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Do You Have the Characteristics of Successful Entrepreneurs?

Do you know what it takes to join the ranks of successful entrepreneurs?

Do You Have the Characteristics of Successful EntrepreneursAs Score Mentors we are often asked, “what does it take to be a successful entrepreneur”?

What is an Entrepreneur?

Entrepreneurship is traditionally defined as the process of designing, launching and running a new business. It typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire. The people who do so are called ‘entrepreneurs‘. They are generally identified as having the…

“…capacity and willingness to develop, organize, and manage a business venture usually with considerable initiative and risk in order to make a profit.”

Twentieth century economists such as Joseph Schumpeter define an entrepreneur as an individual willing and able to convert a new idea or invention into a successful innovation.

Entrepreneurship employs what Schumpeter called “the gale of creative destruction” to replace in whole or in part, inferior offerings across markets and industries, simultaneously creating new products and new business models.

Entrepreneurs, therefore, are leaders willing to take risk and exercise initiative. They take advantage of market opportunities by planning, organizing, and deploying resources often by innovating to create new or improving existing products or services.

While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior can be seen in new and established firms and in for-profit and not-for-profit organizations. These include voluntary sector groups, charitable organizations and government. For example, in the 2000s, the field of social entrepreneurship has been identified, in which entrepreneurs combine business activities with humanitarian, environmental or community goals. Entrepreneurship within an existing firm or large organization is referred to as intrapreneurship and may include corporate ventures where large entities “spin off” subsidiary organizations.

The most significant characteristic that differentiates entrepreneurs is that they are risk takers and they tolerate uncertainty. If that were all that is required for success, then it appears that you need nothing more than to be a gambler. Obviously, more is required.

While there is no simple answer, research indicates several characteristics in addition to tolerance for risk and uncertainty that are commonly found in the personalities of successful entrepreneurs.

Successful Entrepreneurs Have:

  • Self Motivation – have the ability to wake up in the morning and immediately start working. Entrepreneurs do not waste away the day doing things that have no benefit to their business. Bosses told you what needed to be done. Now as an entrepreneur, you must know what needs to be done and take action to get it done.
  • Self Confidence – be confident in yourself, your product and your business. You need to know that your product can truly help people and that you are charging prices that are both fair to you, and your clients.
  • Behave Ethically and Morally – decide what you stand for and how you will conduct your business on a daily basis. Know before you get tempted to cross some line that could jeopardize your business.
  • Manage Time – this goes hand-in-hand with Self Motivation. You need to schedule your day and stick to that schedule. Your time is valuable. Take time to educate yourself on ways to improve your business or products. [Related: Staying Productive]
  • Sales – every business needs to develop a way to handle sales. An entrepreneur’s job is to develop the types of sales that work best for your business Constant effort should be on improving your sales skills.
  • Understand Finance – this a must if you are in business for yourself. Knowing how to balance a checkbook and keeping track of numbered invoices is all most small businesses need to do when they first start out. Remember to schedule time for your financial management.
  • Study Strategies – of successful businesses already doing what you wish to do and incorporate the best strategies into your own.
  • Value Quality – quality drive sales, which leads to business growth.

 Successful Entrepreneurs also meet these Requirements:

  • Clear, succinctly stated value proposition specifying benefits
  • Know target market
  • Strategic business plan
  • Unified, connected product line or service line
  • Competition based on a dimension other than price (e.g., quality or service)
  • Early, frequent, intense and well-targeted marketing
  • Tight financial controls
  • Sufficient start-up and growth capital
  • Corporation or LLC model, not sole proprietorship
  • One or more unique competitive advantages
  • Work experience in the start-up industry
  • Full-time involvement in the new venture

A SCORE mentor can help your through this process FREE! Click here to schedule a mentoring session.

Greater Phoenix SCORE also has classes and workshops on how to a start a business. Click here for the schedule.

