Discuss about the Medium Sized Restaurant Business Idea.
Type of Restaurant
With the increasing numbers of consumers who want to dine out or those willing to take prepared food home, it was essential to come up with a small restaurant that could cater for these needs. Australia is increasingly becoming a tourist destination of choice for many people across the world and with the high rates of food and accommodation in the high-end restaurants, many people are now seeking to find alternative ways to spend less in this sector when they come to make their visits in the country either as tourists or for business. The shifting demographics as well as changing lifestyles have driven a sudden surge in the food-service business (Maeley, 2018). Many busy consumers increasingly lack the time or even any inclination to cook. With the current nature of the economy and life, many people are on the move for business or pleasure. Providing a premise where people could wine and dine and be merry, could go a long way in establishing a lasting business brand as these are some of the things that such people on the move require. As opposed to this, some individuals could have the need or desire to explore certain types of foods or even to develop a given taste for specific foods and thus the importance of establishing this kind of restaurant.
The first step in establishing this restaurant is to come up with the type of restaurant that we want to establish. In this case, the best idea for a restaurant is one that combines all the aspects of the food that is commonly loved by Australians as well as other people coming from different parts of the world. For this reason, three categories of food have been selected to ensure uniqueness, variety, as well as diversity as earlier, pointed out. In many countries, including Australia, it is easy to find a restaurants that are exclusively for fast food, another for Chinese food and another for the local cuisines. In many scenarios, therefore, these are three business with each having its nature of operations. However, for our medium sized restaurant, all these three aspects would be combined and bestowed under one roof. In addition to this, if the customers are from outside the city or country and are in town for the night, there would also be an extra option of booking an affordable room to spend the time. In the end, this business is to be all rounded and therefore required a lot of input, effort, and considerations to establish. Coming up with this type of business naturally comes with many challenges which will be discussed in the course of the paper including the capital sources for the new restaurant, expected difficulties as well as how to effectively involve the potential risk of the business.
- Capital Sources for the new business Venture.
- Personal Investments
Capital Sources for the New Restaurant
This will be the first source of capital for establishing the business. Personal investment is the money that is saved by an individual on their part towards meeting a given end, in this case, starting a medium-sized restaurant. It is essential to note that when starting any business, the first investor should be yourself. This investment could be in terms of personal cash or collateral on assets. A big part of personal investment is the money that is accrued by the investor over a certain period from other ventures to create capital for a new opportunity if it arises. In this cases, I have had skills in web creation, and over time, I have been able to accrue a substantial amount that would help in contributing towards the capital for this business. In addition to this, I am planning to sell a number of my assets such as some electronic gadgets and appliances as well as my car. However, this amount is not merely enough for the whole project and therefore the importance of exploring other areas for the capital. Personal investment is essential as it proves to banks as well as other investors or money lenders to see the long-term commitment of the project and the fact that the business owner is ready to take risks.
Love money can be defined as money that is loaned from a spouse, Friend, immediate family or close relatives. Bankers tend to refer this to as patient capital which can be repaid back as the business grows and profits, and thus does not necessarily have interests, or a time duration within which the amount can be paid (Kennon, 2018). In opening a medium-sized restaurant such as this, it is essential to have substantial capital. Since the personal investment capital is not adequate, love money had to be sought from immediate family. Asking my father for a small loan would go a long way in contributing towards my dreams of establishing this business. The money could be repaid later when the business starts to profit as I am confident that he would not pressure me into refunding the money when the business has not broken even. Love money is a good source of capital, but there are a number of considerations that a person must be aware of before opting for it.
First, it is important to note that family, as well as friends, rarely do have much capital for your business endeavors. For that reason, it would be advisable to overly depend on them as this is bound to generate little boost towards financing the new business venture. Second, a person has to know that dealing with family and friends could affect relations if there is not sufficient understanding and plan of execution, or even when losses are incurred. Lastly, if these people invest money in your business, they might want some type of equity in the venture. Due to this, it requires a person to be comfortable with the idea. In this case, I am not willing to involve too many people in the business in as much as I want to open it, I would have to consider my father only, and from that, I can top up the remaining amount from other sources apart from love money.
Considerations for Love Money
In Australia, government agencies have the potential of providing grants as well as subsidies that could be available for business. These could prove essential for acquiring some funds for the new business venture.
These are the conventional sources of funding for small as well as medium-sized business such as this. A bank can analyze the nature of business and other factors that would help it in establishing the creditworthiness of an individual (Victoria State Government, 2018). If they feel that you are the right person for them to invest in, then it would be easier to acquire a loan. In this case, having ensured everything is in order and having come up with a great business plan, I could present my business idea to the bank for financing.
