Do Restaurant Owners Face More Financial Issues than other Businesses?
If you are a small business owner, then it’s no secret to you that in the last 5 years, small businesses have taken a serious financial hit. Many large business can often afford to take a bit of a dip in profits, and still keep their doors wide open, but many small businesses just don’t have enough revenue, or savings, to stay afloat in tough times. Additionally, among all of the various small business industries, the small restaurant sector has recently been hit the hardest. Staying open in this economic climate has become more and more difficult, no matter how good the food is.
If you own a small restaurant, or are planning to open a restaurant in this difficult economy, it’s important to be aware of some of the financial issues facing small restaurant owner. This will help you better plan your finances, and know how much you may need to apply for in small business loans for restaurants in order to be successful.
While few people would be willing to argue that more and better healthcare is a bad thing, rising healthcare costs impacts small restaurants significantly as it’s expensive for small restaurants to hire, maintain, and cover a large staff. If a restaurant has more than 50 employees (which may seem like a lot, but may account for all of the chefs, cooks, managers, hostesses, and wait-staff on all of the different shifts), they are required to provide health care to their employees. This is one expense you will definitely want to plan on when drawing up the budget.
Building Significant Capital
It’s important to invest funds earned back into your restaurant. That’s how you sustain and maintain a business, but building enough capital to both keep the lights on, pay your employees, and have a little left over to pay the bills is a difficult level to achieve. Before opening, it’s important to have at least a year’s worth of capital in the bank.
Managing Expenses without Hiking Menu Prices
Effectively using inventory should be a priority for all restaurants. It can be tempting to up menu prices in order to help manage expenses, but higher prices will mean a smaller pool of clientele overall. It’s important to find a balance when it comes to menu prices, and there are other factors to consider, besides just how much it costs to make the dish (including competing restaurants and the atmosphere of the restaurant).
Maintaining a Qualified Staff
One of the highest expenses for restaurant owners is scouting, hiring, and training new staff. Making sure that you have the right employees and a good team atmosphere can encourage returning customers and ultimately cost you less money.
To read more about the challenges facing the restaurant industry and how to lower their impact on your burgeoning business, check out this article. Also, please feel free to contact us at Shield Funding today for more information.