Business Plan

[joe71101]

I am currently using a business plan template that i downloaded from the small business association website.  I am currently at the economics section and it is facts about the industry.  The questions ask size of the market, share i intend to have of the market, so on and so forth.  My question is where should i begin to look for that information?  Should I start at the chamber of commerce? Local Library? Local distributors?  I'm kind of stuck because I am not exactly sure where to find the information from.

[TXCraig1]

Unless you are in a large metropolitan area, this information might not be available, and if it is, you would almost certainly have to pay for it.

It's information you can SWAG however. Look up the census data for population, family make-up, income, etc. Identify all the competitors in the area, and make some assumptions about how often people eat out, how much they spend when they do, how that spend breaks down across the different segments, what share of the spend you can reasonably target giventhe competition, etc. Go to similar restaurants during meal times on different days of the week, keep your eyes open, and gut check your assumptions.

The places you mentioned may be able to give you information that can help sharpen and reduce the uncertainty around your assumptions.

[GotRocks]

I used 3 different projections for my original P&L section of my plan.

My categories were named; Optimistic, Fair, and Poor

Optimistic used figures considering that 20% of the population goes out for dinner 2 times per month
Fair used a 12% figure
Poor used an 8% figure

I did a population study in a 20 mile radius of my restaurant, and divided that figure by the number of restaurants within that radius.

Over the last 3 years, I have seen those 20% projections which I made become a reality.
All of the banks I tried to get financing from cared nothing about my business plan, they cared nothing about my business history, they cared about nothing at all and didn't even look at my business plan or my P&L projections.

All they wanted to see was my liquid assets and my personal credit score,  they just didn't give a ratz arse! Not even about the 90% guarantee on any loan to my business from the SBA.
What am I saying? I am not trying to pee on your parade, or into your Wheaties, Just do not expect financing to be an easy thing to get no matter how solid your plan is, been there, done that. Now we just purchased a larger location and closing the deal on the 8th of this month
.So don't let these bank goobers get you down,

[Chicago Bob]

Rocks,

they just didn't give a ratz arse! Not even about the 90% guarantee on any loan to my business from the SBA.
What exactly does that "guarantee" mean?
Thanks,

Bob

[BrickStoneOven]

He's right, my brother has been trying to get a loan for the past 5 months and nothing up until couple weeks ago. They really don't care about helping people out.

Rocks,

they just didn't give a ratz arse! Not even about the 90% guarantee on any loan to my business from the SBA.
What exactly does that "guarantee" mean?
Thanks,

Bob

From what I remember reading it's that if the business that received the loan fails the government pays 90% of the loan back to the bank.

[GotRocks]

Rocks,

they just didn't give a ratz arse! Not even about the 90% guarantee on any loan to my business from the SBA.
What exactly does that "guarantee" mean?
Thanks,

Bob

go to www.sba.gov and look at their loan guarantee programs, it is a department of the federal government that helps small business get financing.

for instance, lets say you need $100K, you fill out all the paperwork that the SBA has, you meet with a Mentor from "SCORE" (Service corps Of Retired Executives), and your local SBA rep will figure out which programs fit your needs, and they will guarantee the bank against your default up to a certain percentage. expect a 70%-90% guarantee depending on your location .
The program is designed to lower the risk for banks so they will loan to a business start up, or one that needs to expand,

Then you should also look to the "EDA" (Economic Development Administration) in your county, this is another financing option that is a government program to help small business get going with Micro-Loans, and the more people you would employ, the more money they can lend. They also have access to grants for different things.

I went through all of this to expand my place, sadly I found my local EDA very corrupt, so I got the EDA funds administrator in a deep pot of hot water because of it, and glad I did it.  He was not making loans to any business's, he was shuffling monies to shell corporations to make it look like he was helping business, all to justify his $160K annual salary.
Expect typical bureaucracy. but if you can get through it, and you have a bank that does SBA guarantees, it may make this easier for you.

I wish you luck,

[Chicago Bob]

go to www.sba.gov and look at their loan guarantee programs, it is a department of the federal government that helps small business get financing.

for instance, lets say you need $100K, you fill out all the paperwork that the SBA has, you meet with a Mentor from "SCORE" (Service corps Of Retired Executives), and your local SBA rep will figure out which programs fit your needs, and they will guarantee the bank against your default up to a certain percentage. expect a 70%-90% guarantee depending on your location .
The program is designed to lower the risk for banks so they will loan to a business start up, or one that needs to expand,

Then you should also look to the "EDA" (Economic Development Administration) in your county, this is another financing option that is a government program to help small business get going with Micro-Loans, and the more people you would employ, the more money they can lend. They also have access to grants for different things.

