If you are buying a restaurant with SBA lending, it’s a good idea to get your business plan in the works. The restaurant brokers recommend you build this critical document now and then ask a few trusted advisors to read and provide input. Does it need to be 100 pages? No. In fact, 10 – 12 pages is more than sufficient to capture the items a lender will want to focus on. The quality of the work is important however. This document has multiple uses beyond the SBA lender that may require it. More and more frequently, landlords will want to see that you have a well thought out direction for the business, particularly if you are buying an existing concept. How will you take it to the next level? What will you keep the same (if it’s working) or change (if it’s struggling).
Here is a basic outline of the elements most lenders like to see. Use this to template out your business plan when buying a restaurant and you’ll be ready to impress, whether it’s the bank, the landlord or investors.
Table of Contents
Begin with a table of contents so the reader can quickly reference where they can go to for important information. There are multiple word templates available that are already set up in a style to capture a table of contents at the beginning.
Buying a restaurant means you have given this some thought about the who, what, why and when. Capture those points in your Executive Summary. This only needs to be a paragraph or two.
Business Description & Vision
Describe the restaurant you are buying and your vision for the future in the next section. What is it doing now and what will your leadership bring to the future for tomorrow once you buy this restaurant?
Definition of the Market
What is your target market? Who visits this restaurant and how do you develop a deeper market share? Look at the current operation when buying a restaurant and figure out how you will grow the business.
Description of Products and Services
Tell the reader of your business plan what you are selling. Describe the menu and services you offer including any catering or outside services in a way that is both enticing and demonstrates your knowledge of this location. If this is a franchise resale restaurant you are buying, it’s easy to pull this from the brand’s website and rewrite it into your own words.
Organization & Management
Lenders and landlords in particular, want to know who they are dealing with. Who’s buying the restaurant? Make sure the organization and management section highlights your relevant background and experience. Be clear in stating your strengths that will transfer to this role, especially if this is your first restaurant.
Marketing and Sales Strategy
Your marketing and sales strategy is key to landlords and lenders. They see fixed costs, like rent, increasing each year. What is your sales and marketing strategy to grow sales and offset these increases? Make sure you spend the most time on this section when buying a restaurant.
Lenders and landlords want to see financial projections. As we discussed in our book, Appetite for Acquisition however, these projections need to make sense. There’s no way you’re buying a restaurant that’s generating revenue of $500,000 this year and it will go to $750,000 next year. It’s better to be conservative on the estimates rather than overstate them.
Additional items that may find their way into the appendices of your business plan may include: your full menu, photographs, resumes. This is the space where you add material that support the document you’ve prepared. Don’t “stuff” this area with a lot of items just to add weight to the plan.
Follow this template to write your business plan when buying a restaurant and your success rate with landlords and lenders will improve.
Contact the restaurant brokers for help with buying a restaurant or see our many restaurant for sale listings below at this link.