If you want to open your own hospitality business, you will need money. But what do you do if you’re broke?
For most hospitality entrepreneurs, finding capital is a huge part of the adventure called business. The process is often the crucial segment separating the concept and the actual restaurant, bar, or café. If you know your business financing options, you are pretty much on the right track.
There are as many ways to get money, but you’d want to be careful. Creativity may pay you well at the right opportunities, but going down the road less taken can be risky when you’re talking finances. That said, here are some popular financing options you can consider:
1. Bank loan – Reliable and offering highly varied lending schemes for individuals and business owners, banks are among the best regarded business financing options today. Getting a loan from them may not be as easy as it used to be, but have the right documents and you should be fine. Different banks will have different requirements, but most, if not all, require a well-crafted or updated business plan.
2. Credit card – “Never was anything great achieved without danger,” said Machiavelli. The same can be said of credit card financing. Aside from being an easy ticket to cashless spending, these “magic” cards can be used as a convenient financing option—with risks, of course. You can use a credit card to buy business-related needs or as an alternative to a bank loan. Do take note every expense you charge to your card directly affects your credit score. Pay your loans as promptly as possible to prevent debt from piling up.
3. Crowdfunding – Suppose you have an interesting business concept that others would find fascinating. Websites like Kickstarter and GoFundMe let you post a description of your project, as well as the funds you need by a certain date. Users from all over the world can then donate money. Crowdfunding’s success often depends on how well you can capture your audience’s attention and imagination, so get your creativity working. Remember, too, that crowdfunding is not feasible if you want a long-term source of funding.
4. Angel investors – Angels are real in business. They are often moneyed individuals or entities looking to invest in new businesses for different benefits, usually ownership equity. But despite their monicker, they’re not in it for charity. Create an effective pitch that would convince them to give you their money. To do this, you have to understand your product and know how you can lead your hospitality business to success.
5. Microfinance – Are you a literal beginner in business without a credit score and a sizable income? If so, a microfinance loan or microloan could be among the best business financing options for you. They are small loans with flexible terms. They also require fewer documentation than banks, making them perfect for filling gaps in your capital. The catch? They feature higher-than-normal interest rates. Think this option through and make sure to pay off your debts as early as possible.