I went through all of this to expand my place, sadly I found my local EDA very corrupt, so I got the EDA funds administrator in a deep pot of hot water because of it, and glad I did it.  He was not making loans to any business's, he was shuffling monies to shell corporations to make it look like he was helping business, all to justify his $160K annual salary.
Expect typical bureaucracy. but if you can get through it, and you have a bank that does SBA guarantees, it may make this easier for you.

I wish you luck,

Thank you Rocks,
There is no way I would want a loan from the SBA or EDA, for reasons you have already mentioned.
I was unaware that they will repay the loan if one fails. That's why I was curious when I noticed your mention of a "guarantee". Very interesting....just not something I would want to get into.
Bob

[GotRocks]

 The SBA doesn't actually loan any money, they just give the lending institution a guarantee that they will get paid back if you happen to default. In some cases, it is the only way to get any bank financing. The SBA also has interest rate levels the bank must abide by, so you don't get raped by the bank on interest.
We just bought a building fully stocked with equipment that was part of a failed restaurant from the SBA loan guarantee program, the last purchaser paid $380K for the building, and then got another $170K in financing for start up!
We got the whole flippin deal for $140K including the land, (lakefront property)  all equipment, furnishings, and smallwares. The place is almost turnkey!

See what you can do without SBA assistance, but be prepared to go the route of an SBA program if it comes down to it. My local rep was ecstatic that we qualified for such a huge percentage, and was also flabbergasted that no bank would do financing for us. We were already in business, profitable, was hiring lots of people, everything they like to see. Yet no bank would do anything for us. Since the time we opened, I saw one bank finance  5 different start-ups in excess of $500K each that all failed within their first 24 months. They refused to finance us, yet we are still here and expanding. I was only seeking $110K, and no debt of any kind going into it. We are still debt free and expanding now.

So don't get all freaked out if you get declined financing, I am starting to wonder if the banks are only financing the guaranteed losers in the industry after what I saw. Its going to be tough in our current economic times, just push forward and try harder.

[Chicago Bob]

OK Rocks, thanks so much for clarifying to me the workings of the SBA. I find your situation very interesting and am glad you were able to stage a major score for yourself. Bob likes it when the little guy wins.  
I'm an old guy and, fortunately for me, financing is not a real concern(if and when I decide to proceed). It sounds like your determination in cooperating with all the SBA red tape has really paid off for you in a huge way and this is quite commendable. Congratulations!
Good luck with your great new property. I know you will succeed my friend.  

Bob

[GotRocks]

OK Rocks, thanks so much for clarifying to me the workings of the SBA. I find your situation very interesting and am glad you were able to stage a major score for yourself. Bob likes it when the little guy wins.  
I'm an old guy and, fortunately for me, financing is not a real concern(if and when I decide to proceed). It sounds like your determination in cooperating with all the SBA red tape has really paid off for you in a huge way and this is quite commendable. Congratulations!
Good luck with your great new property. I know you will succeed my friend.  

Bob

I wasn't able to use the SBA guarantee, no bank would do any financing for us. The best offer we had from a bank was for 50% of needed durable equipment, and we already had all of that from being an operating business already. We needed monies for leasehold improvements, initial inventory, smallwares, and working capital. We never got a cent in financing.
I sold my damn snowmobile to finance a restaurant!!  Yes, I am insane!

 I had a grand total of $5,700.00  to open my place. Our 2nd day open my total net worth in liquid funds was only $23.00. I gathered the crew and said 'We better have a killer weekend, or we are screwed! So buckle up and lets kick some arse"
I was making bank deposits daily for the first month. I refused all credit terms from suppliers and did C.O.D. only. and I still prefer C.O.D. terms. But I am going to Net-10 at our new place because our deliver schedule is before I plan on being there for the day. So drivers has a lockbox, and leaves an invoice for me.

Guys, the point is that it can be done, you may not have everything you want to start, but with hard work and a boatload of luck, it can be done.
But if you have financing options, by all means use them! But do not go nuts spending money on equipment you do not absolutely need, instead set it aside for working capital.

