After targeting smoking and foie gras in area restaurants the City Council has now set its sights on another target. Gee ,what's next?
Source: http://us.rd.yahoo.com/dailynews/rss/search/restaurants/SIG=121ep1881/*http%3A//www.nbc5.com/news/9446752/detail.html?rss=chi&psp=news
Friday, June 30, 2006
Why Managing by Facts Works!
Jeffrey Pfeffer and Robert I. Sutton
Using hard facts, such as qualitative or quantitative data, to make strategic decisions is the clearest path to the best business choices. Yet many executives ignore the facts and make "gut" decisions based on fads or hunches. Although there's great value in keen intuition and fresh ideas, evidence-based management leads to competitive advantage.
Read full article here.
Using hard facts, such as qualitative or quantitative data, to make strategic decisions is the clearest path to the best business choices. Yet many executives ignore the facts and make "gut" decisions based on fads or hunches. Although there's great value in keen intuition and fresh ideas, evidence-based management leads to competitive advantage.
Read full article here.
Raising Capital for Your Restaurant - How Long Does it Take?
Most owners vastly underestimate the time commitment necessary to successfully complete a financing. In actuality, an owner seeking financing needs to budget between 500 to 1000 work-hours to the capital-raising process, spread out over a 6-9 month time period.
The key processes in the capital-raising process include 1) perfecting the business plan, offering memorandum, and other company due diligence materials, 2) developing a comprehensive, targeted prospective investor list, 3) contacting this list and responding to investor due diligence requests, and 4) negotiating the transaction.
Completing the business plan typically requires at least 200 hours of work. This time is dedicated to conducting the market research to validate the opportunity, developing a comprehensive financial model, determining the most effective way to lay out the business strategy, and actually writing and proofing the business plan.
The next step, developing a comprehensive, targeted prospective investor list is also very time consuming. There are thousands of potential investors, each of which has very different tastes regarding the types of ventures that interest them. Some invest by market sector (e.g., healthcare vs. telecommunications), stage (seed stage vs. later stage), geography, or a combination of these. Many hours must be dedicated to determine which investors are the right fit for your restaurant. This process involves creating a master investor list, visiting each investor and reviewing their investment criteria and past investments, and determining who is the right contact to begin with.
To see how easily the time adds up, consider that only about 25% of prospective investors who show an initial interest in a transaction actually progress to detailed company due diligence. Only about 10% of this 25% actually progress to a bonafide offer of funds, of which only 25% of these actually result in an investment transaction. So completing a financing transaction requires, on average, contacting approximately 160 pre-qualified prospective investors.
The due diligence process, where investors scrutinize the investment, can also be very time consuming for the company. Investors often request many documents, some of which can be easily retrieved from files (e.g., prior tax returns), while others may take more time to prepare (e.g., additional market analysis, customer lists with past purchases, contact information, etc.).
Finally, negotiating a transaction can take a significant amount of time depending upon the complexity of the transaction and number of parties involved.
Too many companies fail to raise capital since they are unaware of the significant time requirements to do so. Those owners who understand these requirements and budget accordingly are the ones most likely to persevere and end up with the capital they need.
The key processes in the capital-raising process include 1) perfecting the business plan, offering memorandum, and other company due diligence materials, 2) developing a comprehensive, targeted prospective investor list, 3) contacting this list and responding to investor due diligence requests, and 4) negotiating the transaction.
Completing the business plan typically requires at least 200 hours of work. This time is dedicated to conducting the market research to validate the opportunity, developing a comprehensive financial model, determining the most effective way to lay out the business strategy, and actually writing and proofing the business plan.
The next step, developing a comprehensive, targeted prospective investor list is also very time consuming. There are thousands of potential investors, each of which has very different tastes regarding the types of ventures that interest them. Some invest by market sector (e.g., healthcare vs. telecommunications), stage (seed stage vs. later stage), geography, or a combination of these. Many hours must be dedicated to determine which investors are the right fit for your restaurant. This process involves creating a master investor list, visiting each investor and reviewing their investment criteria and past investments, and determining who is the right contact to begin with.
