March 06, 2008
Posted by Rlpatter
I am working on a business plan currently for a restaurant and it will be pretty solid by the time it is finished. My partner works as a manager of a successful corporate restaurant and is going to take the operational side of the business. He also has a BA in hotel & restaurant management. I am responsible for the business side of our venture (only natural since I am currently working on my MBA at Pepperdine). The location opportunity that we currently have is amazing. We do not have money of our own so everything must be financed from outside sources. So far the advice I have been given is more or less along the lines of, "You're crazy- there is no way you'll be able to raise $3 million from outside sources- espcially since you are young (26) with no experience (actually, I started a business once that has since failed)."
It is in my blood to start a company of my own. I don't want to do the typical corporate later climbing at all, but I also don't like to waste my time.
Is there anyway that an investor or an angel group would consider my situaltion?
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March 07, 2008
Posted by filmjay2k
( 0 ratings )
I am in a similar situation, raising money for a restaurant/nightclub in Santa Barbara. I also have a partner who has managed a corp restaurant, went to culinary school & business school and apprenticed with Wolfgang Puck. (My background is as a film producer) The significant difference is that I have money, and have invested about $400k of my own. I grew up in restaurants as well, my parents owned a couple of them, and I worked as a bartender and server for several years in my 20's.
The first suggestion I have (and I know this is trite) is pick anything but a restaurant. Anything. This is one of the most difficult businesses there is. Restaurant clientèle is notoriously fickle, and with the shape of the economy to come, chances of successfully recouping 3 million dollars are not great.
Most fail in the first year, and if you're at Pepperdine, I assume you're looking at the LA area. Obviously that lends itself to a large pool from which to draw customers, but those customers also have a lot of options, and in a recession there may not be enough disposable income to go around. You;ll need to be so well funded you can ride out at least a year of negative revenues. That said, no one listens to this advice, and neither did I. (But I wish I had).
I can't imagine a VC would be terribly likely to invest that kind of money for a new concept unless its really groundbreaking. Bank financing is possible but only if you can show a balance sheet with hard assets & it is better to reserve a line of credit for contingency use after you open, secured against the hard assets in your business. (Your liquor license by law cannot be held as collateral or used to secure a note.) You are most likely to raise the money from private individuals.
Remember potential investors aren't investing in your business plan, they're investing in YOU. The management team. I have had success finding investors by socializing with people in the area who have money. Through casual conversations over cocktails, etc. Raising money, or rather getting someone to part with their money is a bit like courting a woman. You cannot seem too overeager or needy. Dont have business plans at the ready, and be sure to seem unconcerned with getting the money fast. Have a drink, talk about anything but your business, wait until they ask what you do. Let them get it out of you, then just exchange cards and mention you are opening a round of financing. If they express interest, tell them work is for Monday and you'd be happy to send over a business plan (just the executive summary at first) later in the week. I cant stress this enough: come off as confident and NOT needy. You want to be seen as one of them, not begging for a handout. It has to seem like an opportunity FOR THEM, not you.
I hope this helps, I'd be happy to continue this thread if there's interest. Good luck, and if you have specific questions about opening a restaurant, I'd be happy to help.
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