The thought of starting a restaurant is one thing that might have come in your mind if you are good at cooking. Cooking food for a large section of people is a difficult task and needs passion and commitment towards it. If you have that passion and determination then you can run a restaurant business successfully.
Apart from your fondness for cooking, financial capability is also a factor for the kind of business you are planning to set up. When looking for finance for your business, you have to figure out the capital and startup costs along with other expenses. If you have sufficient savings to start a business then it well and good. Otherwise, you can consider taking a loan from various direct lenders like London Cash Lender to bridge the funding gap.
Though there are other options available such as taking help from friends or family, looking for investors, etc. But these are a time-consuming process and can be tedious. Hence, it is better if you look for financing through lending companies. This is a good starting point for someone who wants to enter into the catering industry. All you need a good lending agency that can provide you a loan easily.
Here in this article, we will go through various financial considerations that you should look into before stepping into a restaurant business.
Working Capital and Cost
The startup cost of a catering business hinges on how big you want to start. First, you need to decide on whether you would like to be home-based caterer in the beginning or go for contract-based catering even outside. Either way, initially you have to pay for various things such as the fees for getting a license, insurance, and promotions.
The fund required also depends on the structure of business. If it is single ownership then a small amount should be sufficient for it. On the other hand, if you want your restaurant business to be registered as a corporation, then more capital infusion is needed.
Operating Cost
There are plenty of ways you can finance the operation of your business.
As discussed above the first source of financing is your savings. Many people prefer saving money before they step into any venture so they can stay away from incurring debts. If you can do this, then it would be the best option for you because initially, your focus will be on building the business rather than making high profits.
The next option is getting loans from banks and financial institutions. As it is widely known securing loans from traditional lenders is very difficult because of their complex and stringent process. Further, you might have to provide some collateral. If you don’t have any valuable property to keep as collateral then your personal assets can be used as collateral. There is little risk involved here so think wisely before choosing this option.
The third option is small loans or microloans. These types of loans are provided by private lenders or marketplace lenders rather than conventional lenders. This option is good for people who are having a difficult time getting financing from other lending companies. Direct lenders like MegaLoan Store can provide loans very easily and smoothly.
The next available option could be crowdfunding. As the name itself indicates, crowdfunding means asking people to finance your business. This type of financing is very famous these days. There is no specific amount fixed here, people can invest in your business as per their capacity. They can either ask to be a stakeholder in your business or just contribute to your business.
The final source of getting funds could be angel investors. People call them as an angel or seed investors. An angel investor is someone who has the capacity of giving you the entire fund for your business. Most of the time, they invest in a startup business and in turn become a shareholder in that company. But here is the catch, you have to convince them that your business model is perfect and you will be able to garner profits in no time. It all depends on your convincing capability.
Paying Taxes
As a registered entity, you are obliged to pay taxes to the respective government for running a business. The amount of tax depends on the size of your business. For this, it would be better to hire a skilled and experienced accountant who can handle all your cash flow in and out.
Overall you need money to get off your catering business; otherwise, it will limit your capability to provide quality service.
