Most entrepreneurs find funding the most daunting aspect of opening their own hospitality business.
Once you start factoring in all the expenses the initial thought of starting up your own hospitality business it can be a lot to absorb initially.
The most important thing to consider is the source of finance and what type of hospitality equipment finance you really need.
There are a number of ways to raise funds and the easiest way is to use your own savings.
It doesn’t matter if you decide to purchase brand new or used hospitality equipment if you have the cash you can easily decide on what you need.
However, not everyone has the financial backing needed to start up a hospitality business.
The next logical step to take is to approach your current bank and find out your hospitality equipment finance options.
Find a good accountant, before you even think about setting up a business.
Ask friends and colleagues for advice.
Open a business bank account immediately and always keep your personal finance separate from your business.
There are a number of potential sources for raising hospitality equipment finance.
For you to be able to borrow hospitality equipment finance from a bank you will need to convince them that the business is viable and that it can pay any interest and make the capital repayments as they fall due.
They will also look for some kind of security for any loan.
Once the business is set up, an overdraft can usually be arranged, although it should only be taken out as part of a tightly controlled cash flow plan.
There are a number of pitfalls associated with borrowing from friends and family; on the positive side, such borrowing arrangements can often be made on more attractive terms than might otherwise be available from a more formal source of funding.
It may be possible to borrow either without any form of security against the loan and it may also be possible to borrow at either a lower rate of interest or even interest‐free.
Repayments may also be possible over an extended period of time and a detailed business plan may not be necessary.
It is best to keep any arrangement formal, however, and to give your benefactor as much financial information as possible upfront.
You will be responsible for their money and as such, it is in everyone’s interest to manage your money effectively.
There are a growing number of venture capital firms that are looking for small hospitality businesses to invest in.
If you are simply looking to run a sweet little cafe, the best you could hope for would probably be a local businessman keen to invest.
But if you are looking to launch a new concept restaurant with potential for rapid expansion, venture capital funding may be valuable to you.
If you choose a venture capitalist, make sure you maintain control running your business.