Restaurateur's Top 5 Reasons for Business Failures
Restaurateur, Jon Taffer, reports on his findings as the
host and executive producer of “Bar Rescue” on Spike TV. Since 2011, he has
used his knowledge and expertise to attempt to help save 53 failing businesses
across America, and has quite succeeded with 90% of the bars continuing to stay
in business and profit after the cameras have turned off and their episodes
aired. While each of the bars are failing for many different reasons, and
Taffer has had to witness many horrifying sights, he sees five main areas that
each of the failing businesses fall often fall into – and while you may not be
thinking of opening yet another bar in the Chico area, we believe that each of
these 5 points are good reminders for all businesses of every shape and size.
- Getting into the
business for the wrong reasons
“Restaurants to
me are not like children; they are businesses,” says Taffer. Too often do
people open a business like a bar because they love hanging out in them.
In order to be successful, you should open a business because you have a
vision to build that business. Educate yourself or surround yourself with
the people, tools, and equipment that can give you the experience to be
able to build that business.
- Not taking
responsibility for failures
Taffer has seen
that the reason for every failing business on “Bar Rescue” whittles down
to an excuse. It is hard to accept the reality that your business may be
failing, but the only way to get over it and to turn your business around
is to find the true problem and to fix it. Yes there are a lot of things
that make owning a business hard; the economy, competitors, even the
weather, but every business owner has to go through the same things.
Every time you find yourself giving an excuse for why business isn’t doing well, give yourself a reality check and
figure out what the real problem is.
- Not
understanding the three essentials of marketing
“Business
owners think too generically about marketing, when they should be
implementing three specific marketing initiatives: new customer,
frequency, and spending programs,” says Taffer. He then goes on to define
each of these initiatives as follows. New customer programs create
first-time business, and typically include neighborhood and local
business outreach. Frequency programs are special promotions designed to
remind existing customers of your business and to encourage them to come
back. This could be through advertising in-store, on email blasts, and on
social media. Finally, spending programs aim to increase how much each
customer spends each time they come into your establishment. This can be
achieved by training your employees on learning how to read customers,
how to upsell to their wants and needs, and to offer special deals. “If
you don’t have those three things, you’re not marketing anything”.
- Not staying on
top of the numbers
Taffer believes
this to be the most important fact of all, and finds it particularly
infuriating when those in the restaurant business don’t as there are POS
systems that do all of the work for you. In any business, not just the
restaurant business, managing expenses is a science and must be
maintained regularly. Know the average percentages that your general
expenses cost for your industry, doing this will help you more accurately
determine your profitability and competitiveness against your
competitors.
- Not having the
necessary experience or help
Taffer works in
an industry with extremely high failure rates for first-time owners. One
out of twelve first -time restaurant owners fail, compared to one in three
second-time owners. His advice for all entrepreneurs in every industry
is, “You’ve got to have experience. Either work for someone else first or
have a partner with experience.” Reach out to organizations in your
community that are dedicated to helping small businesses in your area
succeed, like 3CORE for Butte, Glen, and Tehama counties!
Photo Credit: http://onpurposemagazine.com/2013/02/15/government-rescue/
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