Whether you are currently operating a restaurant or think you have an idea for the next great eatery in your head – you’re going to need solid access to some working capital to make it successful! To remain relevant in the brutally competitive service industry, the two most important streams to keep flowing are creativity and funding! Everything else can be figured out and customized to your guests as you go! The Empower Lend team has been working with restaurant owners to secure the most reliable funding sources to help grow their business – giving us the most accurate intel on the top 3 best ways to secure restaurant capital – let’s talk!
When it comes to the hospitality industry – lenders enjoy a good show just as much as any customer that would walk through your door. They want to see the ins and outs of your business – giving them the insight needed to assess your risk factor accurately. After all, there are millions of restaurants and bars across the country – what really makes one different from the next, right?
Let’s walk through some ways to ensure that your restaurant makes it to the top of any lenders list when it comes to keeping your cash flow on an open stream!
Secure Restaurant Capital with a Grand Ole’ Show
A great way to engage restaurant capital lenders is by showcasing accurate numbers. The one thing a lender loves more than large numbers is consistent numbers! Many restaurant owners ensure this by hosting special events at their venue in the months prior to applying – this enables you the ability to showcase active revenue streams.
It is not uncommon, especially in this day and age, for lenders to do a bit of background research on your venue – checking elements such as your website or social media pages. Just as they are looking for consistency in your revenue deposits, they also want to see consistent updates from your business. This showcases the effort and potential your business has for longevity.
The purpose of applying for restaurant capital is to maintain production to service more guests, right? Although it does not have a direct impact on securing business capital, maintaining an active and engaged brand identity showcases a strong sense of stability to restaurant capital lenders. For this reason, amongst others, it is strongly recommended to place a priority focus on your business social media marketing!
How do you convey to lenders that your establishment not only stands for quality but can maintain its success with the right resources complementing the existing business plan? Since you will not always have the opportunity for pitch meetings or presentation, the goal is to showcase your business success through words and numbers … on paper! To achieve this – it is all about finding the balance between showcasing the how successful your business is while justifying the need for capital at the same time!
So, what makes you different from the hundreds of other restaurants in town? The restaurant space is not only cut-throat competitive but also high-turnover as well. Unless you are catering to an extremely niche target market, securing capital for restaurants can be a bit of a headache if you don’t know which products to utilize. Venues are taken over so quickly that lenders want to know you have a strong contingency plan to fall back on – should you find yourself in hard times. This is where a bit of research and product knowledge will come in handy. Just as your restaurant is unique in its own ways, applying for restaurant funding that caters to those needs is vital – hence, why so many bar owners are taking advantage of alternative lending products.
Preparing to Secure Restaurant Capital – Even Before You Need It!
All of the answers that unlock the secrets to restaurant capital funding are in your business plan. Knowing which elements to highlight on the business funding application is one of the most important (and easiest) ways to place your business in the front-running for financing.
Lenders expect to see economic downturns in the service industry – even the most popular restaurants have their slow periods. Let’s analyze the key factors that impact the numbers you will need to include on your restaurant capital application that will wow the lenders.
Define, streamline and highlight the following:
- Target Markets – The individual target markets that you engage and that engage with your business directly impact your success rate. Many restaurant owners find that the target market they initially engage is quite different from the target market that actually frequents their venue. Recognizing and implementing these changes can increase revenue, which in turn increases the probability for funding!
- Location – Believe it or not, many lenders consider the location of your business in your risk factor. While the location, of course, plays a role in the revenue generated by a restaurant, once opened, it is not an element you can change easily. That being said, when location plays a negative role in your production, showcasing creative ways that you have taken around the obstacle can go a long way with lenders!
- Core Competency – Whether it is a specialty dish or a reputation for hosting the best events, your business strategy should reflect the basics of your core competency in the industry. If you are known to be a restaurant that is perhaps busy during industry slow seasons or have gained popularity for a certain dish or specialty – it creates a higher probability for longevity – and that is what lenders what to see.
- Expense Budget – The ability to maintain a cost-effective budget in the service industry is vital to the success of any venue. Always be on the lookout for patterns in your spending habits and/or different places to trim the fat. Streamlining production and operations costs can help your business run smoothly and showcase a strong sense of financial responsibility to lenders.
- Marketing Strategy – The hospitality industry is customer based and as such requires a strong marketing strategy to ensure connection with potential customers and guests. Even if lenders do not require it, incorporating a strong marketing plan for your restaurant can increase revenue significantly – which can only have a positive impact on securing restaurant capital should you need it.
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