JUST THE RIGHT SIZE Many new restaurant and café owners contact me every week. Very often they have not prepared business plans nor have they had any professional guidance on what it will cost to build their outlets. There’s no problem with this, I love to hear from people and I can help with all these things. Trouble is, that in most cases premises have already been acquired, often on long leases but the costs of preparing the premises to trade have not been properly calculated in advance and the high costs of building work come as a complete shock. This is madness and I would not comment if it were not so common a problem. There really is no point in anyone committing to a lease or mortgage for premises until they’ve made sure that 1. It’s the right size to earn an optimal return, and 2. There is enough money to fit it out to a high enough standard to attract customers. More and more I hear from people whose budget is determined solely by the amount of money they have. This is the wrong way to look at things. No-one should commit to premises until they have the amount of money they need to prepare them right. Customers do not care where you came from or what problems you had in your life. They only care how much expense and effort your competitors have gone to attract them. This is the only comparison that matters. And if a new restaurant or café can afford only to open a small outlet, there’s no point unless it has a sound business plan with realistic bottom-up profit and loss forecasts that show it can earn a return. The only answer I know is to spend a little time and money having a complete model designed up-front before anything is signed. That way the costs and scale of the venture become clear. Of course there’s a cost to this but it’s a lot less than the alternative of a failed venture.
Posted on: Sun, 14 Jul 2013 09:45:38 +0000