Here are some free resources SCORE and the SBA.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

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The Challenges in Opening Your Own Restaurant

Obstacles in Opening Your Own Restaurant

The Challenges of Opening Your Own RestaurantThe single biggest problem in the first year is a lower sales volume than expected, due either to fewer customers or customers spending less money than estimated. Do not overlook seasonality. In the Phoenix area in the summer breaking even is a challenge.

Owners seem to have the idea that they can just open the doors for a grand opening and customers will come flocking in. Increased marketing in the restaurant’s immediate vicinity often cures weak initial sales – but be cautious about offering coupon specials as they are costly and often have a low rate of generating repeat business. Also, talk to other restaurant owners outside your competitive area for lessons they learned in developing their businesses.

Funding Your Business

Money needed to start depends on the type of business, the facility, how much equipment you need, whether you buy or lease new or used, your inventory, marketing, and necessary operating capital. Banks seldom loan more hen 50% of required funds. Depending on how much money you have to

invest in your food-service business and the particular type of business you choose, you can spend over one million on a facility.

  • Your own resources. Inventory of your assets. You may have more assets than you realize, including savings accounts, retirement accounts, equity in real estate, recreation equipment, vehicles, collections and other investments. You may opt to sell assets for cash or use them as collateral for a loan.
  • Family and friends. Friends and relatives who believe in you and want to help you succeed. Be cautious with these arrangements; no matter how close you are with the person, present yourself professionally, put everything in writing, and be sure the individuals you approach can afford to take the risk.
  • You may choose someone who has financial resources and wants to work side by side with you in the business. Or you may find someone who has money to invest but no interest in doing the actual work. Be sure to create a written partnership agreement that clearly defines your respective responsibilities and obligations. And choose your partners carefully–especially when it comes to family members.
  • Government programs. Make your first stop the SBA, but be sure to investigate various other programs. SBA programs generally work through banks and require a complete business plan. The business section of your local library is a good place to begin your research.

Regulatory Requirements

Food operations are strictly regulated and subject to inspection. Fail to meet regulations, and you could be subject to fines or be shut down by authorities. And if the violations involve tainted food, you could be responsible for your patrons’ illnesses and even death. Issues such as sanitation and fire safety are critical. Provide a safe environment in which your employees can work and your guests can dine, follow the laws of your state on sales of alcohol and tobacco products, and handle tax issues accurately, including sales, beverage, payroll and more.

Most regulatory agencies will work with new operators to let them know what they must do to meet the necessary legal requirements. Investigate the governmental regulatory requirements, city, county and state, starting with the Arizona Environmental Services Department as well as county health departments. Prepare for an excess of paperwork, including complex codes with regulations covering everything from kitchen exhaust systems to sinks, storage devices and all interior finishes.

Qualified Labor – one of your biggest challenges.

The Challenges of Opening Your Own RestaurantFinding qualified workers and rising labor costs are two key concerns for food-service business owners. The supply of workers age16-24, the primary pool for restaurant employees, has been declining. Develop a comprehensive HR program and a personnel manual. The job description needs to clearly outline the job’s duties and responsibilities. It should also list any special skills or other required credentials, such as a valid driver’s license and clean driving record for someone who is going to make deliveries for you.

Next, establish a pay scale. Research the pay rates in your area. Establish a minimum and maximum rate for each position. You’ll pay more even at the start for better qualified and more experienced workers. Of course, the pay scale is affected by whether or not the position is one that is regularly tipped.

