Essentials Of A Small Hotel Business Plan

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The restaurant and small hotel business sector is one of the fastest growing domains in the country. A proof of this is the growing number of eateries opening in a majority of the cities in India (including the tier II and III cities) and the crowd that is witnessed in the majority of these places, being packed with people, especially over the weekend. A growing number of people like to have at least one meal out over the weekend and a rising number of individuals prefer to meet friends and family and socialize with others at small restaurants and hotels. This demand for restaurants and small hotels has given rise to a thriving business opportunity in this particular sector. The challenge, however, is not just to start a small restaurant but to sustain it in these competitive times. Budding entrepreneurs need to learn how to start a small hotel business and also how to ensure it remains a flourishing business in a  field that has proven to be a rewarding field over the years.

In order to start a small hotel or a restaurant and for it to succeed, it is necessary to be thorough and well prepared with the planning for the business. A business plan is necessary for every business, and for the small hotel business, it needs to be chalked down meticulously, so as to include all the details if the business. Business planning is the first step towards a successful enterprise and includes deciding what services you would like to offer in the restaurant, the place where you would like to start the restaurant business, analysing the existing competition, estimating demand and creating the financial model. Business planning is an ongoing activity and should be updated whenever internal or external factors change, to ensure a sustainable business that is prepared to weather all situations. 

A business plan is helpful for the business and guides the business to succeed as-

  • The business plan helps give the restaurant and hotel business a well-defined structure.
  • The business plan helps validate the idea for the business, in this case the restaurant and small hotel business, and helps determine whether the business plan is reasonable and feasible and if it needs adjustments and changes for it to succeed.
  • The business plan helps save time as well as resources especially when considering the future of the business.
  • The business plan helps identify shortcomings in the plan at the nascent stage itself and can help make corrections in time, in order to design the business as per the current demand and trends.
  • The business plan gives an inkling into the structure and operations of the business in the future and how to prepare for it from the beginning.
  • The business plan acts as the first step while securing funding for the business because the business plan covers all the concerns and details required by banks and funding institutions.

A business plan is, therefore, a must for every entrepreneur who is planning to open and run a small hotel or restaurant.

small hotel business plan

Small Hotel Business Plan

The business plan needs to cover certain important aspects of the business for it to be of value to the entrepreneur. The essentials to be included in the small hotel business plan vary as per the type of business and entrepreneurs can always opt for business planning services to help define and fine-tune the exact factors and goals to be included in their hotel business plan. However, some of the basic factors to be considered and included in the business plan are-

small hotel business plan

Choosing The Concept Of Restaurant

A small restaurant has several advantages compared to large restaurants and hotel chains and big brands. Small restaurants offer ambiance and coziness, and also require less startup capital for equipment, need to maintain less staff, and cost less in terms of ongoing utilities and maintenance. Even with a small amount of seating, smaller restaurants can still produce sizable profits. However, the concept of the small restaurant must be clearly defined from the beginning. Firstly, the small hotel can be like a bistro or a cafe or an intimate dining place for couples on a budget or can even be a sports bar or exclusively a dessert and snack joint or can also be a takeaway restaurant. The concept of the restaurant even includes the type of food the entrepreneur plans to serve at the restaurant. The small restaurant can serve South Indian fare or even exclusively South East Asian fare or Lebanese food items or continental breakfast only or Italian fare or a restaurant that specializes in vegan food only. There are a number of specialties and styles that restaurant owners can choose from and finalise a niche concept for their business. The concept of the restaurant in terms of the ambiance, interiors and the food offered need to be chosen carefully and mentioned in the business plan in detail. 

Location Of The Restaurant

The location of the small hotel or restaurant is vital for the viability of the business and must be chosen carefully. The first factor to consider is the accessibility of the restaurant. The hotel must be easy to access and must be located in an area that experiences considerable footfall or centrally located or located in an area that is frequented by locals while stepping out for a dining experience. Also, the location must be financially feasible too. The benefits of a small hotel are less overhead expenses and costs. But if the restaurant space drains away a sizeable capital amount then the small hotel business model is rendered useless and no longer profitable. Therefore, the accessibility and feasibility of the location for the restaurant need to be considered while finding a place and must be mentioned in the business plan as well.

Capital Requirement And Funding For The Restaurant

A small restaurant requires a lot of equipment and accessories to run the business and all these requirements need capital investment. The costs involved in running a small restaurant include the investment made to purchase the restaurant space or to get it on lease on a regular rental basis. The other costs include the equipment needed for the restaurant such as vessels, cooking stoves, ovens, microwaves, cutlery and crockery. The furniture and seating arrangements such as chairs, tables, couches within the restaurant is another capital investment to be considered along with the lighting, the decor and interiors of the restaurant. An additional cost involved is that incurred while preparing the ingredients and obtaining the daily fresh produce used for the restaurant. Other costs that need to be considered are the miscellaneous day to day expenses as well as salaries and wages of the staff is an additional expense to be considered while considering the financial requirements of the restaurant business. 

The funding for all these expenses can be obtained via bank loans or from non-banking financial institutions. Alternatively, borrowings from friends and family and savings can also be used to start and operate a small restaurant but loans are the recommended option. A business plan plays a major role while applying for these loans and creates the best impression for the business. Thus the business plan must include all the financial and capital requirements to start and run the business and the plan must also be drawn meticulously to create the right impression of the business while applying for a loan.

Registrations And Licences Required For The Restaurant

A small restaurant or hotel requires permits and registrations in order to run the business. These include FSSAI registration because the restaurant business deals with the production of food, as well as food items and any business dealing with food production and manufacturing or processing needs to apply for FSSAI registration.

The other registration required includes a GST license registration, professional tax license, a liquor license if the restaurant serves liquor and the most important, the business entity registration which provides a structure and identity to the business. These registrations and licenses as well as which business entity the restaurant will choose must be included in the business plan. 

Promotions And Marketing For The Restaurant

For a small restaurant to run, promoting and marketing is an important aspect which needs to be given equal importance as the other aspects and also needs to be included in the business plan. The promotions include spreading the word about the restaurants via social media websites, advertisements and flyers. Special offers, events and occasions too can be arranged and celebrated in the restaurant to attract crowds and promote the restaurant. At the same time, advertising and marketing techniques can also be applied via websites and through listings on food related sites and applications. The marketing and promotion plans for the business must be included in the business plan. 

The business plan is important for the small hotel and restaurant, and needs to include these essential factors amongst other details regarding the workings of the business. Since it needs to be made carefully and entrepreneurs might lack the skills to make a comprehensive business plan, help can be sought via deAsra to make a detailed business plan for the small hotel business.