[joe71101]

right now im still in the planning and development stage my goal is for open in 2018 because my credit isnt exactly what anybody would call ideal.  Im hoping like crazy to get a loan however it is highly encouraging to see that you made it with so little to start-up without the help of banks.

[hotsawce]

You opened a place with only $5,700? Inspiring!

I wasn't able to use the SBA guarantee, no bank would do any financing for us. The best offer we had from a bank was for 50% of needed durable equipment, and we already had all of that from being an operating business already. We needed monies for leasehold improvements, initial inventory, smallwares, and working capital. We never got a cent in financing.
I sold my damn snowmobile to finance a restaurant!!  Yes, I am insane!

 I had a grand total of $5,700.00  to open my place. Our 2nd day open my total net worth in liquid funds was only $23.00. I gathered the crew and said 'We better have a killer weekend, or we are screwed! So buckle up and lets kick some arse"
I was making bank deposits daily for the first month. I refused all credit terms from suppliers and did C.O.D. only. and I still prefer C.O.D. terms. But I am going to Net-10 at our new place because our deliver schedule is before I plan on being there for the day. So drivers has a lockbox, and leaves an invoice for me.

Guys, the point is that it can be done, you may not have everything you want to start, but with hard work and a boatload of luck, it can be done.
But if you have financing options, by all means use them! But do not go nuts spending money on equipment you do not absolutely need, instead set it aside for working capital.

[GotRocks]

You opened a place with only $5,700? Inspiring!

Inspiring, or insane? You choose!
We close on our new building in 27 hours, I finally get to throw pies to go along with our BBQ

But remember, I saw 5 other places open and fail since the time we opened, and they all got in excess of $500K in financing to open.
I just looked over the financial commitments of one spectacular restaurant failure in my area, they thought they were going to be able to make monthly lease payments of $70K, plus have another $12K coming out that of the business on top of their rent each month for their living expenses!
This was a family with no restaurant experience that tried to open a fine dining establishment in a landmark building. the quote "They failed horribly" doesn't begin to describe the train wreck that took place there.
My area is what I consider "Meat And Potatoes" their menu looked like something you would see on a Latin-american cruise ship! And they executed it poorly to boot.
Know your area, know local tastes and traditions. I did something unheard of but I got lucky because of the gain in popularity of my main item nationwide. I was ahead of the curve by pure luck.

[TXCraig1]

$70K/month??? What the heck did they lease? That would get you 25,000 sqft of the finest restaurant space in Houston.

[Serpentelli]

Here is a picture of the place they are leasing.

Taking out common area, it comes to about $2.00/sf

[Chicago Bob]

Here is a picture of the place they are leasing.

Taking out common area, it comes to about $2.00/sf

Well...now that explains why they did the Latin-american cruise ship cuisine. 

[kiwipete]

$70K/month??? What the heck did they lease? That would get you 25,000 sqft of the finest restaurant space in Houston.

In Auckland, New Zealand that would get you about 1500 sqft... 

[GotRocks]

The place was not that spectacular, it is an old building that was partially condemned. These were not restaurant people, and they had no clue WTF they were getting themselves into.
here is their website>>>>   http://mattmorgans.com/
If the building was given to me at no charge, I could not even afford to do the needed maintenance and repairs that it required.

It was a historic family business/building that burned down in 1972, it was rebuilt, it got handed down through the family, the last family member to get iot was a drunk and drug abuser who ran this once very successful business into the ground and ran up all sorts of debt, he lost it in a sheriffs sale, an investment firm bought it, and these last people thought running a restaurant in a tourist town was easy. They obviously had no clue.
Now the investment company is leasing to another group, I think the new group will make it happen, and not agree to $70K/Month terms either!

[Chicago Bob]

Pretty cool looking old boats anyway! 
I've had an old schooler for about 10 years now....
Mine's being refitted right now but looks very similar to this...

[SinoChef]

So don't get all freaked out if you get declined financing, I am starting to wonder if the banks are only financing the guaranteed losers in the industry after what I saw.

The bank gets to resell the property every 1-2 years for 500,000 down or more. Thats not a bad deal?

they thought they were going to be able to make monthly lease payments of $70K,

Seasonal on a lake? I am from out state MN, and you can almost hear when the money spout (Tourist Dollars) gets turned off each September.  What ever were they thinking?

I sold my damn snowmobile to finance a restaurant!!

That sounds like a book title to me. I would love to read it!