Are you ready to take the huge leap and open the restaurant of your dreams?
We all know that a huge percentage of restaurants close within their first year, but how do you avoid becoming another statistic? Many dreamers underestimate how much money they’ll need to open, and to stay open until the restaurant starts turning a profit. Before making the leap and opening your doors, raise the capital you’ll need to start off on solid footing.
Before you go out looking for investors or applying for loans, you absolutely must have a solid business plan. For starters, a solid business plan with real financial projections shows potential investors that you’re serious about your business, and are realistic about what it’s going to take to succeed. Also, with every aspect of your plan as detailed as possible, whoever you’re talking to about finances can fully envision your dream and determine if they’d like to be a part of it.
As you start to look for funding, keep in mind that every new business should look to different sources to contribute to an overall funding package.
Here are some suggestions to consider when looking for funding sources:
1-Your Own Money
It’s hard to convince someone else that your idea is a risk worth taking, if you’re not willing to take that risk yourself. Look at your own savings account or other personal assets that you can use to start your business. Also, are there any close friends or family members that would be willing to invest or partner with you?
Traditional, commercial loans are a good option for people with previous experience operating a restaurant, or running a small business. The U.S. Small Business Administration is a federal government program that provides guidance for entrepreneurs, and has several types of loan programs.
Again, through the U.S. Small Business Administration, you can find out if you qualify for a special targeted loan. These are loans, and even grants, that are available if you meet a specific criteria. For example, certain segments of the population may qualify, such as veterans, minorities or people with disabilities. Also, consider your location, the criteria may be based on geography, such as parts of a city undergoing revitalization.
People with a high net worth are often looking for exciting investment opportunities, and you may be able to work with them as angel investors, or as partners in your business. As with any financial arrangement, draw up legal contracts, so that all parties are protected and it’s clear what role they will play and what amount of influence in decision making they’ll have.
Taking the time to crunch the numbers before the real fun of fulfilling your dreams start, is worth the time and effort, and you’ll be on your way to surviving your first year, and thriving for years to come.