Running a restaurant startup can be a bit tricky for many entrepreneurs. Managing your finances can also prove challenging, posing another risk to your business. Outlined below are the top 4 money management tips from ProperPopcorn.com, a business that has been through the difficulties faced by restaurant startups.
1. Consider Start-Up Equipment Financing Options
As mentioned earlier, starting/running a startup food business has its challenges. Sourcing equipment for the startup is one of the biggest challenges an entrepreneur will have to overcome. Although you might be tempted to use whatever money you have to acquire the assets, this isn’t the wisest of ideas. Try to conserve as much money as possible during the restaurant’s first few months or year. Chances are it won’t be generating enough profits to cover recurring costs, one of the reasons experts preserving your capital for such. The only possible way to do this would be to seek/consider various equipment financings options. You are better off leasing most of the equipment than buying them. Leasing the equipment will leave you with some money to take care of any costs and expenses that may arise.
2. Practice Proper Cash Flow Management
Proper cash flow management is essential for the success of every business. You thus need to ensure all dues and payments are structured appropriately according to cash inflow at that moment. This is the only way you can keep track of all expenses and avoid/prevent a financial crisis which could put the business in too-big-a-debt. If you had sought equipment financing for your business, you would then use the saved-up money to get the business out of any financial crisis it may be in. This gives it a fighting chance for future growth.
3. Don’t Overspend on Show-offs
While you might be looking to impress your customers (and probably your rival), it wouldn’t make any sense spending too much on the aesthetics and design. Acquiring the most expensive artwork, furniture, and furnishings isn’t recommended for start-ups. Simply focusing on keeping the restaurant clean and tidy will go a long way in selling it off. According to restaurant critic Peter Helch, most people will appreciate a decent restaurant that serves the best foods as compared to a ‘shiny’ one but poor customer service or quality. Helch advises that you wait until the restaurant has gained traction before you can start spending money on its interior design.
4. Spend Wisely On Marketing
While it’s natural for one to want to get his/her restaurant known out there, you still need to be careful with how much you spend on the marketing campaigns. Choose your marketing campaigns carefully and use the most efficient and cost-effective strategy possible. Consider advertising your business on the local dailies for improved exposure. Offering discounts on some of your dishes, or even partnering with a local supermarket to promote your brand can save you some money in the long run.