So many people wish to start or buy a restaurant but don’t bother to push through with it because they don’t have enough cash. Not having enough cash to open a restaurant is not something that should stop you from realizing a dream. It is possible to start a business even if you only have very little money or no money at all.
There are things you can do to finance your dream business. Some veteran restaurateurs are able to open new restaurants, even if they have more than enough money. Ever heard of the expression “use other people’s money?” We can teach you how to buy a restaurant or start one from scratch on borrowed money. You will also learn how you can get that loan you need to capitalize your new business.
The first thing you need to do is to write a business plan. Writing a business plan not only makes it easier to plan your restaurant business, it is also needed in case you have to borrow money from a bank. Lending firms will require a business plan that shows that you can make your restaurant lucrative. Your lenders will want to see from your written plan that you know what your are getting into and that you have a solid strategy that will work.
Visit banks and lenders to apply for a loan. Bring copies of your business plan and other financial info. You will need to fill up application forms and give your financial details when you get there. Prepare a list of your assets and liabilities, these will tell your banker your net worth, which they also need for your application. Work with banks that will likely approve loans for small businesses. Apply for a small business loan.
If you plan to buy a restaurant, set aside 20% of the total value of the business you intend to purchase. Some banks will still prefer that you pay a portion of the whole amount. If you don’t have enough money saved up for the 20% down, you may try to get a home equity loan to get the value you need. Banks will want to see that you have your own money invested in the business to assure them that you will work hard to make the business work.
Another way to get money to buy a restaurant is to borrow from friends or relatives. You should still make it a legal business arrangement bound by a contract. Many friendships are ruined when this is taken for granted. Insist on binding your loan and repayment scheme with a legal contract even if some friends or family members don’t want to.
Get investment partners to raise capital. When choosing partners be sure that you don’t just get along personally but more importantly, that you and your partners have the same business goals and outlook. Once you find ideal business partners, discuss how work will be divided or how many percent in profits each partner gets. Some financial partners don’t want to be involved in day-to-day management of the restaurant. This arrangement can be ideal for some and a nightmare for others.
If you will buy a restaurant from another owner, try working out a deal to see if you can make monthly or quarterly payments directly to them. You can run the business, earn money from it and then repay the previous owner a certain amount of money by installment. Your arrangement should be bound by a legal contract and you will be given a deed of sale or full ownership after you’ve paid the whole amount. If you can pull this off, you probably won’t even have to borrow money from a bank or other people.