  • Hire right. Every prospective employee should fill out an application even if they submit a resume. A resume is not a signed, sworn statement acknowledging that you can fire the person if he or she lies about his or her background; the application, which includes a truth affidavit, is. Thoroughly screen applicants. Do background checks. If you can’t do this yourself, contract with a HR consultant to do it for you on an as-needed basis.
  • Detailed Job Descriptions. Don’t make your employees guess about their responsibilities. Be sure they understand what you expect of them. Interview key personnel to determine their perception of their roles and responsibilities. A written description for the owner and all personnel providing position title, qualifications required, basic functions, reporting relationships, authority, responsibilities, and measurements of performance can then be used for training and compensation purposes.
  • Formal Personnel Evaluations. A process that will communicate performance results to company employees on an ongoing basis – and is a fair – is an objective way to provide recommendations for improvement in behavior and performance. After documentation, establish a baseline for developing practical recommendations for improvement. Again, have the employee sign the evaluation form after discussions and a copy kept in company files.
  • Motivational and Compensation Process. Incorporate a profit-motivated employee incentive plan with a bonus weighted according to the employee’s contribution towards achieving both the company profit and individual growth goals as specified in the job descriptions. A new owner should consider profit sharing to provide incentives, reduce turnover, promote teamwork, and improve overall employee operational efficiency.
  • Understand wage-and-hour and child labor laws. Check with your own state’s Department of Labor to be sure you comply with regulations on issues such as minimum wage (which can vary depending on the age of the workers and whether they’re eligible for tips), and when teenagers can work and what tasks they’re allowed to do.
  • Report tips properly. The IRS is very specific about how tips are to be reported; for details, check with your accountant or contact the IRS (or see your local telephone directory for the number).
  • Provide initial and ongoing training. Even experienced workers need to know how things are done in your restaurant. Well-trained employees are happier, more confident and more effective. Plus, ongoing training builds loyalty and reduces turnover. The NRA can help you develop appropriate employee training programs.

When your restaurant is still new, some employees’ duties may cross over from one category to another. For example, your manager may double as the host, and servers may also bus tables. Be sure to hire people who are willing to be flexible in their duties. Your payroll costs, including all taxes and benefits, your own salary and that of your managers, should be about 25 to 30 percent of your total gross sales.

  • Your most important employee. Your best candidate will have already managed a restaurant or restaurants in your area and will be familiar with local buying sources, suppliers and methods. You’ll also want leadership skills and the ability to supervise personnel while reflecting the style and character of your restaurant.

Quality of manager are paid well. Depending on your location, expect to pay a seasoned manager $30,000 to $40,000 a year, plus a percentage of sales. An entry-level manager will earn $22,000 to$26,000 but won’t have the skills of a more experienced candidate. If you can’t offer a high salary, work out a profit-sharing arrangement-it’s an excellent way to hire good people and motivate them to build a successful restaurant. Hire your manager at least a month before you open so he or she can help you set up your restaurant.

  • Chefs and cooks. When you start out, you’ll probably need three cooks–two full time and one part time. Restaurant workers typically work shifts from 10 a.m. to 4 p.m. or 4 p.m. to closing. But one lead cook may need to arrive early in the morning to begin preparing soups, bread and other items to be served that day. One full-time cook should work days, and the other evenings. The part-time cook will help during peak hours, such as weekend rushes, and can work as a line cook during slower periods, doing simple preparation.
  • Salaries for chefs and cooks vary according to their experience and your menu. Chefs command salaries significantly higher than cooks, averaging $600 to $700 a week. You may also find chefs who are willing to work under profit-sharing plans. If you have a fairly complex menu that requires a cook with lots of experience, you may have to pay anywhere from $400 to $500 a week. Pay part-time cooks on an hourly basis.
  • Your servers will have the most interaction with customers, so they need to make a favorable impression and work well under pressure, meeting the demands of customers at several tables while maintaining a pleasant demeanor. There are two times of day for wait staff: very slow and very busy. Schedule your employees accordingly. The lunch rush, for example, starts around 11:30 a.m. and continues until 1:30 or 2 p.m. Restaurants are often slow again until the dinner crowd arrives around 5:30 to 6 p.m.

Servers who earn a good portion of their income from tips are usually paid minimum wage or just slightly more. When your restaurant is new, you may hire only experienced servers so you don’t have to provide extensive training. As you become established, however, you should develop training systems to help both new, inexperienced employees and veteran servers understand your philosophy and the image you want to project.