To see how easily the time adds up, consider that only about 25% of prospective investors who show an initial interest in a transaction actually progress to detailed company due diligence. Only about 10% of this 25% actually progress to a bonafide offer of funds, of which only 25% of these actually result in an investment transaction. So completing a financing transaction requires, on average, contacting approximately 160 pre-qualified prospective investors.
The due diligence process, where investors scrutinize the investment, can also be very time consuming for the company. Investors often request many documents, some of which can be easily retrieved from files (e.g., prior tax returns), while others may take more time to prepare (e.g., additional market analysis, customer lists with past purchases, contact information, etc.).
Finally, negotiating a transaction can take a significant amount of time depending upon the complexity of the transaction and number of parties involved.
Too many companies fail to raise capital since they are unaware of the significant time requirements to do so. Those owners who understand these requirements and budget accordingly are the ones most likely to persevere and end up with the capital they need.
Effectively Completing the Operations Plan Section of Your Business Plan
The Operations Plan is a critical component of any business plan as it presents the Company's action plan for executing its vision. The Operations Plan must detail 1) the processes that are performed to serve customers every day (short-term processes) and 2) the overall business milestones that the company must attain to be successful (long-term processes).
Everyday Processes (Short-Term Processes)Every company has processes to provide its customers with products and services. For instance, Wal Mart has a unique distribution system to effectively move products from its warehouses to its stores, and finally to its customers' homes. Technology products manufacturers have processes to convert raw materials into finished products. And restaurants have processes to identify new areas of customer interest, to continually update service features, etc.
The processes that a company uses to serve its customers are what transform a business plan from concept to reality. Anyone can have a concept. And more importantly, investors do not invest in concepts -- they invest in reality. Reality is proving that the management team can execute the concept better than anyone else, and the Operations Plan is where the plan proves this by detailing key operational processes.
Business Milestones (Long-Term Processes) The second piece of the Operations Plan is proving that the team will execute the long-term company vision. This is best presented as a chart. On the left side, there should be a list of the key milestones that the Company must reach, and on the right, the target date for achieving them. Sample milestones include expected dates when:
- New products and services will be introduced to the marketplace
- Revenue milestones will be attained (e.g., date when sales will surpass million dollar mark)
- Key partnerships will be executed
- Key financial events will occur (future funding rounds, mortgage or loan payoffs, etc.)
- Key employees will be hired (executive managers)
- Additional text should be used, where necessary, to support the projections laid out in the chart.
The milestone projections presented in the Operations Plan must be consistent with the projections in the Financial Plan. In both areas, it is important to be aggressive but credible. Presenting a plan in which the company grows too quickly will show the naiveté of the management team, while presenting too conservative a growth plan will often fail to excite the potential investor who will require a high rate of return over a relatively short time period.
Alternative Venture Finance: Federal Grants and Loans
While most companies seeking venture capital initially think about angel investors and venture capitalists, a large alternative source of financing is federal grants and loans. The two largest federal grant programs are run by the Small Business Administration (SBA), and by Small Business Investment Companies (SBICs).
An SBA loan, regardless of whether it is a direct loan from the SBA, or, as is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The benefit of it versus a traditional bank loan is the rate. SBA rates are typically much less than traditional business loan rates.
In most cases, in a guaranteed SBA bank loan, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are at much less risk than in most other loans, and are a bit more flexible with regards to who they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, which makes them risky should the venture collapse.
Alternatively, Small Business Investment Companies (SBICs) are privately organized corporations that are licensed and regulated by the SBA. Small or emerging businesses which qualify for assistance from the SBIC program can receive equity capital and/or long-term loans from these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, to the companies they fund.
Interestingly, U.S. taxpayers benefits from the SBIC program as tax revenues generated from successful SBIC investments have more than covered the cost of the program. Likewise the program has created hundreds of thousands of jobs.
