So you finally considered to start your own hospitality business and buy a restaurant – perhaps it’s a café, a fastfood joint or a takeaway. It’s a wise move, actually.
According to Bill Brooke in his article entitled ‘Buy—Don’t Start—Your Business’, buying an existing business is a safe and effective way to go into business. The main reason being, in general, startups have a high failure rate. If you’re particularly risk-averse, taking over an existing business is a great way to go.
Still, the fact that you’re taking over an already established business does not guarantee complete success. Plenty of important preparations have to be made – and these will surely help your business in overcoming future challenges. Before you grab the reins, it’s crucial that you take these preparatory steps.
1.) Find the ideal location
When choosing a business, “location, location, location” must be your foremost mantra. Ensure that the location is strategic enough to fit your theme, preferences and target market. You can do this by conducting initial surveys and doing a market research of competitors in the area. However, be flexible enough to possibly changing your plans according to your findings.
2.) Assess your financial capability
Now that you’ve found the perfect spot and are so eager to start, the next thing to do is to look at how much money you will need to have everything running smoothly. Apart from the money you will shell out to make the offer to the restaurant’s owner, you have to make sure you also have enough cash for the following:
- Stock costs
- Wages for the staff
- Contingency fund for equipment repair or replacement
- Allowance for the business to take off with a good profit
- Safeguard against recession and other unforeseen, economy-related problems
3.) Watch out for staffing concerns
In the hospitality industry, it’s a stark reality that there’s usually a high attrition rate when it comes to the staff. Human resources is a vital aspect of your business, so you must make it a priority to choose your employees well. This will have an impact on wage costs and also the quality of your product and service. Take time to choose employees carefully and train them well. A great tip is to have a mix of veterans and newbies who can be trained as apprentices. This will help balance labour costs.
4.) Hype up the promotion
As an SME, your business faces a bigger marketing challenge as compared to an established fastfood chain or a big, well-known brand. It is true that in time, word-of-mouth will inevitably give your business the promotion that it needs as long as it consistently delivers quality food and service. However, at this point, it’s best to be aggressive when it comes to marketing and advertising. Invest in a promotional budget and seek the help of professional marketers.
Some advertising strategies you could do are:
- Building a website
- Having a Facebook fan page and an Instagram account
- Being active in your community – sponsor sports teams, senior clubs and the like
- Submit an editorial to the local newspaper
- Join a business or hospitality organisation
- Engage in trade forums and discussions
5.) Study legal requirements carefully
A well-running, legit business will always have legal responsibilities. These responsibilities include ensuring that your establishment follows both state and federal compliances. As the business owner, you must have a good grasp of these. Keep yourself updated with legal policies by:
- Subscribing to hospitality journals and associations
- Consulting industry associations
- Hiring the services of a solicitor for advice
- Contacting your local health inspector to ask questions about regulations and policies
- Researching about the workers’ compensation board, liquor licensing rules and industry awards in websites and newsletters
Remember that there’s a saying that goes: ” By failing to prepare, you are preparing to fail”. In any business endeavor, preparedness always has a crucial role in determining success. An ounce of prevention is better than tons of cure – and it will also help you be prepared for possible roadblocks that can result in additional costs and loss of profit.
Finally, don’t get overwhelmed with all the steps you need to do. Starting your own business should be a thrilling process. To minimise the stress and hassle, it always help to seek some professional assistance.
Still not feeling quite prepared to jump into buying a business yet? Redmako Business Sales is the only hospitality specialist brokers in the industry, and as such have assisted business buyers in finding the best hospitality business that match their needs. We not only help you buy a great business, we also have programs that help to reduce the pain of business ownership.
Get solid business advice and explore opportunities by taking a look at these businesses for sale.