You’ve paid your dues as a chef for years and never let your dream slip too far from your sight. You’ve built a reputation, have a stellar idea for a dynamic restaurant, and the support of the people you’ve worked with. And that’s a lot of the battle, but not all. You will still need a good amount of cash to get started opening your own restaurant.
This should be first, central, and last. If those investors can’t be pinned down, much of your effort will be for nothing. These could be private investors or lending organizations like banks and small business lenders. If you choose not to use a small business lender and instead use a bank or a private investor, know that they will have different demands and requirements. Banks generally approve only around 25% of the small business loan applications they receive. Other lending institutions approve nearly 60%. Many of the vendors you will need to work with can be helpful, at a price: bargain equipment leases can carry strict limitations; landlords may arrange easier overhead but it will often be in exchange for unreasonable terms or an ownership share in your business. In some cases, you may choose to compartmentalize your funding needs by securing funding for inventory financing from inventory financing companies.
Design Your Restaurant’s Theme
This should be among the earliest – and most creative – steps. And you have likely already done most of it: It may have been coursing through you for years and years. Now you have to write it down and make it appealing to an investor. During this process, name your restaurant, think about its appearance and decor, its menu, and what exactly will draw customers to it. A unique and well-rounded theme will play a big role in getting support from a restaurant funding company.
Design A Business Plan for Your Restaurant
The business plan is perhaps the most vital element you will have in your efforts to secure restaurant funding. It’s the blueprint for how your business will function and be successful. It tells potential investors how your business will diverge from competing businesses, how long it will take your restaurant to be profitable, and how, when, and where you plan to open its doors. Without a quality business plan designed to reassure investors of your restaurant’s ultimate profitability, you will struggle to find restaurant funding companies that are able to work with your business.
Prepare for Your Loan Interview
If you’ve got the theme and concept of your restaurant, as well as a solid business plan, you’re most of the way toward a successful loan interview that results in good restaurant funding options. But you will also need to know your credit situation, and be prepared to explain any blemishes on your credit record. In addition, it’s important to have a location in mind and to have other physical elements of the business planned out. Which leads us to:
Choose Your Restaurant’s Location
Perhaps no other business is so dependent on location as a restaurant. Among the factors that need to be considered are the neighborhood: are other restaurants, but not too many, successful there; the size and layout of the spaces you have your eye on; competing and complementary businesses; event spaces and recurring events in the area that will drive business to or away from your business; the vehicle traffic and parking; the foot traffic and walk-in potential; the opportunity for effective signage; the potential curb appeal of the space. And, of greater impact than any of these: the rent and overhead.
Be Ready to Compromise and Commit
Be prepared that the answers you’re waiting for may not come in black and white. You may be approved for some of the restaurant funding you’re seeking, but not all; or a lending institution or private investor may want a different share in the business than you’ve been offering or may prefer to work with some collateral on hand. Don’t dismiss or accept these negotiations out of hand, but give them significant and focused thought. Be wary of making any deal that may handcuff you, but also remember that sacrifices have to be made for dreams to come true and ambition to come to fruition.