188 | HOW TO WRITE A BUSINESS PLAN
Pierre’s approach is not one I would
recommend. Here is how I would tackle
this sort of problem. I would take the first
four months’ total sales and divide by four
to get a monthly average. Then I would
design a Profit and Loss Forecast to make
a profit at that level of sales. To do this, I
would have to cut back. I would also pay
a lot of attention to both the quality of my
food and techniques to get the word out
in the community. For example, if Monday
and Tuesday evenings were slow, I might
close the restaurant and start a cooking
class those nights. If my efforts to generate
more business failed, I would think about
closing.
Axiom: You can fool yourself into waiting too
long for success.
Advice: Before you open your doors, establish
a time when you will review your business
performance to see if you are meeting your
goals. This forces you to compare your results to
your plan. If your business is not doing as well
as it should be early, you still have a chance to
make changes before your money and energy
run out. If you must close, it’s far better to close
with a small loss than to hang on and end up in
bankruptcy.
Prepare for Success
Now let’s assume your business succeeds.
Why shouldn’t it? After all, you’ve planned
carefully and worked hard. When it
happens, be sure you relax and enjoy your
success for a while before you think about
your next step. Everyone needs to know
how to take a vacation, especially small
business owners.
If you’re considering expanding, first
take a long look at your business and your
personal goals. Many wise people would
rather make a decent profit with a small
business than deal with the headaches of a
much bigger business.
Let me illustrate this point with the
story of Fred and Fritz, who opened a
breakfast restaurant several years ago. After
they learned the ropes, they made a good
profit. Best of all, they went home every
day at 3 p.m. Then they opened a second
breakfast restaurant and things were twice
as good. Next, they made plans to open
two more, on the theory that if two are
good, four will be better. This meant they
had to run the two existing restaurants
while building the new ones. Inevitably,
hired employees ended up managing the
existing restaurants. About then, interest
rates went up and there was a recession.
Finally, they got all four restaurants open.
The only problem was that without their
personal attention, business had dropped
40% at the original locations and was less
than half of what was expected at the two
new ones. Within two years, they both lost
their homes as well as their businesses and
were back to working for someone else.
Not surprisingly, their new bosses thought
it unreasonable for employees to go home
at 3 p.m.