Starting a food business has to be one of the most challenging enterprises. The harsh reality is that most fail within the first year. The restaurant business in notoriously tough and competitive, but where there is a will there is often a way.
Turning ambition into success requires research, planning, capital, business acumen and perseverance. Here are five tips.
1) Do your research – Conduct research before getting started. Networking events (such as those operated by small business development centers, SCORE and chambers of commerce) offer a great venue for picking the brains of fellow business people. Try to find out what works, what doesn’t, and what they would do differently. If you are aware of restaurants that have failed, try to identify why. Online community forums are a great way of gauging market need and customer opinion.
2) Consider starting small – Test your idea before you go all out with a pop- up location. It will give you an opportunity to run through your idea without all the risk. Many food businesses began as a hobby at home and once they outgrew the space they moved on to something bigger. You can rent a food truck for a month or try a local market just to see how things go. Fast-food franchises might be another option.
3) Build a business plan – It doesn’t have to be an overly formalized document, but building and constantly tweaking your plan will help you match the strengths of your business to the opportunities the market presents. It can also help you better deal with threats as they emerge. A business plan is essential when it comes to communicating with customers, partners and investors. If you want them to believe in you, convince them that you know what you are talking about.
4) Obtain financing – There are ranges of options, from microloans to more comprehensive small business loans such as the SBA 7(a) and 504 loan programs. Use your business plan and the knowledge you’ve gained from your pop-up test as the basis for a loan proposal or investment plan. Also, be realistic about how much money you need.
5) Know food laws and regulations – From labor laws to food safety laws, understanding and achieving compliance with legal and regulatory requirements in your city and state can have a big effect on the success of a food operation.
Visit www.sba.gov for more information.