How To Grow A Restaurant Using Business Funding?
Restaurant Entrepreneurs are always seeking ways to differentiate themselves from the competition in order to increase profits and create stability for their business. Develop a strategy for the business funding before you receive it.
Most common ways to use your business funding:
1. Restaurant Makeover
Customers are always going to love a fresh new feel to a business that makes them want to come back again and again. Owners should consider this if the business has had the same look for 8+ years. If the restaurant looks tired its probably time for a renovation. Paint, Lighting, decor, and space are all very important things to think about when doing a restaurant makeover. Since construction projects like this only last 1-2 months, restaurant owners typically utilize a line of credit or a small business loan. A line of credit allows you to only use the money you need along with the ability to draw on the amount that is open on the line at any time. The small business loan is a set amount with a fixed payback and is easier to quality for and typically higher amounts (Up to 130% of gross monthly sales) than the line of credit are given.
2. New Kitchen Equipment
Giving your staff the tools they need is always great for the business. When a cook is in a professionally built kitchen that inspires creativity and excellence, both customers and the restaurant owner win. New Prep stations, ovens, stove tops, and coolers can increase output and save you money in the long run. Newer coolers will help product stay fresh, stove tops and ovens may be more energy efficient. All of which, will cost money now but pay dividends shortly thereafter. Equipment Financing is an available option to fiance these upgrades. This style of loan is typically between 4-9% interest and up to 84 months to pay back which is cheaper than other loan styles and makes it very enticing for high volume restaurants.
For restaurants that have a great product but don’t have the traffic they desire, marketing and advertising should be the focus. Signage to attracting more customers and help draw them in is crucial. Advertising a coupon in a local magazine-ad mailer typically works well for restaurants. As for the funding to get this done, a small business loan works well for these projects because they are short-term and profits can be paid back with credit card sales or the increased revenue gained from establishing your brand.
4. Add Employees and/or Increase Service Hours
It is very typical for a restaurant to start out only open during one of the service periods such as breakfast in order to grow in a responsible manor. Expanding these hours at some point may be an opportunity to win more customers and secure more profit. Business funding can help make up the cash flow gap of hiring, training and implementing the new service hours.
5. Implement New Technology
Still using paper tickets? There are several new technologies available to small and medium size restaurants that help deliver an exceptional experience for your customers. Imagine never loosing a ticket again because everything is paperless. Implementation of new technologies can be good for the business but may slow the restaurant output for a short-term during the adoption phase. Small business loans are great for making up the gap in sales in order to maintain cash flow.
8. Add Inventory
Expanding a product offering is a great way to increase revenue and gain more interested customers. A great example of this is a local hamburger restaurant was selling hamburgers and french fries and doing quite well. They decided to have customers fill out a survey. Several survey results suggested a hot dog option on the menu. Not all customers like hamburgers. The restaurant wanted to make this change but it was difficult for them because the available funds were tied up in hamburger buns and patties. They decided to get business funding. The owners applied for and secured a small business loan to purchase inventory with a weekly payback as a percentage of credit card sales so when the new income from the hot dogs. Once the loan was finished they had successfully added new income and a sales item to the menu and increased monthly profits.
9. Facilitate a move To a New Location
Moving facilities can temporarily interrupt the sales of a restaurant or the possibility of paying two rents while renovations are being done to the new place. In order to facilitate a move some restaurants relay on business funding to make up the income gap and maintain cash flow until the new location can increase returns. Short term small business loans are perfect for this because they have no collateral and can fund in hours with a motivated business owner.
10. Develop better Cash Flow
Restaurants may be profitable when looking from a monthly or yearly view but may face difficulties keeping money in the bank at time to facilitate the day to day operations of the business. Working Capital Business Loans can be the solution to this issue. They are designed to bridge the deficit so that you maintain a healthy bank statement.
Once you have decided what option will help your business grow. Consider the funding options available to you such as a Small Business Loan (Working Capital), Line of Credit, or Equipment Financing. All three can help support the growing needs of your business to ensure success in the form of increased profits.