The funding plan, called the money plan by some, is a set of strategies for targeting the right amount of money from the right sources, at the right time, for the right price. Be sure to examine all the sources you can and then you can build your money plan.
First, figure out how much money you need. Don’t ask for less than you need because you think you can’t get more, and don’t ask for a lot more just because you think you can get it. Falling short later can be more painful than not getting anything now, and greedily overreaching is just bad karma.
Also, define the points in your business plan when you will most likely need an injection of cash. Knowing ahead of time what you need and when is much better than trying to take all your money at once. Or even worse, going to the money well too many times.
It is best to have money in place about six months before you need it, and a safety net equal to at least two months of projected revenues. Look at your projected proforma and projected cash flow and plan on infusing capital at times when your financial plan shows a shortage of cash.
For instance, if I project the restaurant to do $70,000 per month in sales, I want to plan on having $140,000 in additional cash available at all times during the start-up stages. Many times I get this by getting a line of credit from my friendly neighborhood banker that is equal to $140,000 that I can tap if I need it and won’t tap if I don’t need to.
Another important part of your funding plan is to identify sources of capital, whether they are bank loans, small business grants or venture capital. The business plan that you have should be targeted to these investors and how your restaurant complements their own goals. Finding the investors can be a daunting task and requires more research.
Howard Cannon – Sizzle Reel – Media Compilation
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