This is part of a series on Starting Your Own Restaurant

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

 

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25 Jul

Entrepreneurs: You Are Not Alone

Entrepreneurs and owners of small businesses are used to doing everything – from unlocking the doors in the morning, to emptying out the trash cans, and locking up before heading home at the end of another long day. Along the way, making hundreds of decisions, often with significant potential consequences. It’s challenging, risky, unsettling, and often intimidating. But it doesn’t have to be lonely.

Every entrepreneur and small business owner will benefit from an informal team of advisors that they can call on for advice and help. As you pursue your entrepreneurial journey, seek out and invite an advisory team of business professionals to join you. Your core competency is running the business, theirs is to help you be successful.

Your advisory team should include a Lawyer, an Accountant, a Banker, an Independent Insurance Agent, and a Mentor. In addition, given the pace of technology, adding an IT guru and an On-Line Marketing expert is highly recommended.

Referrals and recommendations from friends and respected colleagues are the best sources of leads to fill out your advisory team. Once you identify one or two members, ask them who they feel comfortable working with and you’ll likely quickly assemble a talented team.

Each member of the team will be able to advise you on the many pitfalls that face small businesses, as well as help you set a firm foundation for future smooth operations. For instance, the Lawyer will counsel you on creating a legal entity for your business, but also provide guidance on the regulatory environment, labor law issues, and review of contracts (before you sign). Ask lots of questions, take advantage of free advice, but always be willing to pay for their professional services.

The Mentor on your team can play a particularly important role. Find a Mentor with relevant experience, a willingness to share, and the time needed to be available to you. SCORE is a great source of Mentors – with over 70 talented business professionals in the Greater Phoenix Chapter – and no charge for mentoring.

You don’t have to be alone in your entrepreneurial journey. Reach out to others and focus on identifying and forming a team of business professionals. Your advisory team will provide the advice and support needed to drive your success. Add this task to your “to do” list today, and then take out the trash.

About the Author:

Andy BeranAndy Beran is the immediate Past President of Greater Phoenix SCORE and has been a mentor since 2008. Andy currently owns a medical transport company in the Phoenix area.  Since purchasing the company in 2010, he returned the business to consistent profitability and growth. During his extensive corporate career, Andy held various management positions at a leading Fortune 50 high technology research, development and manufacturing company.  His positions included Group Controller and Director of Strategic Planning.  He was a proven expert in the areas of Strategic Planning, Mergers and Acquisitions, Strategic Alliances, New Business Development, Operations and Capacity Planning, Finance & Budgeting and ROI / Productivity. Learn more about Andy here.

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Restaurant Layout and Design: Planning for Success

Restaurant layout and design for successLayout and design are major factors in your restaurant’s success. Typically allow 40 to 60% of space to the dining area, approximately 30% to the kitchen and prep area, and the remainder to storage and office space.

Make sure the kitchen allows efficient, effective food preparation and interaction between staff, safety in movement, dry and cold storage, dish washing, an area for staff’s personal items, convenient delivery zone, ease of cleaning and maintenance and proper ventilation.

Aim for a practical, useful layout, while setting the mood.

Make sure you have:

  • Seating/waiting areas, serving room, cashier area, rest rooms, bar (optional);
  • One or more areas from which you can view the entire restaurant;
  • Lighting, signs and obstacle-free traffic flow;
  • A variety of seating arrangements: 50% of customers come in pairs; 30% come alone or in groups of three; and 20% in groups of four or more; To accommodate the different groups, use
  • Tables for two that can be pushed together in areas where there is ample floor space. This gives you flexibility. Place booths for four to six people along the walls.
  • Adequate floor space – the suggested square footage requirements per chair are: 10-20 sq. ft in traditional restaurants, 10-12 in cafeterias, 7-17 in coffee shops;

Production Area

restaurant kitchen must have adequet production spaceOften inefficient–the result is a poorly organized kitchen and less than top-notch service. Keep menu production in mind as you determine space for receiving, storage, food preparation, cooking, baking, dish washing, production aisles, trash storage, employee facilities and a small office. Arrange your food production area so that everything is just a few steps away from the cook. Allow for two or more cooks to be able to work side by side during your busiest hours

