The hospitality industry is constantly evolving with new food trends and favorites. For the most part, hospitality business owners can see what their business will do 12 months from now. However, looking out past that point is a bit of a mystery.
When opening a restaurant, it is important to ensure you share your vision and involve as many people in the discussion as possible.
It is important to consider where your funding is coming from over those first few critical years, and diversifying your funding allows you the best agility to be successful within your business. Funding your business should come from a few different sources:
1. Bank Finance of Traditional Lease – This financial model allows you to have smaller payments over a longer period of time. This type of product is great for fixed assets such as ventilation, Walk-In Boxes, and custom pieces. Traditionally, this type of product is supported by a personal guarantee or placing your personal assets as security, such as a home, investments, or cash security. For the most part, you are locked into this type of contract for 2-6 years. As hospitality businesses are constantly changing this can be hindering on some pieces of equipment.
2. Cash – It is no secret that for any business cash flow or cash on hand is one trick to success. Cash should be used for operating capital. This allows you to weather a slow start, adapt to seasonality, and make changes to complement consumer food trends. If your business has a strong cash flow position it also allows you to invest in things that will accelerate the business such as marketing, hiring employees, and food costs.
3. Silver Chef Funding – The Rent-Try-Buy model is designed from a hospitality owners perspective. It allows you to take control of your buying decisions and gives you the flexibility to be agile should change arise. It is important to see change from a positive stand point. Simply put, you want to set your restaurant up for what the demands needs are now. Then, as demand increases, scale your equipment through Silver Chef’s upgrade option. With Silver Chef you can purchase the equipment out at any time, this allows you to reduce your outgoing accounts payable as you begin to generate more profit. Additionally, there are no personal guarantees allowing you peace of mind.
How you fund your business is an important part of the equation when it comes to setting up your new restaurant or evolving your current business. To speak with a Silver Chef representative about how to best fund your hospitality project please reach out to us here and we will connect you to your local rep.