BUS 463 – Entrepreneurship Feasibility and Analysis

There is a great deal of leg work that must be completed to compile a comprehensive business plan for opening a small bistro. The value proposition is the first step; it is the opportunity to show the desired target market what makes this idea different or better from the exiting choices. A competitive market analysis can illuminate how the new plan will hold up against the existing competition. It is vital to institute strategies to protect the design branding, logo, and technology, or in the case of a bistro, the secret recipes. A thorough feasibility study must be completed after all of the previous steps have been completed. A feasibility study will accentuate what practicality of the proposed idea.

While many believe that opening a restaurant takes merely a dream, it is much more complicated. Start-up capital is required in addition to the goal, but a thorough business plan is crucial to success. From a solid Value Proposition to an in-depth feasibility study paired with a competitive analysis are vital for a business plan that will show the real value of the venture.

Value Proposition

The value proposition of any business is quite difficult to pin down because the value of anything is entirely subjective. To write a successful value proposition that will enhance the value of a healthy business plan is best done by focusing on the target customer and building the value proposition from there. Once a value proposition has been picked it will help to keep the focus of owners and staff in the direction that supports their target customers (Barmak, 2014). While the atmosphere and artwork help with the success of a restaurant the food is the lifeblood of a restaurant. With the explosion of social media, everyone has the audience and potential to be valued food critics where the conversation about the food served can launch a bistro to success or utter failure

Lomati’S is the name of the bistro we would like to open in the next few years. The value proposition for Lomati’S lays in the idea of contemporary spins on traditional comfort foods offered at competitive prices.

We will also be launching a Key-Holder program. We have purchased 50 old fashioned keys. We will hand out twenty-five in the first week that we are open and will reserve the others for repeat customers or members of the law enforcement community. If a key is presented during a visit, the presenter will be rewarded with a random reward, from a glass of wine to a free appetizer or dessert. We hope that key holders will share their keys with family members and friends to bring in new customers.

Our atmosphere will be upscaled casual with couches for people wanting to relax and dine and tables and booths for a more traditional dining experience. The walls will be adorned with artwork and photographs from local artists and family that will be available for purchase. Our food will be supplied from local farmers and vendors to allow new items to be offered each season using the freshest ingredients.

Target Market

The ideal target market for the bistro environment is people with an above average income and possibly some college experience. While the goal is to keep the food pricing competitive with other local eateries in Ashland, Virginia, the average meal will be slightly higher than typical fast food or chain type restaurants. The higher education generally means higher average income leading to more disposable income to be spent at a favorite eatery.

Competitive Market

A competitive market analysis is a critical step that should be performed before trying to open a business of any sort. In business terms, a competitor is a company in the same industry which offers similar products or services. It is necessary to know the existing competitors for two crucial reasons: understanding competitors strong, weak areas can enhance the focus to fill the voids in the competitor’s strategy and to help strengthen your product against the competitors (Barcellona, 2017). Without a robust competitive analysis, it is difficult to determine the direction of the new venture. With proper analysis, it is not clear if the new venture can differentiate itself from the existing businesses, or it the new investment would be better served to strive to create a niche for itself in a well-established industry (Allen, 2012).

There is a healthy competitive market in Ashland, Virginia. There are currently thirty-eight places to eat in the 7.16 square miles that make up the Town of Ashland. The current population is 7,796 people with an estimated 1,500 people commute into Ashland for work. Additionally, Ashland is a booming college town, home to Randolph-Macon University. It is estimated that roughly 15,000 vehicles pass through Ashland on a daily basis and a large portion of those vehicles make purchases since Ashland is conveniently located off Interstate 95 at mile marker 92, about 15 minutes north of Richmond, Virginia.

The thirty-eight places to eat are comprised of twenty-four chain restaurants like Applebee’s and The Cracker Barrel with 17 of those 24 restaurants being fast food restaurants like Wendy’s, Cook-Out, Chick-Fil-a, and McDonald’s. Ashland is proud to offer fourteen unique dining options with twelve of those options being traditional to dine in style restaurants like Trackside Grille, The Iron Horse, and Homemades by Suzanne.

The restaurant that would be the most direct competitor to Lomati’S would be The Caboose Market and Café in downtown Ashland. They have eight tables, their menu is seasonal and changes to support local farmers and suppliers whose names are featured on their menu with the items supplied. While they offer some specials like $3.00 draft night and $35.00 date night for couples, their prices can run a bit high, and they have very few staple items on their menu. Their décor is bright and straightforward while we are hoping for deeper, warmer tones and more comfortable options.

Protecting the Brand, Logo, and Product Technology

The most direct way to protect the brand and logo on a new business venture is to trademark them. A trademark gives the holder the right to exclude others from using similar marks that might confuse consumers. After the trademark has been issued, it is the responsibility of the owner to monitor new trademark applications and monitor unregistered infringements (Keller, 2017). It is essential to make sure that your Trademark is safe from competitors choosing similar looking or sounding replications. When putting anything online, it is vital to protect the intellectual property with legal statements and conditions and to monitor activity on a regular basis. Lomati’S because of the unique name the nature of business should not be under much threat from copiers, but the trademark and monitoring will be part of the weekly routine.

Testing the Feasibility

Having a great idea is a step in the right direction when trying to start a new venture, but examining the design before launching the plan is imperative to gauge success. As Roth (2017) stated: There are many ways to test the feasibility of a new venture, the three worth investigating deeper are: run it by a group of critics and have a good support team, train yourself and your team, and marketing yourself.

