Opening a restaurant is an exciting time. One of the most difficult aspects of getting a franchise off the ground is attaining financing for working capital, equipment, inventory, renovations, and countless other resource drains that may not have been anticipated. Franchisee financing is vital to the opening and initial start-up period for any budding enterprise, and getting the right financing isn’t as difficult as one might expect. There’s no shortage of firms out there offering financing, but not all are created equally. Understanding what to look for when shopping for a financier can help save tens of thousands of dollars over the life of your restaurant.
Starting any business doesn’t come cheap, and restaurants are definitely not an exception. Initial decorating alone can take a large portion of a starting budget. Interior design costs, seating and tables are all important design elements that will impact a customer’s willingness to come in initially and to return in the future. Kitchen equipment is another vast expense that will need to be taken care of. Refrigeration equipment, cooking appliances, and storage add functionality and flow to a kitchen. The quality of your kitchen equipment will be a factor in the quality of the meals prepared. As such, choosing the right equipment is absolutely vital. Rather than skimping and opting for inferior quality equipment, it’s often best to attain financing for the right equipment from the very start of the enterprise. Since many businesses fail in the first few years, getting the best possible start is an absolute necessity.
Choosing the Best Options
The wrong financing option can have long lasting and financially devastating results to a new business. Ludicrously high interest rates are dangerous and can seriously hinder a business’s ability to generate income. Never take out a loan from someone who operates out of their home. It’s an invitation for trouble. Try to find a firm offering both daily and weekly payment options. Fixed repayment terms of six to twelve months are also beneficial in that they limit the amount of time debt will need to be dealt with. A high interest loan that compounds frequently and extends for years is an ideal way to ensure tens, if not hundreds of thousands of dollars are spent on interest rather than the principle.
Select the financing option that will help get your business off the ground the right way without drowning you in years of crippling debt. Franchisee financing, like financing for any other type of business, is vital. No business can exist without appropriate funding. Restaurants require an abundance of start-up capital to ensure their ability to remain open during a sometimes difficult first year. Be sure to deal with only the best financing team available to help ensure that payments are paid primarily on the principal rather than interest. The best way to do this is with a shorter payment term of six to twelve months. A new business can be an exciting time. Don’t let basement lenders eat away at your profits.
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