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    8 Replies Latest reply on Feb 22, 2010 8:03 AM by alvinm

    What do I need to know to open a small restaurant? Thank you

    FERNANDOAYLIN Newbie
      Hello everyone, I am 27 and me and my wife have the opportunity of buying a small restaurant, and I would like to know what is that I need to know before I get into bussines.
      The place is working now but not really good, there's a lot of things to improve, the area where is located is excellent A LOT OF TRAFFIC.
      I would need a loan for arround $ 15000 to $ 17000 , what do I need to get a loan like that, and wich are the points that i cannot let pass when i buy a
      restaurant.
      I have some ideas to improve this place, and let me tell you, your ideas would help me a lot thank you very much for you time.
        • Re: WHAT DO I NEED TO KNOW TO OPEN A SMALL RESTAURANT? THANK YOU
          Tracker

          Fernando:

           


          Do you have previous restaurant experience? If not, realize that while a restaurant may seem like a good idea, it takes long hours and doesn't always pay well. You need to have experience and a passion for the business to make it successful.

           


          As a previous owner of a restaurant, I have some ideas where you should start. Some of my information applies to buying a restaurant in the US.

           


          First, are you working with a business broker to buy the restaurant? If not, I highly recommend you find a reputable broker in your area that has experience in buying and selling restaurants. A broker will help you focus on the discretionary income for the owner(s) including:

           

          • Income
          • Insurance for the owner(s) (health, auto, etc...)
          • Car allowance (repairs, gas, etc...)
          • Phone
          • Meals & Entertainment
          • Travel

           

          This will be the income in the business that you can alter to pay yourself. The business broker will help you properly assess the value of the business. Other important questions include:

           

          • 1. Are revenues and discretionary income growing, remaining the same or shrinking?
          • 2. How is business within the market segment?
          • 3. What is the status of competition in the area?
          • 4. Where is there mismanagement in the company that you can alter to add money to your bottom line?
          • 5. How much opportunity is there for legitimate upside to the business?
          • 6. Why is the current owner(s) selling?
          • 7. Do they have any contracts locked in that you would need to honor and for how long?
          • 8. Are there any upcoming dangers for the company (i.e. losing a long-term contract)?

           

          Second, meet with your local health department to get their requirements. They will most likely require that you operate out of a commercial kitchen and not your house. You may have an opportunity to keep your cost down by subletting space from a current restaurant or hotel with a kitchen.

           


          Third, develop a business plan. Before you get started, you should have determined your legal structure, purchased all necessary licenses, researched your local market (customers and competitors), defined your marketing strategies, assessed necessary funding, and so forth.

           


          If you need help with a business plan, I have a page on my site to help. Here's the link:

           


          http://thesologuide.com/planning/

           


          Doing research and developing your business plan will guide you in performing the necessary steps to proving the profitability of your idea and launching your business.

           


          Hope this helps.

           


          Doug Dolan

           

          The Solopreneur's Guide

           

          http://thesologuide.com/
          • Re: WHAT DO I NEED TO KNOW TO OPEN A SMALL RESTAURANT? THANK YOU
            amspcs Ranger

            Two things come to mind quickly: One: You need to learn absolutely EVERYTHING there is no know about the restaurant business. Two, make sure you are adequately funded. Having been in the business-to-business sector for many years, I can tell
            you that restaurants have a very high failure rate. That should tell you it's not nearly as easy as it looks. You need strong managerial skills, strong business skills, and capital, Failure to deal one or more of these issues is almost always the case my dining establishments fail, in my experience.