Group of Critics and Support Team

The U.S. Small Business Administration offers access to counselors, potential investors, and mentors to people trying to start a business. The experience and insight from someone that has “been there, done that” can be priceless to a budding future business owner. The only thing that is certain about opening a restaurant is that nothing ever goes as planned. Surrounding yourself with experts that can help navigate the changes can be the difference between success and failure. The best team to surround yourself with is people with experience, strong critical thinking skills, and people invested in the future success of your venture. These people will help

to guide you through the unthinkable before it happens. Proper planning is the key to success it is not possible to over plan (Roth, 2017).

Training

When striving to open a business, training is essential, practical experience is crucial, and the ability to train your team is the vital key to success. A sure-fire way to ensure proper preparedness for the restaurant world is to invest time working in restaurants, both in the front end and behind the scenes. Loving to cook is not enough to make a successful restaurant owner, there must be an equal dedication to design, food, service, and hospitality. All of these aspects are needed to create a successful restaurant. Once the owner’s skill set is solid, it is imperative to invest the time, energy, and love of teaching to train the employees. The servers and employees at the front of the house are directly responsible for customer satisfaction; it is necessary for the employees to have the tools and the knowledge to accurately correct issues as they arise for complete customer satisfaction. The owner or manager needs to make sure that employees are trained in line with the mission statement and goal of the business. Thorough training will empower the employees and make them an indispensable resource to serving customers in a manner that will keep them coming back for more (Roth, 2017).

Marketing

The key to successful marketing starts months before the restaurant opens its doors. Set aside a budget that allows for aggressive marketing for months before the doors open and on a consistent basis after opening. The main point of marketing is to generate a buzz and interest in your business before the doors open. A successful marketing plan requires a dedicated marketing partner that can continue to keep a sharp focus on marketing even while the owner is occupied with what needs to be done to open the doors. When composing a marketing plan remember to plan for a robust social media presence, the new generation relies on social media. Lastly, appoint a member of your team to monitor the social media channels and respond to comments, questions, and complaints as needed. (Roth, 2017).

Start-up Funds

Performing a realistic estimate of the amount of cash that will be needed to start up the business successfully is vital for potential financing or grant applications and attracting investors if that is the route taking for the new company. Investors can be an enormous benefit regarding cash and capital invested, but also regarding experience, they bring to the table. The initial analysis of the market and property costs shows that the start-up costs of opening the bistro, according to the article, you should figure on $3,734.00 per seat.  Assuming we have ten seats, it would be around $30.734.00 per year.  While the numbers below don’t exactly match the estimate, things could be done cheaper, but the initial numbers are:

Lease for 1 year of 2000 sq ft area: $12,000.00

Rent restaurant equipment, dishes, etc. $12,000.00

Insurance for year: $4,000.00

Payroll for year (estimated): $10,000.00

Food: $10,000.00

When mentioning that the numbers could be lower buying or leasing the restaurant equipment will have a big impact on the overall numbers. Payroll will also vary according to the size of the establishment and the number of employees needed. Another factor that could affect the overall start-up capital needed is the cost of the food. Working with local farmers and vendors can do a great deal to help the image of the restaurant, but may be more expensive than buying in bulk and discount stores.

Incentives for the Founding Management Team

The bistro that we plan to open will be a small operation. The founding management team will be my husband and me. Incentives that we can offer investors would be a percentage of the future profits. We have done some investigating into the benefits of investors and have decided we would be happy to work with investors and give a percentage of ownership and profits as long as the investor has a substantial business background with a robust focus on the restaurant business. Knowledge is power, and insight from experience is priceless in the restaurant business. Our main focus will be investigating the labor and tax laws to pay our servers closer to minimum wage, instead of the typical salary of around $2.00 per hour while still allowing them to keep their tips. Having waitress and bartending experience proved that earning more per hour and keeping tips was a significant motivation to continue to strive for perfect customer service and finding ways to be more beneficial to the owner. We hope that by giving more to the servers, it will inspire more from the servers as a means to shrink the gap from owner to customer while providing superior customer experiences.

References

Allen, K. R. (2012). Launching New Ventures: An Entrepreneurial Approach (6th ed.). Mason, OH: South-Western CENGAGE Learning.

Barcellona, N. (2017, January 13). Restaurant Competitor Analysis: How to do it. Retrieved from https://www.forketers.com/offline-marketing/restaurant-competitor-analysis/1853/

Barmak, A. (2014, June 30). Does your restaurant have a clear value proposition? Retrieved from https://www.restaurant-hospitality.com/blog/does-your-restaurant-have-clear-value-proposition

Keller, K. (2017, November 02). 5 Steps to Protect Your Brand Trademark or Risk Losing It. Retrieved from https://smallbiztrends.com/2015/12/5-steps-protect-brand-trademark-risk-losing.html

Martin, M. (2016, February 02). New Business Idea? How to Test It Before Launching. Retrieved from https://www.businessnewsdaily.com/6540-how-to-test-your-business-idea.html

New Restaurant? What’s Your Value Proposition? (2018, November 09). Retrieved from https://contentwriters.com/blog/new-restaurant-whats-value-proposition/

Roth, D. (2017, July 10). 7 Steps to Successfully Launching a New Concept. Retrieved from https://www.foodnewsfeed.com/fsr/vendor-bylines/7-steps-successfully-launching-new-concept

(n.d.). Retrieved from https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs

5 Things Startup Restaurants Typically Overspend On. (2015, April 30). Retrieved from https://restaurantengine.com/startup-restaurants-typically-overspend/