If you are a new business owner and want to invest in a new cafe, restaurant, coffee shop, or bar, you need to know three key pieces of information that make the startup process easier, quicker, and simpler.
3 key steps to opening a restaurant
When looking to open a restaurant, there are at least 3 key steps that you need to check off before you can really call yourself a successful business owner.
Obtain funding
One of the biggest steps to do when opening a restaurant is obtaining funding for your plan. Most people are not multi-millionaires who are able to fund their business projects with their own checking of savings accounts. In this case, you need to obtain loans or lines of credit that can help you with financial planning to ensure a profit and reduce the chances of going into debt.
Securing outside funding sources can help you open a restaurant without draining your bank accounts and watching the dream of a lifetime slowly dissipate.
The first step in securing funding and planning your financial forecast is to estimate the total startup costs for your type of restaurant – do you want a food truck or do you want a 5-star restaurant? The cost of daily operations can fluctuate depending on your eatery and menu.
With your budget now in your mind, you can now compare the total income and cost of capital gain to how much you need from a loan to begin creating your restaurant. This will help you determine how much you need to borrow and what type of loan works best for you. The most common types of loans and funding when opening a restaurant are:
- Commercial loan – This type of loan can be acquired through a bank, with the benefits of having lower interest rates. The only downside to a commercial loan is the need for a high credit score, usually in the ‘excellent’ range, and collateral, such as assets or property.
- Business line of credit – just like a credit card for an individual, businesses can open a line of credit for the business to pay for hefty one-time expenses. However, with this method, interest accumulates, and the lending level is lower than other loans.
- Small business loan – you can relieve and qualify for a small business loan without an excellent or very good line of credit, making this a good choice for those without the extra income.
- Investors – if you know other people in the restaurant industry, some rich investors may like your business plan and agree to invest in your space.
Lease a commercial space
Another step to opening a restaurant is leasing a commercial space. Make sure you take certain factors into account, such as:
- Accessibility – can people see your restaurant from the road? Is it easy to get to your eatery, or can you only turn into your restaurant from one side of the road? All of these factors can influence the number of customers you receive.
- Demographics – Your target market needs to match up with the demographics of the area.
- Labor costs – The price of living affects how much you need to pay your workers.
Restaurant permits
The final step of opening a restaurant is paying for permits and licenses. When opening a restaurant, you need to have state, federal, and local permits to make sure you are a legal entity.
Conclusion
Although opening a restaurant is a long process, following these three key steps make it easier and simpler to follow a checklist as a new business owner. By creating a financial plan, obtaining funding, choosing a location, and obtaining permits, you can quickly and easily open a restaurant.