The food and beverage industry is a fulfilling one in many ways, but it costs money. Opening up your own culinary venture is risky, challenging and expensive. But dreams can certainly be transformed into reality if you have the drive and vision. Here are a few ways to finance your culinary venture.
Try the turf with pop-up restaurants, food trucks or home-based catering businesses before going all out with a full-scale restaurant. These are excellent platforms to test out menu ideas, themes, innovations, and get honest public feedback. They are extremely low-cost compared to brick and mortar joints, and allow you to save money for the real deal. It’s also possible to run some of these while working a part-time job (or a full-time job if you have the inclination).
Restaurant incubators present ideal options for those who don’t have funds or business experience. Good incubators, such as FIERCE Kitchens, offer world-class infrastructure and access to experts and investors so you can refine the structure of your culinary venture before it launches. There’s a physical space for early projects so investments required are low, and ample learning opportunities to scale up effectively.
Get a loan or an investor
If you’re firm on your idea and have a proper business plan, you might be able to look into a bank loan or get funding from a venture capitalist. You could approach friends and family first, or utilise inheritance if you’re lucky to have it. Bank loans will probably require collateral and interest rates can be high. Angel investors fund ideas or business plans while venture capitalists usually consider formats that have been in business and are looking to scale up.
It’s also important to note that venture capitalists generally act as directors in your company and will have a hold over decisions taken. It might be wiser to head down this road if you already have a successful venture and want to scale up.
It’s been said that two heads are better than one. Partnerships are better on the investment front and reduce risk through sharing of profits and losses. Consider partners with experience if this is your first venture, so you can learn from them and make use of their expertise.
Choose someone who has similar ideas to your own and the same vision for your idea, and is ideally located in the same city. Remember to detail the partnership structure legally to safeguard all parties. It’s preferable to avoid going into partnership with close friends and relatives to avoid any issues later on. Well-known acquaintances, such as college mates, work colleagues or neighbours, might make better business partners.
If you have customers who know and love your work, crowdfunding can help you raise funds for your venture. Crowdfunding can be a follow up from pop-up restaurants, food trucks and home catering businesses. You can offer discounts or other goodies to your donors. To successfully crowdfund, you will need to stay engaged with your campaign, answer questions, acknowledge donations, and actively push it across social media. Make your story personal.