  • Plan your menu early as the kitchen layout and equipment purchases depend on it. See if you can purchase used equipment or lease new to reduce initial costs.       Taste-test all the recipes repeatedly until the kitchen can achieve consistency. A good way to check the food and service is to have a private opening for family and friends.
  • Form a limited liability company or private corporation and be sure to define all key personnel responsibilities – in detail.
  • Allocate the available space considering furniture and equipment to be included. Consider efficient flow and applicable regulatory requirements.       Be specific for dining, kitchen, dish washing, prep, storage, bathrooms, administrative work areas and entrances/exits.
  • Plan the layout for the dining area in detail. Remember to balance the desire for the maximum number of seats with customer comfort, and avoid seating in high traffic lanes or stuffed into corners. Avoid locating tables in the middle of the room like little islands and consider instead having low divider walls and hanging plants to break up the space.
  • Don’t forget the graphics – from exterior signage to the look of the menus, graphic design plays an important part in the overall image to be portrayed.
  • Pay attention to the lighting design. Focus dramatic light onto the tables to highlight the food, and compliment it with glowing background light to make the interior and customers look good.
  • Decide whether to offer a full service bar as this will dramatically influence initial investment requirements. Periodically Arizona releases a limited number licenses such as Series 6, 7 and 9 liquor licenses – Series 6 is needed to operate a bar, Series 7 is needed to serve beer and wine, and Series 9 is needed to sell liquor at retail. Until recently, the only way to obtain a bar or liquor license had been to buy it from another business with prices reaching $90,000 for an existing Series 6 and up to $240,000 for a Series 9. This state intends to issue a total of 126 new licenses this year at the going market rate.
  • Define your insurance needs. Restaurants are sources of potential accidents from fires to floods to food poisoning, and hundreds of other catastrophes. The NRA is an outstanding resource for guidance on related insurance coverage requirements.
  • Select and train your staff early. Look for enthusiasm, good grooming and experience. Allow them enough time to become familiar with your concept as well as for cross training. Remember that the person greeting customers is as important as the person running the kitchen – and great service and great food is a winning combination for success.
  • Set up a restaurant oriented bookkeeping and accounting system – more on this later on. Be sure to establish control over the meal checks as there are dozens of scams that dishonest servers and cashiers, especially bartenders, can use.       In particular understand and document the entire process thoroughly, and watch the petty cash, cash drawer flow and check cashing processes. Get expert advice on how to prevent abuses.
  • Designate several trusted employees to supervise storage areas. Stress that they must check in all deliveries and audit the food inventory carefully – document these responsibilities into their job descriptions.
  • Read books and attend SCORE training seminars on managing a business. Take a class at a local university on restaurant management.
  • Finally, decide on the restaurant’s overall look. Beware of trendy, contrived designs that are short lived. Attempt to provide a warm, friendly atmosphere tailored to the customer base you are trying to attract.

Dining Area

Plan your restaurant's decor & seatingDining room design will depend on your concept. This is where you’ll make the bulk of your money, so don’t cut corners. Visit restaurants in your area and analyze the décor. Watch the diners; do they react positively to the décor? Note what works well and what doesn’t.

Calculating Seating Capacity

Note relation of costs to gross and to menu pricing which are functions of number of seats, seat turns, average cover, seasonality (caveat summer), lunch covers, dinner covers, etc.

Estimate gross by number of seats times average cover reflecting these factors:

  1. Determine desired profit—convert to percentage of sales to get sales required;
  2. Determine number of operating days—divide number of days into sales to get average daily sales;
  3. Estimate volume percentages for meal periods (breakfast, lunch, dinner);
  4. Multiply figures in step 3 by average sales per day to get dollar volume per period;
  5. Determine average check per meal period;
  6. Divide dollar volumes in step 4 by average check for the number of patrons per period;
  7. Estimate:
    1. Average seat occupation per meal period;
    2. Time per meal period;
  8. Divide time per period by average occupation to get seat turnover per period;
  9. Divide possible seat turnover into number of patrons to get number of seats required per period;
  10. Take the largest seating requirement in step 9 and add a 20% safety margin for the seating capacity.

