Business funding is such a major part of launching a new restaurant. The vast majority of the start up costs for a restaurant comes way before a penny has been earned, so you need to make sure that you know where your funding is coming from before you start to sign leases and buy furniture.
Business FundingIf you have very deep pockets filled with gold, perhaps you don’t need to get any type of funding at all, other than your own money. This is a very desirable position to be in as not only do you not have to worry about paying interest on any business loan, you will also not have to take on board any other persons opinion as the buck stops with you. However, this can also be problematic, as you can end up spending your life savings on a crazy restaurant scheme that someone a little more savvy may have stopped you doing.
If you do not need additional funding, still give yourself limits to what you will spend on which areas of your new business (there is no need for the most expensive glasses, say – plenty will get broken) and make sure you take the advice of a trusted business advisor – whether that is your accountant, a mentor or fellow entrepreneur. Just don’t do it all yourself, you can tell a restaurant a mile off that has just been a whim of the rich owner.
There are a number of business grants available if you know where to look for them. Make it your business to find out about business finance available from your local Business Link office, or what local scheme and programmes you may be eligible for.
Venture Capital Funding
There are a growing number of venture capital firms that are looking for small businesses to invest in. If you are simply looking to run a sweet little bistro in a market town, the best you could hope for would probably be a local businessman keen to invest. But if you are looking to launch a new concept restaurant with a celebrity chef, venture capital funding may be more available to you.
Many venture capital firms host invitation only ‘open days’ where you can pitch your business ideas to the people that have the very large cheque books. To get an invite to such an event is rather tricky but not impossible – after all they are looking for businesses to invest in. Get to know the firms and court their decision makers of you are really serious about gaining venture capital funding – just make sure you read the small print.
A ‘Dragon’s Den’ type benefactor may seem like all your Christmases and birthdays have come at once – but they are likely to make an impression on your business and it may not be entirely welcome. This is not a loan that you pay back – it will likely be a percentage deal, so you will be handing over large sums of your profits. Perhaps a bank loan is easier!! At least you just pay back what you agree, plus interest, of course.