It is important not confuse the start up expenses (profit & loss) listed above with start up assets which will appear in the balance sheet of your financial plan. Expenses are tax deductible whereas asset are depreciated. Typically assets are financed by start up capital, either cash from the owner or a bank loan and these typically include:
Your restaurant business plan should include a start up worksheet to assess the true level of capital required to start the business. This will relate directly to any funding application. Banks will only fund assets that have a residual value as it provides a level of security in the event of business failure. Typical Profit Margins Profit margins in the restaurant game are notoriously low compared to other sectors, like for instance assignment help business. This is a direct result of the high level of variable and fixed costs involved in running a restaurant business. Good cost control is essential to turning a profit and the restaurant business plan should focus heavily on cash flow management. Effective cost controls are the best way to maintain a healthy profit margin and the good news is that it is completely within the control of the business owner. Labour (or staff) is a major cost for restaurants and essential to delivering the best experience. Labour costs should be streamlined to meet the needs of the business with as little excess cost as possible. Getting this right takes planning and effective recruiting. Importance of working Capital Management The cost structure of a restaurant is heavily weighted towards variable costs. These are costs that move in proportion to the amount of trade conducted in the business. They are within the control of management and more often than not are the single largest factor in restaurants failing.
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