The Small Business Administration recommends venture capital as a means to raise funds for your growing business. If you see your restaurant as one with the potential for high growth, venture capitalists may want to take a look at your business plan. Find an angel investor or venture capital firm and give your best pitch; if they like what they hear, they’ll offer to fund your restaurant enterprise for a share of ownership and a hands-on role in its future.
Per the SBA, your best course for pursuing a small-business loan is to work up a business plan, expense sheet and five years’ worth of financial projections. Regardless of your credit and history, this proof of concept and diligence will give you the chance to secure a loan and should help you obtain the best terms and rates available. Loans are not strictly limited to financing startup: You can pursue equipment financing for your kitchenware and appliances, short-term loans to cover repairs and upgrades, or a business line of credit to cover smaller needs.
Crowdfunding has become a reliable way for innovative businesses to raise funds by turning directly to customers. If you have a great concept or unique menu, you may well be able to fund your business with a well-realized campaign on a platform like Kickstarter or IndieGoGo. You can offer rewards and benefits for backers like lifetime discounts, merchandise or free meals, which can help create strong word-of-mouth that will guide you toward your funding goal. Though the success rate is lower with crowdfunding, so is the risk. If nothing else, it’s a great option to consider as a supplement to your conventional funding methods.
If you have your heart set on starting a restaurant, consider starting smaller and opening a food truck. Food trucks present the option to test your restaurant concept in a mobile platform that doesn’t carry the same sizable startup costs and overhead as a brick-and-mortar location. While you’ll need to pay for a vehicle, equipment and supplies, you may have better luck securing a loan or venture capital since you’ll be asking for a smaller amount. What’s more, if your food truck takes off, you can use that capital to fund a fixed location.
There is no shortage of options available to you if you want to open a restaurant of your own. Speak with your financial institution and learn what’s available, then put yourself in a position to make the step from dream to reality.