3 Important Things to Do Before Starting a Food Business
Starting a food business is quite exciting but can be very challenging especially if you’re a newbie. The first few weeks and months can either make or break you. Without proper planning and understanding your target market, and finding the right partners and suppliers, you can end up losing more than gaining. You should know how to calculate your risks if you want to run a successful business.
So before starting a food business, here are the 3 things you should do first to make better business decisions:
Do your Homework: Research about Your Target MarketLet’s face it. The food industry is quite competitive. You may have the most scrumptious dishes served in town but you have to face the fact that many of your target customers may already be ‘loyal’ to another restaurant.
So before you even try to get sign that lease, you need to do your homework first. Find out who your target customers are, what works for them, and which trends they follow.
The term food business is quite broad. You need to decide which demographics you want to cater to. Are you targeting upper to upper middle class (fine dining) or young professionals (fast food)? Or would you rather to categorize your business according to type food served like desserts, pizza, burgers, or maybe cultural Asian, Italian, or American, etc.
Another thing you have to consider is the size of your menu. While it’s tempting to offer ten things at the same time, sticking to a simple menu on your first few months may actually help your brand get recognized.
Remember to add a touch of human element to it. Starting a food business is not just about how delicious your food is or how affordable it is. People fall in love with the story behind the food being served too. Are you starting a family business? Are these recipes handed down from one generation to another?
This is the most crucial element in any food business especially if you’re planning to build a brick-and-mortar type of restaurant. You want to find a location that’s easy to access and has ample amount of foot traffic.
If you have yet to find a location, creating a competitive analysis can help you decide. You can use a heat map tool to get insights into your competition and which neighborhoods have a market gap your restaurant can fill in.
Identify Challenges and Risks
Identifying the challenges and risks of establishing your business can help you come up with effective contingency plans should the business will not earn as much as expected or, worse, fail.
You should also look into possible accidents like fire, which is very common amongst those in the food industry. Make sure you look into fire safety equipment like extinguishers and smoke detectors.
Signs like Fire Extinguisher signs and Fire Exit Signs should be visible to everyone in the vicinity for quick access.
Make a Business Plan
Creating a realistic and feasible business plan is an essential step in starting any business. Your food business plan should always include the following:
The type of business entity: Is your business a sole proprietorship, a partnership, or a corporation?
Business structure: What is the size of your crew? How many employees are you looking to get and what are their roles in the business?
Define your Budget: How much capital do you need and what are your expected income and expenses? Include all possible expenses such as rent, overhead pay, equipment, utilities, logistics, and supplies. If you decide to take a loan to finance your business, include how you’re looking to pay for that loan in your plan.
Contingency plan: Always have a back-up plan in case you fail to meet your targets. What would be your next steps should you not meet your ROI on time? Having a contingency plan will give your partners and creditors peace of mind knowing that you are prepared for everything.
Choose the Right Partners
Partners are not limited to your stockholders. It also includes your creditors, suppliers, logistics, and kitchen staff.
Find trusted creditors who will give you generous terms. Choosing the right suppliers will give you the best ingredients that is the foremost component of quality food service. You want to partner up with logistics with fair rates and delivers your goods on time. Lastly, you want a kitchen staff that will adore your customers as much as you do.
The first step is always the hardest. But the rewards are definitely worth every sweat. By preparing ahead, you can ensure that you achieve success in your next food business venture.