We’d be lying if we said that creating a successful venue concept was easy. Your idea may be ambitious, even spectacular and still not work in your chosen location. But you know that. That’s why you’re putting the research in.
Hospitality is home to some of the most inventive, captivating businesses in the world, and features a mix of everything from small independents to large, world-conquering conglomerates.
Where does your business fit in that? Whether you are just starting out, or your existing hospitality business needs an overhaul, there’s one crucial element that will determine if your venue will fail or flourish.
This guide is a starting point for your business plan that will clearly outline the path to success. We’ll be linking to in-depth guides for specific actions and consideration that form a larger guide for hospitality businesses.
Related read: 10 Traits of Successful Restaurateurs
Let’s cut straight to the chase: there are thousands of business plan guides out there. But then, there are thousands of types of different business. We’re not sure it’s a one size fits all marketplace to be honest.
General guides often miss the crucial thinking that needs to go into creating a business plan. Rather than explaining what an elevator pitch is, or how to create a cash flow template, we’re going to put you in the right mindset to create a business plan which actually means something.
It’s all about asking yourself the right questions.
Focusing too intently on spreadsheet templates and finance requirements can lead to a business plan which misses product-market-fit (whether there is actually a demand for your business or product).
Following these steps will force you to ask questions and dig deeper into the reasons you’re entering the hospitality industry (or continuing to develop your business)
Question 1: What’s your business identity?
The best restaurants, hotels, and bars in the world have the personality of the owners poured into them. Some have the personality of customers injected directly into their strategy.
The identity for your hospitality business is absolutely crucial. It’s something that’ll develop over time and it’s a very personal thing, but it’s also something you need to start cultivating from the start.
For instance, are you a quick-service restaurant? Are you a boutique hotel? Are you launching an ultra-fine dining establishment? It’s tempting at this point to try and incorporate a few different ideas. Be specific.
This is the starting point for your business identity, and once you’ve identified it, you can start thinking about what makes your business special. Keep it as simple as possible, and picture your business as a person; what kind of person would they be at a party? (One of the cool kids that hangs about in the kitchen, obviously.)
Question 2: Can you easily explain your vision and mission?
It might feel like you’re simply pushing the prospect of actually opening your doors further into the distance with all this ‘big thinking’, but it’s such a crucial stage of business planning.
In the hotel industry alone, there are over 700,000 hotels and resorts worldwide. You’ll need a pretty clear mission if you’re to join that throng and open a venue that attracts the attention of guests. This comes down to your vision and mission.
Your vision is a clear statement of intent about why your business exists (for example, “we’re going to run the best fine dining seafood restaurant in Miami”).
Your mission is all about what you intend to do with the business (for example, “our mission is to offer high-quality food that’s sustainably sourced from hyper-local suppliers and match it with new takes on classic dishes”).
Of course, your vision and mission will be far more exciting than those examples above, but that’s because you’ll have spent time devising them!
Saying, “we’ll make great dishes of different types” at this stage is not enough!
Question 3: Do you have a solid business structure?
Who’s going to do what when the venue opens? The success of your business will depend massively on the structure you use and how it’s implemented. At this stage, it might be worth seeking the advice of an experienced mentor, because while one of the following will be ideal for you, it can get a bit confusing:
- Sole proprietorship
- Limited partnership
- Limited liability company (LLC)
This is also the point at which you need to start thinking about your key positions. From the main boss (that might be you or someone else), to the front of house manager, waiting staff and security personnel, every position needs accounting for early on.
Question 4: Is your business financially viable?
Miss this step, and you really will be heading down the creek without a paddle.
Your business plan will need a clear budget and finance plan. And to undertake this step, you’ll need the help of an experienced accountant, no question.
This is about as numbers-oriented as the business plan is likely to get, but it’s something you’ll need to work through. The thing to keep in mind throughout is that you need to create a business that’s financially viable.
That means working out how to measure the maximum profitability of your venue and the tools you’ll need to project future income. When it comes to the business plan, that means arriving at a few key numbers that reveal how much it’ll cost to start and maintain the business.
Question 5: Is your target market defined?
You might think that you already have a solid grasp on your target market. Indeed, it’s probably largely why you decided to get into the hospitality industry in the first place.
You know what people want and you’re going to give it to them, right?!
Great, but that’s pretty broad targeting, and a classic mistake when trying to find product-market-fit.
Rather than think of your target market as the type of customer you think will be interested in your product, try and think about your perfect customer. You want to create an offeing that will fill your business with your perfect customers.
How are they likely to be reached? Do they spend all day posting stories to Instagram, or are they likely to be reached in more traditional marketing methods?
What do they want from a night out in a restaurant or a weekend away at a hotel? You need to get to know these people like your best mates. And the earlier you do so, the better.
How-to Guide: Customer Segmentation for Restaurants
Final step: Promise that you won’t leave the business plan to gather dust Far too many hospitality business plans have been left to gather dust.
It’s why we noted from the outset of this guide that it wouldn’t be a bog-standard business plan template.
Templates have their place, but they often send you down the wrong path. They force you into a specific way of thinking which may not be right for your business. By instead following the steps above, you’ll discover a unique business idea and its target market, without sacrificing the reality of having to create a sustainable business.
Our last piece of advice is the easiest to work into your business planning: enjoy it! Business plans which have been created with love, passion and enjoyment are far more likely to succeed - particularly in this industry.