quote:
I agree with Dave Bugg on most everything except the following...
Business Costs
Consultants ...... 2,500.00
(Consultant? Do you know how to cook great BBQ? What else do you need consulted on that you can't find in some forum somewhere? My BIGGEST advice on this is get a good CPA before you purchase one single thing, however this shouldn't cost you $2500.)
Consultants had nothing to do with bbq; I cooked bbq for 32 years prior to opening my own place. And I spent a large portion of time during 7 years prior to writing up my business plan using vacation and unpaid leave to visit (and work at some) 282 different bbq joints around the country so that I could absorb as much info on the restaurant trade as possible. Nope, the budget for "consultants" had nothing to do with cooking or restaurant design. The "consultants" were the group of individuals, from property assessors to accountants, that required fees in order to perform an actual service. The time I spent researching and writing my business plan anticipated this expense and was included as a line item for the loan package.
The cost for "consultants" will vary; here is just an example of a few of the most expensive ones I used:
> An attorney to review my contracts with contractors and to advise me on city codes when conflicts arose over signage, landscaping, sidewalks and other stuff.
> A CPA to setup the books (in my case Quickbooks) and to begin setting up the corporate entity (an LLC) for filing with the state.
> A bookeeper who obtained my books and other information from my CPA, prepared all the paperwork for opening accounts with the state employment security agency, the state Dept. of Revenue, the IRS (gotta get those account numbers donchaknow), state L&I, etc.
> Landscape architect. My city requires any developed lot to be landscaped and requires a plan be submitted by a licensed landscape architect or designer.
Over the course of opening the business, spending $2500.00 was close to what was budgeted for that line item.
quote:
Marketing
Print Advertising... 5000.00
Radio.............. 1,000.00
Flyers............. 600.00
Signs............. 2,000.00
(Put up a sign and open the doors, when you have the money to throw at advertising, do so. But I wouldn't throw $8600.00 at advertising in my first year... If it's good the word will get around!)
I agree the amount spent on marketing WILL vary and does not need to be the same as mine, but I wonder if you read my other posts in this thread. I spent a lot of time looking at what I needed to do to capture the attention of customers in my area, and I budgeted accordingly. A small hamlet with one main road, would not require even 5% of the money I had budgeted, but in my location the amount I budgeted was realistic. The point is this: I did not advise the OP to spend the same amount of money that I did for marketing. I would not do that because I haven't a clue as to his location, market, or town. By that same token, you should not advise the OP that just hanging out a sign is sufficient.
The more guerilla tactics you can use, the fewer dollars need to be spent. It depends on a lot of factors, including the size of the town, the size of the market, and the visibility of the location. But the advice to just hang a sign on the door and word of mouth will bring them in is a potential disaster waiting to happen.
My store is invisible from the road and is on the opposite end of town from "restaurant row" and the motels and bars. Can you imagine how long it would have taken to attract my first customer if I had taken the advice to "just hang a sign"?
To overcome my location's handicap, I needed a sign 40 foot tall. Two weeks prior to opening: I hired a few individuals to blanket various neighborhoods throughout town with doorknob hangers. I did a newspaper insert. I did radio advertising that rotated between the 5 most popular radio stations. I sent a PSA to the local paper's business reporter. I put a big ol' sign on my pickup. I passed out cards at the mall. I put flyers on car windshields at several grocery stores. In my small store, I did over 6500.00 on opening night, and word of mouth began to get out. That would have never happened if I had just hung a sign on the door.
Sometimes word-of-mouth works but that is the exception, not the rule. I have seen dozens of beginners around America close shop within 6 months after opening thinking "if I build it, they will come". Sometimes they honestly believed in the word-of-mouth-only concept of marketing. Sometimes they went into business with such a lean budget that they thought they would save money by not spending any funds on marketing. In the last 2 months alone in my town, 3 new eateries have closed shop. They had great product, but very few people knew they even existed. In talking to these guys, they had thought that word of mouth would bring the customers, and they didn't budget anything for marketing, nor did they do anything to market their places.
Just my two cents.
