By Andrew Martino, Founder Martino Hospitality Services
1. Everything Costs More Than You Think
So you have spent months planning and budgeting for your new venture and you feel ready to go, but there are some hidden costs that you may have missed.
Calculating your payroll? Don’t forget to add in the cost of payroll administration (unless you are doing that on your own), workers’ compensation insurance, and payroll taxes. These hidden costs may raise your payroll costs by 50% or more.
Building out a space? It is easy to estimate the cost of your needed equipment and the physical construction of your space. But even if you have the estimated cost from your contractor, there are always “change orders” that can add up. Always account for at least a 20% wiggle room in your construction budget. Don’t forget to factor in engineers and architects as you may need detailed drawings and calculations before construction can even begin. And don’t forget permits and any special zoning or licensing application fees that may be required for your construction.
2. Plan For Success (And Failure)
Most new owners have thought a lot about what to do if their business starts off slowly. But how many people plan for a scenario where you are more successful than you ever imagined? A great problem to have, right? Well, maybe..
What happens if you do double the business in fewer months than you expected? Can you handle the volume and maintain quality control and service? Can your employees work more hours than initially expected, or will you have to hire and train new employees? Can your working space handle the extra volume of product and employees?
Make sure you have thought through not just the negative possibilities, but also the incredible positive ones. If your business is rapidly growing from the start and you aren't ready, you will likely fail to meet your customers’ expectations and your business may quickly decline as you try to play catch up. You only have one chance to make a first impression; make sure it’s a good and consistent one.
3. Have A Backup Plan. And Another. And Another.
Let’s say you are open for business and everything is going great. You are the captain of the ship and wear many hats. You know all the ins and outs of running your business. You know how to place the orders, receive the orders, calculate inventory, work the cash register, work the line, pay bills, fix the printer when it breaks, etc.
Now what happens if you get the flu and have to miss a week? Or you break your leg and are crutches for several weeks? Your business could be vulnerable to collapse if you are out or have limited mobility for an extended period of time.
As great as it is that you can do everything, you need to have a plan in place so that the business can still operate in your absence. There is no “one-size-fits-all” plan for every business. But I recommend creating detailed Standard Operating Procedures (SOPs) for each job in your operation. This way there is a written detailed guide employees can follow to accomplish the tasks you were doing yourself. There can be an SOP for simple tasks like answering the phone and taking orders to complex tasks like end of the month inventory.
The more detailed your SOPs, the easier it will be for employees to assist you when you inevitably have to miss some time. And even if you have designated an assistant who can step in during your absence, the written SOPs will ensure even if that assistant is also unavailable, another employee can step in.
4. Learn How To Say No
There are so many industry events these days that it is easy to think that a new business should be in as many as possible. The voice in the back of your head says, “You need to get your name out there”, “Any exposure is good.” This could not be further from the truth.
Your time is valuable, and all events are not created equal. Spend time researching the event. What other vendors will be there? Do they complement or compete with you? How much did they sell last year? What are the setup logistics? How much does it cost to enter? What are the demographics of the attendees of the event, are they my future customers?
These are all important questions to answer before you decide that you “have nothing to lose” by entering. You need to be confident that you can showcase your product and your business in a positive light which means knowing what you can and cannot do. Do not stretch yourself too thin. Being memorable in one or two key events is much better than being forgettable in 10. Do your homework, and don't be scared to say no to being in an event.
5. Have Conviction In What You Are Doing
One of the biggest mistakes I see in new businesses is owners who do not stick with their plan when sales aren’t where they expect them to be. It takes time for customers to get to know your business and what you are doing. You believed in yourself and your business. Stick to your guns.
Changing your menu, specials, promotions, etc. can be alienating to existing customers who have become accustomed to what you were doing, and confusing for potential customers who are watching the business from afar. You can’t be everything to everyone, and changing things on a whim with no plan can be a death sentence for a new business. Customers notice these things. When they want to see you be confident and consistent in what you are doing, you cannot change midstream on a whim.
Martino Hospitality Services specializes in concept design and development, systems implementations, operations analysis, p&l analysis and employee training for restaurants, bars, hotels and nightclubs. They focus on ensuring their clients have everything they need to turn their dream of owning a hospitality business into a reality. From creation of the concept to your grand opening, MHS will guide you every step along the way. Whether you are opening a new business, looking to rebrand or purchase a current one, or simply looking for general guidance, Martino Hospitality Services is here to help. For more information, visit: martinohospitality.com.