This is part of a series: “So You Want to Open a Restaurant?” Click here for the rest of the series and other articles pertaining to the restaurant business.

If you are thinking of opening a restaurant, we’ve got mentors who have been there and done that! Click here to schedule a free mentoring session at a Phoenix location near you!

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

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Restaurant Categories and Concepts: What's your style 5 Jul

Restaurant Categories and Concepts: What’s Your Style?

This is the 4th in a series of post on starting and opening a restaurant.

Restaurant Categories and Concepts:

  • Quick-service restaurants sub-categories are fast food and fast casual. These establishments offer limited menus of items that are prepared quickly and sold for a relatively low price. In addition to very casual dining areas, they typically offer drive-thru windows and take-out service. This category serves chicken, hot dogs, sandwiches, pizza, seafood and ethnic foods as well as hamburgers and french fries
  • Mid-scale restaurants occupy the middle ground between quick-service and upscale restaurants. They offer full meals but charge prices that customers perceive as good value. Midscale offers a range of limited- and full-service options.
  • Upscale restaurants offer full table service. They focus on the quality of their cuisine and the ambience of their facilities. Fine-dining establishments are at the highest end of the upscale restaurant category and charge the highest prices.

Your own personality, skills and preferences will dictate the type of restaurant you choose. Restaurant Categories and Concepts: What's your styleDo you have a passion for a particular type of cuisine? Do you enjoy a predictable routine, or do you prefer something different every day? Are you willing to deal with the additional responsibilities and liabilities that come with serving alcoholic beverages?

Are you an early riser, or do you prefer to stay up late and sleep late? If you like–or at least don’t mind–getting up before dawn, your niche may be a bakery or a casual breakfast-and-lunch operation. Night owls are going to be drawn to the hours required for bar-and-grill types of restaurants, fine-dining establishments and even pizzerias.

If you’re a people person, choose a food-service business that gives you plenty of opportunity to connect with your customers. If you’re not especially gregarious, you’ll probably lean more toward a commercial type of business, perhaps a bakery or even a catering service, where you can deal more with operational issues than with people.

Once you have decided what best suits you, figure out the niche you’ll occupy in the marketplace. As you do this self-analysis, think about your ideal day. If you could be doing exactly what you wanted to do, what would it be

Selecting a Food Concept, the Challenge

The challenge is to develop a concept that fits a definite market and to do it better than your competition. Care must be taken to ensure that it is not a fad, that there is a market for the concept and that there are enough customers in the area to support the concept over time.

Concept Adaptation

Food service operators deciding to open a new operation have several options:

  • copy a successful concept
  • adapt an existing concept
  • develop a new concept.

The advantage of copying an existing concept is that you piggyback on the work and success someone else has accomplished. The disadvantage is that you will have to offer something better or why should guests go to your operation rather than the original. You must do proper research to make sure your adaptation of an existing concept is what customers prefer.

Look at the fast food hamburger market. Operators realized they could not compete with McDonald’s head to head, so they tried to find ways to differentiate their burgers to draw customers from the segment leader. Burger King offers burgers cooked over an open flame, Wendy’s offers a salad bar, chili, and burgers using fresh rather than frozen meat.

The most risky of the options is to develop your own concept. To be successful you must be creative and find a need that is not being filled by existing operations. If your goal is to have a successful business you must appeal to a range of customers. You must exceed customers’ expectations. The more you research the needs and desires of your customers and provide offerings customers want and need the greater opportunity you have for your operation to be successful.

