Opening a restaurant? And you have enough money so you don’t need a loan? If this is your first restaurant, then get the loan. Many people under estimate the costs of opening and running a restaurant as well as the amount of time it takes for the business to make a profit.
Getting the loan also forces you to think everything through, because a lender is going to want to know everything. It is also beneficial for an impartial third party to review your plans. You will be surprised how many small businesses do not have a marketing plan. No matter how good your food is, if nobody knows you are there, you are not going to get any business.
Many think they can rely on word of mouth. Well, I have seen this noodle house open on Broadway in Vancouver, a very busy area of town, and closed a year later. Their food was good and it was cheap. I told my friends about it. The business was slow in the first 6 months are so, but it slowly built up. In fact, by the end of the first year, the place was to capacity at lunchtime. So why did they leave? They didn’t have enough money to see the business through the start up phase. They were running out of money and sold their business 9 months in, before the restaurant started getting really busy. Now that’s painful.
Have as much money available as possible. If you need to buy a new kitchen, lease it. If your restaurant starts making money a few months in, great. You can pay off the loan earlier. If not, you know you have the option of waiting or putting more money for marketing or applying for a liquor license, etc. It is a lot more difficult to get the money after the restaurant has opened and it is not doing so well. Yes, you might be paying a bit more in interest but think of it as an insurance policy that has a pretty good chance of paying out.
I am not a business loan expert so please do your own investigation. I am just trying to share some of my experiences. However, I am a home equity loan expert. If you need to use your home equity loan as your primary business loan, or you need extra money to get you through the first year, then I can help. If you live in BC, Alberta, Manitoba or Saskatchewan, I can arrange the loan for you. Contact me here or call 604-831-4437 and ask for John.
