Creating a fresh, new image for an existing business or developing an entirely new  concept from the ground up is a major task for any operator.

Do a feasibility study to determine whether the business potential exists that will provide momentum to successfully drive the new concept.

Next, put together a business plan for the first year. This will help you to determine the business potential within your primary market area & to understand how much debt you will be able to service each month.

Begin by creating assumptions - Establish your profit centers. Estimate your sales. As an example: A cybercafé might have four distinct profit centers.

Food & Beverage - Sandwiches, snacks, pastry, coffee & tea products, juices, espresso, beer, wine, etc.
Computers - Surfing the Net, doing research, games - access/use fees
Training - Providing computers in an area for classroom-type training, group computer access
Additional Services - Copying, printing, Web design, graphics production, ISP services, etc.

For a restaurant or cybercafé, you might estimate the number of lunch & dinner customers you expect each day & multiply that number by the amount each will spend during an average visit.

Example:

500 people per week x $  8.00 lunch check average  = $  4,000 per week in sales
750 people per week x $14.00 dinner check average = $10,500 per week in sales.

Break down your estimated sales in each profit center area to determine your projected weekly sales. Your goal here is to come as close as possible to the actual sales that will be generated once the business is open to the public.

Set up a mock budget for the business listing all anticipated operating expenses including rent. Exaggerate slightly your expenses while understating your projected sales.

Next, allow an additional 10% monthly for contingency costs after all expenses are figured. That's your cushion.

The money remaining on the bottom line each month is what you can realistically count on to service your construction & pre-opening costs. Multiply that monthly dollar amount by 18 mos.

Example: If you have a $10,000 a month bottom line, multiply $10,000 by 18 mos. to pay off =
                       $180,000 concept budget.

Maybe later when you re-work the numbers, you find that you need more cash. One option: Plan on 24 months to pay off the debt.

In the above scenario with a $10,000 bottom line, your construction & pre-opening budget has now increased to $240,000. ($10,000 x 24 months)

Here's another formula for a new concept: Budget 1/3 of your anticipated first year's sales to building & opening the new business.

Example: Your conservative estimate is that the business will generate 2.1 million in sales the 
                       first year it's open. Using the formula, you can figure that up to $700,000 could be set
                       aside for the project.

The bottom line: Never take on more debt that you can reasonably pay back in 1 year to 18 months...... 2 years at most.

The Reason: Almost every project expands by 30%, sometimes more, before all the true numbers are in.

Using this formula, our original estimates should come in at or near $500,000. By starting here, I feel we have a chance to meet the real budget figure, $700,000 when all the costs are known.

Armed with this valuable data, it's now time to develop a realistic budget for the new concept. Be sure to estimate any demolition costs that you might incur prior to starting construction.

ALWAYS get a minimum of three bids. NEVER lump all your anticipated costs into one big package.

Think of demolition, general construction, electrical, plumbing, air conditioning, (HVAC) sound, video & lighting, computers, furniture, fixtures & equipment, (FF&E) etc., each as separate, controllable parts.

Balance cost savings with the time it takes to complete the task. Sometimes, doing a job yourself to save money will actually cost you money in the long run. (Short term gain, long term pain)

The good news: Money is cheap right now & a lot of craftsmen are willing to work for decent wages.

Strive to be objective. Don't spend money with blinders on.....look at all sides in a given situation. The key: View each expenditure as an investment from which you expect a certain return.

We recommend the following start-up guidelines:

Key personnel salaries for 30 days prior to opening
Funds to stock the club for 30 days of business
Allocate funds for training (5 to 7 days minimum)
The grand opening plan A to Z
Advertising for the first 30 days
Operating capital for the 1st 60 days of operation

Now we're ready for the fun stuff. Working with the designer, creating a new name, logo, food & beverage menus, costumes, grand opening PR. Here are some basics:

Cybercafé - Food, snack & beverage menus, coffee service menu, equipment, computers, network equipment, Internet access (ISDN, DSL, cable, satellite, etc.)

Restaurant - Breakfast, Lunch, Dinner menus designed & costed out. Also, snack items, appetizers, deserts & beverage menus, etc..

Sports Bar - Coin operated games & amusements, TVs, cable & satellite system. Computer, Internet? That way, patrons will have instant access to player/game stats, sports trivia, etc. Sports ticker service? QB-1 interactive games.

Nightclub - A music menu (format) & entertainment policy will be created, DJs hired & trained, record library & a music service set up.

Also, we'll write a new, customized house policy, establish operational standards, develop training manuals. Also, a detailed plan will be initiated to hire, upgrade, train the staff & managers as needed.

Next, we'll develop a grand opening plan to include:

A media PR hit list
The grand opening party(s) & festivities
Advertising media to be used
Commercials, ads & graphics for all events
A detailed 3-6 month promotions calendar

The plan should include a critical path for completion of all construction plus a separate pre-opening operations schedule which begins approx. 30 days prior to opening, continuing thru the grand opening week & concluding with the first 2 full weeks of operations.

We've just scratched the surface here. Creating a totally new concept also means finding a location, negotiating a workable lease, working out the TI's, (tenant improvements) securing financing for the project & more.