13.1: Structuring Your Business Model

A strong business model combines the elements/parts of the applicable information to form a whole idea. Larger industry issues and necessary capabilities surface to convey a competitive advantage. All information in the model is sufficiently evaluated, analyzed, and synthesized. It is important to reflect sound reasoning and judgment, which includes analysis of information, recognition of unstated assumptions, and distinguishes between fact and conjecture. Thus, the model must be well written, with properly documented references containing no typographical errors. Your business model is also a ‘visual aid’ available for referencing key points when you discuss your vision with a lender. Use it to your advantage – impression management.

Business Model Format

Cover sheet and Contents Page

Introduction: A through summary of findings and analysis (approximately 3 pages)

Section 1: The City Introductory paragraph City/suburban appeal City industrial/service sector appeal Discuss why the city is a ‘good fit’ for your business Provide example where applicable

Section 2: The Customer Introductory paragraph Complete demographic information on the population in the area. Based on this information, an estimate of overall market demand. Direct and indirect competitor information: prices, hours of operation, size, menu type, other characteristics of the competitor. Potential of new entrants in the area.

Section 3: Competitive Analysis Introductory paragraph Direct competition Indirect competition Types of food Price, quality, service, hours of operation, etc. Rank your competitors Discuss strengths and weaknesses – theirs and yours Discuss opportunities and consider threats

Section 4: Segmentation Introductory paragraph Segmentation strategy Broad or narrow segmentation Age groups including psychographic ‘face’. The total segment demand in the area Your share of the segment demand – market share & business mix variance.

Section 5: Positioning Positioning statement and strategy Utilizing the hospitality marketing mix Sources of data Type of restaurant you intend to construct Type of advertising you intend to utilize Electronic media usage

Section 6: The Marketing Plan Marketing approach and target markets Electronic and traditional media The methodical approach you intend to use Incorporate position statement

Section 7: Facility and Operation Introductory paragraph Décor and architectural design. Location Equipment and resources available Management plan

Section 8: Costs Introductory paragraph Pro-forma Income Statement Analysis of fixed and variable costs Investment requirements Financing plans

Section 9: Menu Pricing Introductory paragraph Standardized recipes Method(s) of menu pricing’ Product mix Product availability Menu pre-cost

Section 10: The Menu Introductory paragraph Menu information Layout Printing considerations Descriptions Nutrition considerations Truth-in-menu considerations Artwork Beverage menu – listing and pricing (method?) Narrative of considerations

Section 11: Menu Analysis and Revenue Management Introductory paragraph Menu engineering analysis and menu scoring Break-even analysis and sensitivity analysis Performance measures (Which should we use and why? Are they relatable to each other?) Revenue per operating seat hour), revenue per average seat hour (RevPOSH), average check, turnover (RevPASH), food cost percentage, yield management, profit contribution, or others.

Appendix Tables, charts, data, and so forth that strengthen your proposal. Include picture for your competition and facility section – visuals are powerful and explanatory.