The first legal challenges that we have to deal with in any nature of new business venture including this is the registration of the business name. In Australis, this could also involve Australian Business Number (ABN), the Good service Tax (GST), Pay as you Go (PAY G) withholding and Tax File Number (TFN) (Australian Government, 2018). It is important to note that all the business owners in Australia must have registered their business before starting any type of operations. The second legal consideration is to ensure compliance with fair trading laws. This law ensures the business venture operates fairly and competitively as well as make sure that your consumers/customers are well protected. Finally, intellectual properties in Australia are quite fundamental and must be adhered to always as a legal measure. For this reason, we shall ensure that we do not infringe on any other business rights for our case.
Political instability or political upheavals could be detrimental to any new business. For a new venture to flourish, it must be established in an area where the politics of the land is settled. In Australia, the political situation is not that tense, and this provides an excellent ambiance for starting a new business. When there is political instability, not many tourists are bound to visit the country, and thus this is bad for business. In addition, political instability has a negative impact on the economy forcing people to stay away from luxurious places such as restaurants another political issue that is bad for business. The last political challenge that is likely to affect the new business venture is tax reforms. Restaurants could be affected by a wide range of politically motivated taxes as well as financial regulations like credit-card swipe fees, restaurant depreciation write-offs as well as rules for food donations (Perkins, 2018). For this reason, some issues that warrant a close watch in terms of politics of the area is the work opportunity tax credits, lodging taxes, sales taxes among others
Government Grants and Subsidies
When creating a new business, the technological issues are essential to consider as they bring about the nature of innovation in the work area. In this case, since the business is new and there is no much capital to work with, there could be challenges in acquiring the right technology to drive the opportunity. In the hospitality industry for instance and having this nature of the business, it would be ideal to do digital market, advertise, create a website and well as a means of booking and making reservations when needed. All these could come in time but are a great challenge during the initial stages of launching the venture.
In Australia, the federal, as well as local governments, can jointly work on administering the environmental protection law. As a new business owner, it is essential to note the business laws that apply to you depending on your location and the surrounding. For instance, in the restaurant business, it is perfectly okay to open near other facilities such as hospitals or schools. If this business were a liquor store, then the considerations would be different. The environmental challenge for a restaurant is, therefore, establishing the location in which to set up.
The type of society in which business exists as well as the cultural challenges tend to have a significant influence on the success of the venture. If the society and their cultural believes are not supportive to the business, then it would be a stupid idea to set up such a business. For instance, setting a pork shop in a Muslim community or beef joint in India. For this reason, to avoid wasting resources, it is essential to conduct a proper study of the society in a specific area as well as their cultures. Considering that Chinese food is part of what will be served at this restaurant it could be a challenge in getting enough of the customer base in that area of the menu as opposed to the common Australian food as fast food due to the society and culture of the people of the nation.
In addition to all the challenges that have been mentioned above, there are a number of risks that are involved in this nature of business. For instance, if there is a potential for a political unrest or collapse in the economy, there should be ways to ensure that the business does not collapse as well. One consideration that has been made in this regard is that through diversification, the restaurant is able to continue operating regardless of the political or economic situation. Another way of mitigating the potential risks is to monitor and review and risk or challenge and analyze the consequences. Some risks are good for business while others could be detrimental to the venture and thus the importance of coming up with structures that would minimize the negative effects of risks and upscale the positive impacts (Watkins, 2018).
A restaurant business that is diverse and unique such as this could go a long way if successful. There are many challenges that could be witnessed in starting the venture such as the capital for beginning as well as external factors that affects ant type of business. These challenges could be political, economic, social, cultural, technological or legal. Understanding the challenges and knowing how to best overcome them could prove useful in starting this venture. In addition to this, risks are an essential part of any business and must be considered at all times. They could be positive or negative. Regardless of the type of risk, they should be involved in the considerations for starting a new venture. Risks should be strategic and measurable at all times.
Australian Government. (2018, August 14). Legal essentials for business. Retrieved September 13, 2018, from Business: https://www.business.gov.au/planning/new-businesses/legal-essentials-for-business
Kennon, J. (2018, August 27). The 3 Primary Types of Financial Capital. Retrieved September 13, 2018, from The Balance: https://www.thebalance.com/the-three-primary-types-of-financial-capital-357332
Maeley, L. (2018, July 4). How to Start a New Restaurant. Retrieved September 12, 2018, from Small Business: https://www.thebalancesmb.com/how-to-open-a-new-restaurant-2888644
Perkins, C. (2018). Political Problems Affecting the Restaurant Industry. Retrieved September 12, 2018, from Chron: https://smallbusiness.chron.com/political-problems-affecting-restaurant-industry-62098.html
Victoria State Government. (2018, July 30). Apply for a Business Loan. Retrieved September 13, 2018, from Business Victoria: https://www.business.vic.gov.au/money-profit-and-accounting/raising-capital/small-business-and-commercial-loans
Watkins, D. (2018). Risks Associated With Running a Restaurant. Retrieved September 13, 2018, from Chron: https://smallbusiness.chron.com/risks-associated-running-restaurant-20838.html
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