You have an amazing idea for a restaurant. Your idea is unique and something that hasn’t been done yet, and you know it’s going to make you a lot of money. However, the problem is you don’t have nearly enough money to open a restaurant. If your credit rating is low that leaves even less options and sometimes the financial obstacle becomes too much for even the most ambitious would-be entrepreneurs.
However banks aren’t the only answer, as there are many ways to chase your dream if you’re willing to compromise. You may not have any luck with banks but there are sure to be like-minded people who’d love to invest in your idea. You could also go far if you re-think your idea into a different concept, such as a food truck or catering business. This would go a long way to show the banks, investors, and the world and large that you’re dedicated to your idea.
The minimum cost of opening even a small restaurant such as a café or diner is around $50,000-$75,000. As most people don’t have that amount of cash lying around, there is always the option of borrowing on the value of your home or other property that you own.
The bad news is that banks aren’t likely to want to finance your restaurant if you have bad credit. However, the good news is that there are other potential investors who may overlook your credit score and offer you financing.
Angel investors are wealthy individuals who help finance a business idea. Despite the name, angel investors won’t just give away money to help you out, they’ll expect something in return.
Usually they do this because they see value in your business idea and feel they’ll get something out of it. However it isn’t a one way street, as angel investors have a wide breadth of knowledge and networks that will help your business out far beyond the initial capital. Angel investors interested your restaurant idea are likely to have a passion for the food industry and knowledge that will help your business make the most out of the opportunity.
Another option is to ask a friend or family member for a loan and have them act as a silent partner. Although, be wary of this option as going into business with someone you’re close to is going to change your personal relationship forever. Having said that, don’t rule it out as there are many successful family businesses that are highly successful, especially when it comes to restaurants, so don’t disregard it completely.
Have a business plan ready
Whoever you’re trying to get to invest in your restaurant should see a business plan from you as this will make them much more likely to see the value in your idea that you do. A good business plan will outline your concept, target audience, and then break down the financial side including start-up costs, projected sales as well as a detailed budget.
Further to this you need to outline your own background and qualifications as the investors need to be assured you’re the best person to be in charge of this restaurant. Experience in management, hospitality, marketing, or simply having good people skills will go a long way to making your restaurant business successful and anyone who wants to help you would like to know what you bring to the table. Think of it this way, you’re not only just selling your potential restaurant idea to investors, but you’re selling yourself as well.
What about a food truck?
A little less formidable than opening a restaurant, opening a food truck is a cheaper way of bringing your concept to the market. While still needing initial investment it’s not anywhere near what’s required for a restaurant, as a used food truck can set you back as little as $5000 and there’s no need to pay rent or electricity costs. Of course, some restaurant ideas wouldn’t translate well to a food truck as successful food trucks serve fast, convenient food but if your idea falls into this category you should definitely consider it as the costs are low but the potential is high.
Opening a restaurant requires a lot of organization, planning and implementation before the first meal is even served. If you’re passionate about food but have no experience in running a business you may find out too late that owning a restaurant is not for you. Starting a catering business based around your idea means you’re able to ‘try before you buy’.
Catering for events such as parties, weddings and corporate lunches still require many of the aspects of running a restaurant such as menu planning, pricing, preparation, customer service, marketing insurance and or course food preparation. If after a few catering jobs you’re still as a passionate about your idea as you were when you first thought about it that’s a sure sign you’re ready to expand further. Having said that, Catering itself is a great option for food lovers as it means you can focus more on the food and less on the administration side.
If you’re a caterer looking for exposure you can become a partner with us and let Caternow connect you with food-loving customers. Click the link below to find out more