Patrons want to be delighted with their dining experience, but don’t want surprises. Concepts let patrons know what to expect and provide some structure for the operation. Some of the more popular restaurant concepts:

  • Quick-service seafood restaurants generally offer a limited range of choices, often restricted to fried seafood. Midscale and upscale seafood restaurants offer a wider selection, prepared in ways other than fried,. Seafood can be a risky as prices are always changing, and many kinds of seafood are seasonal. Make sure items are fresh and meet your standards of quality. If you are not happy with what a distributor offers, you can be sure your customers won’t be either.
  • Steakhouses are part of the mid-scale and upscale markets. Mid-scales are typically family-oriented, offer a casual environment with perception of good values. Upscale steakhouses offer a more formal atmosphere and may serve larger cuts of meat that are of better quality and charge higher prices. Their décor may be similar to fine-dining, offering guests more privacy and focusing more on adult patrons than on families.
  • Family-style restaurants. Geared toward families, they charge reasonable prices. They also appeal to seniors, offer speedy service that falls somewhere between that of quick-service places and full-service. Menus offer a variety of selections to appeal to the interests of a broad range of customers, from children to seniors.
  • Casual-dining restaurants. These appeal to a wide audience. They provide a variety of food items, from appetizers and salads to main dishes and desserts. They offer comfortable atmospheres with mid-range prices. Many center on a theme that’s incorporated into their menus and décor.
  • Ethnic restaurants. They range from quick-service places with limited selections to upscale eateries with a wide variety, including Americanized ethnic dishes, as well as authentic food. Most popular are Italian, Chinese and Mexican followed by Indian, Thai, Caribbean, English, French, German, Japanese, Korean, Mediterranean and Vietnamese.
  • You have two primary choices; a to-go in a modest facility specializing in pizza and beer, limited seating and self-service or a full-service pizza restaurant with a menu that features a variety of pizzas, beer and wine, as well as Italian entrees like spaghetti, ravioli and lasagna, side dishes such as salads (or even a salad bar), and a few desserts. Hire a good pizza cook who knows how to make a good pizza. Invest in top-quality ingredients and preparation methods. Make every pizza as if you’re going to eat it yourself and your customers will keep coming back for more.
  • Sandwich Shop/Delicatessen. They enjoy high profit margins and can change their menus quickly and easily to adapt to current tastes. Many add delivery and catering to their sit-down and take-out operations. Most sandwich shops serve only sandwiches, possibly with some side dishes or desserts. A delicatessen offers a more extensive menu, including    sandwiches, prepared meats, smoked fish, cheeses, salads, relishes and various hot entrees.
  • Coffee is the world’s most popular beverage. Beyond coffee, people frequent coffeehouses and espresso bars to meet with friends, for a quick lunch and a drink to perk up the afternoon, or simply to start off each morning with a great cup of coffee. Most successful coffeehouses have heavy foot traffic and high-volume sales serving up to 500 customers per day and up to five customer turnovers during the lunch hour, despite having limited floor space and modest seating capacity. Profit margins for coffee and espresso drinks are extremely high – the product is more than 95 percent water. The average ticket is around $3, so you need volume to reach and maintain profitability.
  • “Bread-only” retail bakeries have almost disappeared. Today many offer cakes, scones, bagels and coffee drinks. Some even have full dining menus, including sandwiches, hot entrees, beer and wine. The market is extremely competitive

Trends in terms of menu content and design should influence the type of food-service concept you open. The problem is whether the new food service trend is really a trend or just a short lived fad. Care must be taken when adapting a trend and changing a concept so that you do not lose your existing core of business in the attempt to attract new customers.

Trends include vegetarian items, tortillas, locally grown produce, organic items, fusion dishes (combining two or more ethnic cuisines in one dish or on one plate) and microbrewed or local beers. Pita dishes and wraps are a high demand easy-to-consume alternative to sandwiches. There is a strong demand for bagels, espresso and specialty coffees, and “real meals,” which are typically an entree with a side order. Also trending is more chicken, seafood and beef dishes. At the same time, growth is in meatless alternatives. There is demand for “comfort food”–the dishes that take them back to their childhoods, when mothers baked from scratch, and meat and potatoes were at the center of each plate.

