So you want to be an F&B owner? Ponder on the questions below to refine your ideas and better prepare to take the plunge!
A) Ask yourself: what makes you special?
Whether an innovative format, a signature dish, or a new approach to managing your operations, the first question is what you intend to do that will differentiate you from your competitors!
- What need does it fulfill or what value does it provide?
- Are people willing to pay for this?
- How often are people willing to pay for it?
- Who are your closest competitors?
- How does what you offer, compare with them?
B) Think about: who is your target market?
It’s also important to really understand your market. Teenagers may want different things from the middle-aged crowd, the office crowd a different experience from those around for the nightlife – just for instance. Know who your customer is, and serve them!
- What demographic are your targetting?
- What are the defining lifestyle features this demographic has?
- What do these people value in their dining experience?
- What do these people dislike in their dining experience?
- What channels would help you reach these people?
C) Calculate: all of the costs
Being profitable in the long-term is key. And typically, in order to survive, you need at least one year’s worth of working capital the time you start your operations! Figure out at least the following:
- What are the start-up costs – renovation, equipment, etc
- What are the main fixed costs in running your operations?
- And what will they add up to in a year?
- What items will you be spending the most money on and are these areas worth it?
D) Consider: All business formats
A full-service restaurant, a mobile food truck and a cafe all have different business formats that target varying needs like speed, accessibility and ambience, just to name a few. With the tight manpower situation in Singapore today, it might be worthwhile to consider alternative business formats, and which works best for you!
- What is your operating model?
- With this, what are your manpower requirements?
- How do you intend to meet these manpower requirements?
- How important is it to have a brick-and-mortar outlet? Why?
E) Be realistic: What risks can you take?
How much are you able and willing to invest – both financially and in terms of your own time? What capabilities do you have and how much are you going to be relying on other people to sustain your operations?
- How much can you personally invest financially?
- How long can you wait before you need to break even?
- What methods of funding and financing are available to you?
- What will your role in this business be?
- What skills/experience do you bring to support it?
- What are the ownership and financing structures between you and your business partners?
- Do you have milestones for extracting yourself from daily operations (if that is a goal)?
F) Decide: on a suitable location
A desirable location isn’t just about the traffic it can bring. Have a think about the health of the surrounding businesses, the landlord’s track record in managing retail real estate, and if the neighbours (especially in a residential area) can pose problems for your business.
- Is this an area that will reach your target customers?
- How many competitors are there in the area?
- How near are they to you?
- Can you afford the rent?
- Is the space sufficient?
- What are the lease termination penalties?
- Will your operations disturb your neighbours?