It takes an independent spirit to run any kind of small business, especially a restaurant business. Picking a location, developing a business plan, and raising capital, hiring staff and obtaining proper permits all while ensuring quality food and service are tasks best led by someone who has a “do-it-yourself” mentality. Although many business owners step out of the corporate world for that sense of independence, a measure of reliance on outside experts can create a mutually beneficial interdependence that can propel a restaurateur toward success.
This is especially true when it comes to managing the finances of a quick-service restaurant. A recent TD Bank survey indicated that 80 percent of small business owners, such as quick-serve operators, are self-reliant in managing their company's finances. Still, there are tasks that owners feel less confident tackling alone, including knowing how to seek credit and how to expand the business, according to the survey.
The quick-service industry is highly competitive, which can lead to a self-preserving "by myself, for myself" mantra, that less often involves business partners. Still, engaging professional partners who can consult on various financial aspects early in the business' life cycle can be a business boon, from your banker, a free resource for evaluating business plans and long-term growth projections, to a wealth manager for investment strategies.
Professional Partners Boost Productivity
As a restaurant owner, there are times you might need to pitch in as expediter or on the line during a rush, which take hours out of your day needed to tackle draining and time-consuming tasks such as payroll, filing taxes and cash management. Business owners simply cannot be everything from line cook to staff managers, and should consider bringing in professional services or outsourcing some of their financial tasks.
Balancing the demands of being a restaurant owner, whether independent or part of a national franchise, is difficult. Yet just 25 percent of small business owners have a dedicated financial planner or banker who could provide insights to manage cash flow and help them grow.
One way for quick-service operators to find relief is to work with a payroll service (if permitted). A payroll partner can provide basic services such as calculating pay, tax withholdings and generating direct deposit or checks each pay period, taking care of time-consuming tasks that must be done weekly by many operators. Others offer perks such as online check stubs, time off tracking and apps for employees to view pay information. While there’s no denying these services come with an added cost, quick-serve owners ought to consider the potential several hours saved each week for business management and development.
Similarly, a financial planner or accountant can take over routine tasks such as bookkeeping, cash flow management or tax preparations. If the right financial service provider is chosen, outsourcing these tasks comes with t assurance that your finances are being handled by a capable professional and reduce potential errors that could create lost time or income or incur penalties. Outsourcing financial tasks isn’t simply about getting someone else to do them; it is about gaining peace of mind knowing the right person is doing the work.
Ensuring Business Growth
Seeking out expertise goes beyond the regular financial tasks of owning a restaurant. At some point, an owner may want to add locations or invest in new equipment, and for that, the business owners need to know how and when to seek credit. Yet the same 2017 TD survey indicated that 69 percent of SBOs believed they either did not have a business credit score, or worse, that business credit scores do not even exist. This could be a hindrance to the 21 percent of business owners who said that they have or will seek a loan or line of credit in the next 12 months.
Yet the data shows restaurant owners may not have the know-how necessary to effectively seek credit or even what types of credit is available. Establishing a relationship with a business banker, who is a free resource, and engaging him or her early can help outline a path to credit and help avoid common obstacles to gaining access to funds. Thirty-one percent of small business owners who reported being turned down for a credit request, while 34 percent stated their personal credit score was too low. These factors weigh heavily in your business creditworthiness, and this is where finding a dedicated banker can help impact the bottom line. Not only can a financial advisor or dedicated banker reduce the time spent by an operator applying for a loan, they also can advise the owner on how to build a healthy business credit score.
As restaurant owners grow and expand their businesses, it may be worth revisiting the possibility of seeking outside help. While outsourcing or engaging professional partners may not be a solution for operations of every size, they can often bring efficiency to mundane tasks and free up resources to spur growth and achieve success.
Mark A. Wasilefsky is the head of the restaurant franchise financing group for TD Bank. Wasilesfky joined TD Bank in 2010 and has 20 years of commercial and investment banking experience as well as 6 years in corporate finance. In his role, Wasilefsky is responsible for overseeing TD Bank’s specialty restaurant lending team, focused on providing financing to franchisors, including McDonald's, Dunkin' Donuts and Wendy's, throughout the bank’s Maine to Florida footprint.