Length: 114 Words Reading Time: 30 Seconds

Undercapitalization is the greatest threat to the longevity and success of any restaurant.  Ideally, a restaurant owner or a restaurant investment group should have three years of operating capital in the bank and certainly no less than one year.

Most restaurants require three years or more to become profitable.  Many fail in the first year because they do not have enough working capital in the bank.

Restaurant owners should have excellent numeracy skills.  They must understand operating costs, working capital, cost of goods sold, gross sales, net sales, and other financial aspects of running a restaurant.  You do not want to go to school on the job, but preferably before the fact.  Numbers rule!