Starting a hospitality business
- Gerdine Annaars
- The basis
- 13 Oct 2023
- Edited 13 Oct 2023
- 6 min
Do you want to know how to start your own hospitality business? Find the answers to the main questions about starting in the Dutch 'horeca'. And a few tips. Because a good preparation is key.
Are you a real go-getter with guts and a never-say-die attitude? Good. You will need all these traits in spades if you want to start your own hospitality business. Here is a list of some of the other entrepreneurial skills (in Dutch) you will need.
Starting a hospitality business - where do you begin?
A new business starts with a good idea. But how can you tell whether people will like your idea as much as you do? Whether you are opening a pub, a Michelin-starred restaurant, or a sushi joint, there is only 1 way to find out if there is demand for your idea: do market research. Writing a business plan is a good start, as it forces you to flesh out your idea and describe it as specifically as possible.
To substantiate your plans, describe the trends and developments in your industry, based on surveys performed by Statistics Netherlands, KVK, trade organisations, and banks. Include this information in your marketing plan and figure out exactly who your customers will be (target audience) and why they should prefer your business over others (USPs). For Eugene van der Meij, the owner of coffee and lunch bar Hofje van Jongkind in Gouda, quality and individuality come first, “We do everything ourselves, from roasting our own coffee to prepping the salad dressing. Our guests appreciate that. and it is a big reason why they keep coming back.”
The hospitality industry is known for its laws and legislation and the considerable amount of red tape: from permits, fire safety rules, and environmental legislation to HACCP rules and the new Alcohol Act (formerly the Licensing and Catering Establishment Act). Keep the costs and handling time into account when applying for permits.
There is an increasing amount of rules to make your business more sustainable. For example, the ban on free single-use plastics, or the Energy-saving obligation. But there are also subsidies you can apply for. If you know what to take into account, you can make a green start and save time and money.
How do I choose the right location and property?
The key to success is choosing the right location, and if you ask Van der Meij, you can only find the right location through research. “We went on multiple visits to Gouda, just to take a look around, gauge the crowds, and get a feel for the people. We started talking to local business owners and asked them about their experiences, which helped us paint a good picture of the location.”
Tip: Use the location scan (in Dutch) to add to the insights from your own field research. Want to quickly and easily count businesses in a particular industry in any given area? Check out the KVK Company Counter.
Hospitality brokers like Funda in Business and Misset Horeca (in Dutch), your municipality's business desk, or your local shopping district manager can give you the details of businesses for sale, as well as vacant or soon-to-be vacant properties.
Once you find a suitable property, consider the following:
What does the lease or purchase contract say and are the price, term, and conditions negotiable? Bring in a specialist for support.
Are your intended activities allowed under the zoning plan? Reach out to the municipality to find out.
How much will you have to pay to remodel or furnish the space so that it complies with the energy-saving obligation? Include the costs in your business plan.
Van der Meij has nothing but praise for the municipality. “We put a lot of thought into our business plan, and it paid off. The municipality loved our plan to do up these historical landmarks and realised that our lunchroom would be a valuable asset to the city. They were very eager to help and even amended the zoning plan.”
How do I get the finances right?
You usually need financing to start your own hospitality business. Create a financial plan with a solid rationale before you go to an investor. You will need a thorough plan and plenty of enthusiasm to convince lenders to invest money in your company. It is notoriously difficult to find financing in the hospitality industry due to its high-risk reputation. Bring in a specialist for support, like an accountant. Larger accounting firms often have dedicated hospitality specialists.
Go over several scenarios in your financial plan. According to a KHN spokesperson, hospitality business owners should be happy if they reach 30-50% of their usual revenue during the pandemic. “Think of a way to corona-proof your business and still run a profitable operation. We are all hopeful that the restrictions will only be temporary, but it is difficult to predict how long they will last.”
Try to combine several options (stack financing) to complete your financial plan. Apart from bank financing, you could also consider crowdfunding. A large (online) network will come in particularly handy if you decide to take this route. You can use crowdfunding as a marketing tool and build a relationship with your (future) clients. There are several crowdfunding platforms that focus specifically on the hospitality industry.
Suppliers like major breweries often play a role in financing hospitality businesses. Reach out to potential investors to discover your options. Perhaps you can make things work by leasing business assets.
Tip: Consider taking over an existing hospitality business. Research shows that starting entrepreneurs who take over a business are more successful and have an easier time securing financing. More businesses come up for sale in times of crisis, so keeping an eye out for good opportunities can be worthwhile. But remember: never commit without doing your due diligence first.
What are my risks?
You cannot do business without taking risks: there is no such thing as guaranteed success. There will always be things that you cannot control, like a pandemic, a prolonged road closure, or competitors opening a branch nearby. They are all part and parcel of being an entrepreneur.
This is what you can do to take back control:
Take out business and personal insurance for the risks you cannot bear yourself.
Are you planning to hire staff? When you start your business, draw up a risk assessment and evaluation (RI&E) to identify risks in the workplace and take measures to control these risks as much as possible. Building a rapport with your employees is a great way to prevent employee fraud.
Draw up terms and conditions to create clarity for you and your customers and lay down clear agreements about liability, cancellations, and payment. Alternatively, use KHN's Uniform Terms and Conditions for the Hospitality Industry.
Choose the right legal form. An eenmanszaak (sole proprietorship) is quick and easy to set up. The main disadvantage of this legal form is that it means you are personally liable for any debt your business runs up. Many new business owners in the hospitality industry decide to team up with one or more business partners, in which case a vennootschap onder firma (vof, general partnership) or besloten vennootschap (bv, PLC) is usually your best bet. In a vof, each partner is privately liable for the entire vof, so make clear agreements and document them in a vof contract. If you choose to set up a bv, you will need a notary.
Protect your business against (online) fraud. Keep criminals from stealing your money, personal information, or passwords through fake emails.
Business owners process all sorts of data, so make sure you are fully GDPR-compliant to avoid fines.
How do I find staff for my business?
Chances are that you will need helping hands for your business. You can employ staff, use an online supply & demand platform, bring in a temporary employment agency, or hire self-employed professionals. Lots of people are looking for a job during the crisis, but finding the right people for your business is not always easy. Show people why they should want to work for you: the best businesses draw the best staff. Head to the hospitality inspiration box (KHN, in Dutch) for successful ways to recruit staff, as well as information about collective labour agreements, wages, and model agreements.
Tip: Invest in a good relationship with hospitality colleges, giving you access to a steady flow of competent, highly motivated employees.
When should I apply for my KVK number?
Every entrepreneur is required to register with KVK. Make an appointment before you open for business. Before you come by to formalise your registration, complete the online registration form. Are you renting? Bring your signed lease to the appointment.
After registration, you will be given your KVK number right away. KVK will then share your details with the tax administration, who will send you your VAT ID and VAT number by post within 2 weeks. Registration costs €75.
Tip: Check the rules and tips for choosing a name for your business.
If you are not yet open for business but are already applying for permits, remodelling a building, purchasing goods, or signing a lease or financing agreement, you will usually need a KVK number. Fortunately, that does not have to be a problem, as you can register with KVK in advance.