Some people choose a career in fundraising or devote their free time to raising money for a cause. Hats off to these folks. It’s a hard job and one from which I’ve always run.
Well, I can’t run any longer. It’s my new part time job, along with opening the bakery. Turns out that when following your dream requires funds, you have to make a choice. Do what it takes to raise the appropriate capital or proceed to career plan B. I choose plan A, opening Flour + Co!
Opening a small restaurant or bakery can run anywhere from $200,000 to $800,000 depending on the needs/size of the space, your vision, the extent to which you go all out. Was the space a restaurant before? Is the space up to code? Are there structural issues that need to be fixed? Do you only have a certain dollar amount to work with, no matter what?
Answering some of these questions and many, many more, I landed on my total capital requirement for the project, in the bottom half of the cost spectrum above. Keep in mind, this includes absolutely everything from insurance premiums, city and state fees, office supplies, and graphic design to architectural fees, tables and chairs, construction and oh-so-much-more.
With budget in hand, it’s go time. Raising capital (or reducing capital needs) can come from many sources:
- Personal savings – you have to have some of your own money or no one will invest or loan you money. They want to see that you have something to lose too.
- Friends and family – the best way, in my opinion, to raise capital from people who believe in you and love being a part of the project in a significant way. It’s a fun partnership for everyone involved.
- Other investors (angel investors, etc) – this type of investment is harder to come by in the restaurant industry due to the nature of a restaurant investment (not high growth, different payback format).
- Bank loan (SBA)– banks are loaning more to small businesses again, but it’s very competitive with lots of rules, such as having a solid business plan and other documentation. Qualifying can be difficult depending on your personal assets.
- Micro loans (SBA, less than $50,000) – these small business loans are more accessible than larger SBA loans, but you have to have your ducks in a row as well. They typically won’t loan until you’ve raised all other capital, so they help to close the last funding gap.
- Crowdsourcing (kickstarter.com) – great online community where you can ask the general public to be an investor in your business. These are donations really. You give these “community investors” something in exchange for their donation, such as an apron (small donation) or a baked good everyday for a year (large donation).
- Other financing (equipment leases, etc) – instead of huge outlay in the beginning, you have more manageable monthly payments to pay back.
- Lease negotiations – perhaps the landlord will pay for some of the upgrades or enhancements that add real value to their property.
- Pro bono services (legal, accounting, etc – provided by family and friends) – network and see who you know that can help you out with some of the start-up related services. Don’t forget to take care of them in one way or another!
- Small business or industry related contests – it’s amazing how many opportunities are out there if you dig.
Though it’s not my favorite job, it is rewarding as I secure dollar after dollar towards my good cause. I’m still looking for investors and in fundraising mode, in general, but I’ve had many friends and family already jump on board to support me and my business financially. I’m half way there with just personal, friends, and family investments! Yippee!!! Stay tuned as there is lots more happening from the grab basket above in order to make ends meet in the end.
But, I have big news!! I’ve been accepted into the FedEx Small Business Grant Contest which is worth a potential $25,000!! It requires your support and daily voting to win. It’s really a popularity contest, so help me join the in-crowd! You can vote once a day on the FedEx facebook site. Please set your calendar reminders and spread the word to all of your friends and coworkers. It’s a great way for me to start to close my gap and I’d be humbly honored to be the most popular small business! Thank you!!!