Restaurant Start Up Funding Is All About The Research & The Pitch!
When I started my first business Josie’s Delicatessen and catering, and my business partner and I started Corporate Catering I initially used my savings and borrowed from family.
The truth is many small businesses piece together their funding from several different sources.
No single source of funding is necessarily easier to come by than another. It depends on your business, projections, and how well you can sell yourself to potential financial partners.
I don’t want to say we were lucky to have had family members who believed in us because luck wasn’t the reason why they loaned us money. They loaned us money because we had years of experience in the industry and did a lot of research before presenting our idea to them.
We created our business on paper from our experiences, researched our target markets which led us to a location where the businesses had every opportunity to be successful.
When you are a start-up seeking initial capital you have to stay passionate and be sure you have completed the proper research. It is important regardless who you’re pitching to, to be convincing it is essential you have a plan to succeed. The only way to do that is to do the research that will back up your pitch to increase your chances of getting funding.
Your pitch needs to get investor’s attention. And, because investments are rarely made after just one pitch, your goal is to get them to ask for more after they hear your pitch.
Remember, your pitch presentation is probably the first things that an investor is seeing when they’re starting to learn about your restaurant and business idea.
Here are some ways to get started with funding your restaurant business:
Most entrepreneurs and small business owners these days have come to the realization that they will have to rely on their savings.
There are many ways to accomplish this from savings accounts and zero interest credit cards to leveraging other personal assets. If you believe in your vision and are passionate and refuse to accept failure as an option, you should feel confident investing your own money. If when the time comes when you look for a partner or potential investor, it will look good if you have skin in the game as they say.
⇒ Family and Friends
Funding from them is a popular and effective way to find some initial capital for business. Those closest to you are more likely than anyone to believe not only in your idea and vision but your ability to make it a reality.
The downside to this, of course, is that you are potentially risking personal relationships should the business fail. To avoid this, I recommend professionally structuring this type of funding as an interest loan till you pay it off regardless if the business fails.
I know you will want to avoid expensive legal fees, but it is imperative that you get sound legal advice. Not doing so can potentially cost you much more down the road.
⇒ Small Business Loans
Startups seeking money from banks need a good business plan, profitable projections and as I said above some of your own money invested. An upside to pursuing debt financing is that you aren’t giving away a piece of your business.
If you’re needing funding help, the SBA participates in a number of loan programs designed for business owners who may have trouble qualifying for a traditional bank loan.
⇒ Angel Investors
Is an affluent individual or company who provides funds for a business start-up, usually in exchange for ownership equity or convertible debt (is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value.)
An increasing number of angel investors organize themselves into companies, angel groups or angel networks to share research and pool their investment capital.
Here are a few tips to make your pitch stand out:
⇒ Prepare To Tell a Story
Nothing will draw investors more than a story that they can relate to. That’s why your pitch should start by defining why you are starting your restaurant. Make sure your audience can easily understand that there’s a real need that your restaurant and cuisine can fill by making your story real and believable.
⇒ Show There’s a Market For Your Restaurant
This is extremely important ! You may have a great idea for a restaurant and cuisine, but unless enough people want it, it’s going to be hard for investors to consider your pitch. Your presentation needs to show that there is a market, but don’t exaggerate the market size.
⇒ Keep Your Idea Simple
You don’t need to go into too much detail about your restaurant and your food, keep the description of your concept straightforward. Getting a second meeting with investors is your goal, so it’s fine if not all questions are answered on everything your restaurant will be offering and serving.
⇒ Show How You Restaurant Will Make Money
Surprisingly, many pitch presentations skip this important part.
Investors need to know how your business will make money, in what time-frame and what the return on their money is before giving you funds.
You have to know your numbers even though they are just an educated guess, potential investors will want to understand your thinking on how the business will grow over time and what it’s going to take to be profitable. Just be sure to be realistic!
⇒ Have A Marketing & Sales Plan
You don’t need to have all of the details but you should include some details on how you plan on marketing and advertising your restaurant. Investors will want to know that you’ve thought about this aspect of the business.
⇒ Explain Why You and Your Restaurant Are The Right Investment Choice
You, and your staff, are what investors are really investing in. There are always great ideas, but there are only so many people who are qualified to turn ideas into successful businesses. Your presentation should show why you and your staff are the right people to build a successful business
Know The Competition
Every business has competition, so don’t make the mistake of saying that you don’t have any. Your presentation should show who your competition is and why your restaurant will standout and is better.
How Do You Plan On Spending Their Investment
If you do get investors to give you money, how will you plan on spending it? Investors don’t just write checks because you have a great pitch or idea. They are going to want to know how you plan on spending their money to build your business.
As I said at the start of this post to be successful at getting funding and as a start-up restaurant you have to do the research that is necessary.
Not only should you research how to successfully start a restaurant you should also research the investors you are pitching your business to.
Make sure you know your investing audience!
Do research on what they like to invest in and try to figure out why. Why your restaurant is going to be a great business in this current economy and why you have the right team to build it, and why together they should invest in the next gigantic restaurant idea.
Restaurant Start Up Funding Is All About The Research & The Pitch!
Making the best decisions during your startup is an absolute must in today’s rapid and competitive paced restaurant business world.
Getting Start Up Funding is one of the many steps first-time restaurant entrepreneurs have to research.
Before you can comfortably start doing business, you’ve got to make sure you have completed all the other steps.
Your Startup Phase Is The Most Important!
Doing the right steps and in the order, they must be done in gives you an advantage, and a head start to opening a successful restaurant.
If You Are You Struggling To Get A Handle On How To Start A Restaurant?
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