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You’ve dreamed about starting your own hospitality business for long enough! Now it’s time to get cracking. This guide takes you through each component of opening a business and leads you through each step to realising your dream.
Starting a new hospitality business is an exciting time for any new business owner. Sure, significant challenges await. It’s not easy owning a hospitality business and smaller businesses can go under. It takes a certain amount of research, preparation and perseverance to succeed with your business.
But there are some pretty tempting reasons to create your own hospitality business.
If you’re keen to start a hospitality business, it’s always a good idea to begin with a solid base made up of:
It’s also helpful to have an industry mentor who’s successfully launched a similar venture and can offer advice and guidance, particularly in the planning and launch phases of the business.
There are a number of startup costs associated with opening a new hospitality venture.
Be careful not to erode your reserve capital in the beginning by splashing out to buy everything brand new.
Instead, invest strategically in the elements most likely to draw in customers (quality food and good customer service) and upgrade on aesthetics when you’re more established.
You’ll also have running costs to cover, including:
If you can’t afford to finance on your own or with the generous help of family, there are a number of finance options worth considering.
Many new business owners require external funding to get off the ground and for continued growth. View the main types of finance options below.
Many banks and other types of lender tend to be risk-adverse, so if you’re looking to secure a loan, you’ll need a detailed business plan with clearly established key performance indicators (KPIs). This serves to inform prospective lenders on your proposed business so that you get the right loan.
Before you approach a lender, make sure you talk to an accountant or business adviser.
You’ll need to consider:
Crowdfunding platforms like GoFundMe, Kickstarter or IconPark are also becoming popular. In these set ups, financial investment from the general public is used as an incentive for non-financial reward, such as food venue vouchers.
Venture capital is a type of business financing for startup companies that have long-term growth potential. Venture capitalists are more likely to go for high risk investments, but they often get a say in how the business is run.
Angel investors are individuals who invest in small startups. They are often family and friends of the aspiring business owner and invest in exchange for equity ownership.
Since they are typically focused on helping you start your business rather than the success of the business, their terms are generally more forgiving than a lender’s.
So you’ve decided you want your own gig. Do you buy an existing business or establish your own? We’ve summarised some of the main advantages and disadvantages of both options.
The location of your hospitality venture can be a key factor in its success or failure. It’s important you research different locations to ensure the demographic makeup of the area complements the type of venue you’re looking to establish.
Questions you need to ask are:
It’s also a good idea to contact the local council to assess projected growth figures, and ensure the cost of buying or leasing in the area is in line with what you can afford. Key considerations to look out for are any planned development, council rates and zoning.
Once you’ve done your research and decided on a location, you’ll need to decide whether you’ll buy or lease your business premises. Then it’s good to inspect several potential business premises in the local area to get a detailed understanding of price and availability.
Also, spend time negotiating a favourable lease – if you have strong turnover but are pouring a large portion of that money to the landlord, you’re shooting yourself in the foot.
Lastly, before you sign the contracts, seek financial and legal advice to make sure you understand what you’re signing.
HACCP (pronounced HASSP) is a food safety and risk assessment plan to help identify risk to avoid food contamination or code violations.
To get started implementing HACCP in your business, download the HACCP Safe Complete Kit.
There are seven principles of HACCP that should be used by businesses:
It’s a legal requirement in Australia that all employees handling food must be trained in basic food safety. Therefore you should provide food safety and appropriate training as part of the induction.
Employers have a number of options to consider, ranging from:
It’s compulsory in many Australian states and territories (VIC, NSW, QLD, ACT) to have a nominated Food Safety Supervisor on staff.
This person will:
In a competitive industry like hospitality, finding and retaining employees is one of the biggest challenges facing venue owners and managers.
Skills required for hospitality roles will largely depend on the type of venue you’re recruiting for but can range from barista skills, food and drink preparation, cash handling, customer service and management skills.
Additionally, employers should equally consider soft skills like interpersonal skills, the ability to multitask and be adaptable, team work, strong organisational skills and having good attention to detail.
In addition, promoting the role through your social media platforms, as well as putting a simple ad in the window, will help raise the attention of potential job seekers.
There are a number of specialist recruitment services available to help time-poor business leaders ensure they are recruiting employees that have not only the right job-related skills needed for their business, but also the right cultural fit.
The hospitality industry is highly competitive. Many inner-city suburbs of major capital cities in particular are experiencing gentrification, which is changing the demographic of these areas, but also attracting new hospitality businesses. Business leaders must remember that there will be other venues vying for consumers’ money and loyalty.
You will need to keep your eye on the food, beverage and aesthetic trends that are appealing to your target market, the price point of similar venues in the area, and how you can provide a point of differentiation
Social media is widely used by the hospitality industry for marketing purposes and to help businesses communicate with their target demographic. In fact, a growing number of consumers now expect hospitality venues to have an active digital and social presence.
Social media has the added benefit of being a cost effective marketing option, with potential for high reach.
The most cost and time effective way to use social media to market your venue is to identify the key social platforms that your current and prospective customers use, and use clever content and targeted marketing to reach them.
Advertising in the local paper, or through online “hot spots” like Broadsheet, TimeOut and Concrete Playground, can boost awareness of your business and are worth considering if your marketing budget allows.
Tech savvy business owners may also look to invest in some paid Facebook or Instagram ads, once these platforms have been established.
Lastly, if your business has invested in a POS solution like Impos, the marketing feature will enable you to harvest contact details and send online newsletters with new promotions or incentives.
Incentives may include loyalty offerings for regular customers, bundle deals, “happy hour specials”, or discounts with the launch of business milestones (i.e. the launch of a new menu), just to name a few.
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