Planning to launch a restaurant? Then you need to seriously think about how you will manage your finances. A restaurant startup needs a lot of money, not just to kick-start its operations but also to continue running. And if you are not very careful about the way you handle the funds, you are likely to fall into a tight spot monetarily.
4 Money Management Tips to Keep Your Restaurant Startup Afloat
In this post, we look at four financial tips that every restaurant startup owner must keep in mind.
Use Equipment Financing Options
Do not use up all of your funds for acquiring assets. This is one of the dumbest things you can do when setting up a restaurant business.
In all probability, you will have to survive without much profit for a few months, maybe even a year. As such, the only way to see through this period is by preserving your capital as much as you can so that you can use it when in tough financial situations. By using start up restaurant financing options, you can lease the necessary equipment and other things you need for the place, thereby ensuring that you keep as much capital as possible safe and secure.
Manage Cash Flow Efficiently
Businesses tumble when owners do not manage their cash flows properly. The payments and dues of a business should always be structured according to expected cash inflows. This is the best way to ensure that you do not experience any temporary financial crunch that can snowball into a big problem.
Poor cash flow management will make your business acquire too much debt. You won’t be able to pay your monthly repayments and running expenses on time. By utilizing restaurant equipment financing for all of your equipment acquisitions, you make it possible to reserve at least 6 months of operational expense reserves in the bank, ensuring your future growth.
Avoid Excessive ‘Show Offs’
Many owners commit the mistake of splurging too much money on ‘show offs’ when setting up their restaurants. For instance, they can go overboard with the internal design of the shop, acquiring the best-looking furniture, artwork, furnishings etc. Don’t over-splurge on these things. Be minimal with your design and focus on keeping the restaurant neat and tidy at all times.
As long as you do that, people will visit your place provided the food you serve is top-notch. However, if you are setting up a high-end restaurant, then you will inevitably have to splurge on interior decoration.
Spend Well On Marketing
If you raised funds for your business through start up restaurant financing, it is natural for you to try to preserve as much capital as possible. However, marketing is one area where you need to spend money very well.
Publish ads on major local newspapers announcing your operations. Plus, come up with attractive discount plans and let the public know about it. You can also get into arrangements with local businesses and benefit from such relationships. For instance, you can offer a discount of 20% for people who spend at least $50 in the nearby supermarket. When customers of the supermarket see this offer, they are more likely to utilize this opportunity and visit your place.
Our guest author, Paul Kendall, is a proven professional with 15 years of building regional sales channels, business development, commercial financing, account management, and marketing experience. He has strong cross-selling skills with commercial equipment. Self motivated, energetic, and positive, Kendall always strives for a win-win solution for partners and clients. He loves attending trade shows and networking with like-minded individuals.