In summary, SBA and SBIC financing are viable alternatives to financing from angel investors and venture capitalists and should be considered in the capital raising process. Similarly to angel and VC financing, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a highly professional and compelling business plan in order to raise the capital they need.
An SBA loan, regardless of whether it is a direct loan from the SBA, or, as is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The benefit of it versus a traditional bank loan is the rate. SBA rates are typically much less than traditional business loan rates.
In most cases, in a guaranteed SBA bank loan, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are at much less risk than in most other loans, and are a bit more flexible with regards to who they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, which makes them risky should the venture collapse.
Alternatively, Small Business Investment Companies (SBICs) are privately organized corporations that are licensed and regulated by the SBA. Small or emerging businesses which qualify for assistance from the SBIC program can receive equity capital and/or long-term loans from these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, to the companies they fund.
Interestingly, U.S. taxpayers benefits from the SBIC program as tax revenues generated from successful SBIC investments have more than covered the cost of the program. Likewise the program has created hundreds of thousands of jobs.
In summary, SBA and SBIC financing are viable alternatives to financing from angel investors and venture capitalists and should be considered in the capital raising process. Similarly to angel and VC financing, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a highly professional and compelling business plan in order to raise the capital they need.
The Case Against Illegal Hiring
QSR Online
Like most cases that make the Supreme Court’s docket, the question posed in Mohawk Industries v. Williams, et al is a smaller piece needed to complete the puzzle in a much larger legal battle. When the court hands down its decision, it will only be ruling whether Mohawk, the country’s second largest rug and carpet manufacturer, and temporary employment agencies with which the company worked constitute an enterprise under the Racketeer Influenced and Corrupt Organizations (rico) Act.By itself that doesn’t seem like much. But that decision, in turn, will determine if former Mohawk employees were right to sue the company for back wages and damages under RICO, a suit that could cost the company millions and open the door to any number of similar actions taken against other employers, including quick-service restaurants.
Read Article
"Somebody sue me! Please!"
KFC Gets Fried. Is Starbucks Next?
Forbes.com
When KFC was hit with a lawsuit last week over its use of partially hydrogenated oil, the question on many lips was "Who's next?" But despite a flurry of reports pointing at Starbucks, the Center for Science in the Public Interest says it has no immediate plan to sue the ubiquitous coffeehouse.
Read Article
Forbes.com
When KFC was hit with a lawsuit last week over its use of partially hydrogenated oil, the question on many lips was "Who's next?" But despite a flurry of reports pointing at Starbucks, the Center for Science in the Public Interest says it has no immediate plan to sue the ubiquitous coffeehouse.
Read Article
"Please sir can I have another?"
More nutrition info for restaurant diners?
UPI
The Food and Drug Administration is urging the food service industry to promote low-calorie eating. In a recent study, the FDA and the Keystone Center, a non-profit organization, targeted the issue of rising obesity rates in the United States and how the food service industry could help curb that trend.
"I musta done something to deserve this!"
One of the thoughts that consistently come to my mind as I see more and more intrusion into our businesses by governments anxious to appease their need to posture themselves as doing what's in the "public interest", is an old Meg Greenfield quote, "stupidty has begun to think!"
Here is just the latest move by a locality to help protect us from the evil we do to ourselves! Shame on us and thank God that we have the Oakland City Council and the Chicago City Council and the ____________ (insert your town here!) City Council.
Oakland bans foam containers from restaurants
East Bay Business Times
The Oakland City Council banned polystyrene food packages in a late-night session Tuesday. The city's move requires restaurants to start using biodegradable food containers starting in January. It calls for fines of $100 to $500 for businesses that fail to comply.
Here We Go Again!
Trans fat ban sought for Chicago restaurants
The Chicago Tribune
One of Chicago's most powerful aldermen is proposing the city become the first in the nation to ban restaurants from using artery-clogging trans fat oils.Ald. Edward Burke, chairman of the City Council's Finance Committee, introduced the proposal Wednesday. It was criticized by Mayor Richard Daley, who said a ban was unnecessary.
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