If families are a key part of your target market, have four or five items in smaller portions that youngsters will enjoy. If you serve snack items as well as entrees, note that kids are choosing healthier snacks more often thanks to concerned parents. Consider allowing your young diners to choose among a selection of nutritious options.

Though menu variety has increased over the years, menus themselves are growing shorter. Dining out is a recreational activity. Keep your number of items in check and menu descriptions simple and straightforward, providing a variety of choices in a concise format. Indicate what dishes can be prepared to meet special dietary requirements, including items low in fat, sodium and cholesterol.

Remember, as you develop your particular concept, you’ll need to find a way to differentiate yourself from all the other competitors.

If you need help deciding which way to go, a SCORE mentor can help guide you for free! Click here to schedule an appointment with a SCORE mentor.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

 

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6 things you need to think about for successful strategic business planning. 29 Feb

6 Things to Ponder when Creating a Successful Business Strategy

Creating and sustaining a valuable business enterprise is a difficult task under the best of circumstances. Strategic planning is a key to facilitating superior performance and value creation, yet businesses tend to ignore strategic planning, often relying on seat-of-the-pants management and/or business folklore. Even businesses that begin the strategic planning process get distracted by the latest crisis and put planning on the back burner. As Benjamin Franklin said,

“If you fail to plan, you are planning to fail”.  

Mark Thompson and Brian Tracy in their book Now…Build A Great Business!, note that…

“people and organizations with clear visions, values, and plans tend to accomplish far more and do it faster than their competitors. When everyone in your organization is united by a clear strategic vision of your desired future state, you create a powerful mental synergy that will move you toward your goals and move your goals toward you”.

Thompson and Tracy cited six key questions that should be asked when creating or revising business strategy:

  1. Where are you now? What is your current situation?
  2. How did you get to where you are today?
  3. Where do you want to go from here?
  4. How do you get from where you are today to where you want to be in the future?
  5. What obstacles will you have to overcome? What problems will you have to solve?
  6. What additional knowledge, skills, or resources will you require to achieve your strategic objectives?

The answers to these questions are critical input to strategic plans that identify the vision, mission, goals and objectives of a business and how resources will be managed to achieve those objectives. Management of resources is facilitated by action plans, milestones, accountability and time sensitivity.

Management theorist Peter Drucker defines strategic planning as…

“…the continuous process of making present risk-taking decisions systematically with the greatest knowledge of their future; organizing systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations through organized, systematic feedback”.

Questions to ask for a success business strategyStrategic planning is the alpha and omega of business processes and performance. All business activity should flow from the strategic plan. Effective management and performance of resources, including human, financial, technological and time, are a function of the strategic plan. Profitability and value creation are facilitated by a strong, flexible and well executed strategic plans.

We have been inundated with statistics regarding business failures at every stage of growth of the business. There are those who credit factors other than planning to the success of their business. However, as with anything in life, one must avail themselves of all relevant resources to provide the best opportunity for success. A critical resource is preparation, including education, experience and planning. An effective strategic plan is not a guarantor of a viable, valuable business enterprise, but it can better facilitate the realization of that viability and value, and it is clearly superior to reliance on seat-of-the pants management or folklore!

No time like the present to put together your business strategy! Greater Phoenix SCORE holds workshops regularly to help you no matter what stage your business is in. Click here for the schedule!

About the Author:

Michael Mobley, business strategist

Michael Mobley is president of CEO Focus and Managing Partner at Impetus Solutions, LLC. 

Michael is a seasoned business executive with extensive experience in finance, planning, operations and marketing with both large corporations and small businesses. He served as an adjunct professor of entrepreneurship at a Maryland community college and an adjunct professor of business in the MBA program of a Maryland university. Michael received his BA in Economics and his MBA in Finance from Columbia University.

Michael Mobley will be one of the Breakout Session Speakers at this year’s SCORE Symposium! It’s free to attend – registration required. Click here for details!

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