Start up costs for a small restaurant business are extensive when compared to other business models and it can be difficult to start up for less than six figures. Let's look at some of the start up expenses that you could be up against as you plan to open your small restaurant business and how you should go about cautiously budgeting to ensure the best use of your start up finances.
Many restaurant owners run out of capital during the first year of their restaurants life and are forced to discontinue due to the sad reality that they did not reach break even point as quickly as they had imagined. Keeping enough funding in reserve to prepare for this situation is prudent.
Plan a budgeting schedule for buying only enough to satisfy immediate needs as your business grows and look into used equipment and fittings to save money where possible.
The important cost related to starting a restaurant is location. You will either have to let a place or pay a mortgage on a space that you own. Refurbishing costs for a restaurant can be considerable and you will also have ongoing expenses related to your building such as utilities.
Leasing could be the best alternative right now and with the economy still bad, but slowly starting to get better, you could negotiate a lease at a reasonable rate and be set up and ready for when the recovery finally arrives.
Compliance costs can be surprisingly excessive so it is essential to do some preliminary investigation so that you are aware of how much it will cost to get the licenses and permits that city authorities require you to have.
Your business will need to have liability insurance as well as a policy to protect you against loss or damage to your business property. Figure in health and safety equipment too like fire extinguishers.
The list of kitchen requirements will be extensive and you will require a stove with adequate electric elements, cooking systems such as ovens, deep fryers, a microwave, freezers and adequate refrigeration just to name a few of the most important items
Dining room, reception area and bathroom needs also require a lot of planning. You will need to buy all of the furnishings, serving equipment and table settings to go with your theme.
Profitable restaurants usually implement computerized systems that maintain efficiency and owner control. From taking orders and collecting payments, to security systems, you should estimate costs well in advance.
You need to create a brand and work this in with your theme, on exterior signs and on menus and on business cards and other materials. Advertising is also essential and you need to allocate a substantial sum for this to ensure good exposure.
Go to see a few restaurants and make some notes of all the little things that you see that you may have overlooked.
Set up costs will differ depending on if you are creating an upmarket fine dining environment or a restaurant with a more laid-back family dining experience.
Many new restaurants will encounter a slow patch at first when revenue doesn't meet owner expectations. It is important to separate start up costs from operating costs and allow yourself to have funds on hand to get through the hard times before passing break even point.
Stick with safer financing options at first like loans from relatives or banks. Leave higher interest options like credit cards cash advances until you really need them.
Get your restaurant off to a fantastic beginning by making sure that you are fully aware of all the restaurant startup costs that you will be facing and by making sure that you have a strategy in place to allow for them.
Many restaurant owners run out of capital during the first year of their restaurants life and are forced to discontinue due to the sad reality that they did not reach break even point as quickly as they had imagined. Keeping enough funding in reserve to prepare for this situation is prudent.
Plan a budgeting schedule for buying only enough to satisfy immediate needs as your business grows and look into used equipment and fittings to save money where possible.
The important cost related to starting a restaurant is location. You will either have to let a place or pay a mortgage on a space that you own. Refurbishing costs for a restaurant can be considerable and you will also have ongoing expenses related to your building such as utilities.
Leasing could be the best alternative right now and with the economy still bad, but slowly starting to get better, you could negotiate a lease at a reasonable rate and be set up and ready for when the recovery finally arrives.
Compliance costs can be surprisingly excessive so it is essential to do some preliminary investigation so that you are aware of how much it will cost to get the licenses and permits that city authorities require you to have.
Your business will need to have liability insurance as well as a policy to protect you against loss or damage to your business property. Figure in health and safety equipment too like fire extinguishers.
The list of kitchen requirements will be extensive and you will require a stove with adequate electric elements, cooking systems such as ovens, deep fryers, a microwave, freezers and adequate refrigeration just to name a few of the most important items
Dining room, reception area and bathroom needs also require a lot of planning. You will need to buy all of the furnishings, serving equipment and table settings to go with your theme.
Profitable restaurants usually implement computerized systems that maintain efficiency and owner control. From taking orders and collecting payments, to security systems, you should estimate costs well in advance.
You need to create a brand and work this in with your theme, on exterior signs and on menus and on business cards and other materials. Advertising is also essential and you need to allocate a substantial sum for this to ensure good exposure.
Go to see a few restaurants and make some notes of all the little things that you see that you may have overlooked.
Set up costs will differ depending on if you are creating an upmarket fine dining environment or a restaurant with a more laid-back family dining experience.
Many new restaurants will encounter a slow patch at first when revenue doesn't meet owner expectations. It is important to separate start up costs from operating costs and allow yourself to have funds on hand to get through the hard times before passing break even point.
Stick with safer financing options at first like loans from relatives or banks. Leave higher interest options like credit cards cash advances until you really need them.
Get your restaurant off to a fantastic beginning by making sure that you are fully aware of all the restaurant startup costs that you will be facing and by making sure that you have a strategy in place to allow for them.
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For more information on choosing a location for a restaurant visit - Start a Restaurant
