant? Whatever you decide, we’re here to help.