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Opening a restaurant is not all about getting a space, a license, some tables, and chairs. In fact, these might be the cheapest parts in the process.
The actual equipment is what adds to the actual expenses. In fact, you cannot purchase the same blender you have at home. You need professional units and definitely more than just one.
You will need sets of different pots, utensils, and all sorts of robots to make your job efficient. This is where most business people get stuck – restaurant equipment costs a fortune.
Luckily, there are ways to find financing, as well as some clever ideas to make everything more affordable. Here is what you need to know regarding restaurant equipment financing.
Organize your finances
This is the first step before any financial move. You need to know where you stand, what documents you have, and how far you can stretch before applying for financing.
Get all the income statements in place, as well as spreadsheets and balance sheets. You need up-to-date documents as well, so gather everything in a file.
You must also be aware of your credit score and what it implies. Lenders will consider both your business and personal scores – if you live in a country with such scoring systems.
Having a top-notch organization allows you to choose the right type of financing and make proper planning for repayments.
Plan ahead
Whether you already own a restaurant or you plan to open one, you need to plan everything ahead in the smallest details. New equipment costs and can catch you off guard.
As a restaurant owner, replacements are just as pricey, and things usually break down in the worst possible moments.
You need a spreadsheet with your equipment, age or purchase date, common lifespan, and the optimal time to replace it. This way, you will be able to prepare before unexpected situations arise.
This plan also involves dealing with financing if you have to. Always keep an eye on your credit score and rely on small tricks to improve it over time – most importantly, make sure debt is paid on time.
Shop around
Just like for anything that involves a bank or a lender, you have to shop around. You have to find different equipment vendors and even look online – you could get things shipped over from any part of the world.
Then, you need to research lenders. There are plenty of opportunities out there. Some lenders give you more money, but at higher interest rates. Some others give you less money, but make the loan doable.
The overall idea is to find low-interest rates, as well as a proper payment agreement. You want an agreement that you can stick to. Negotiations are part of the game too – give it a try.
Used equipment
Used equipment can still last for ages – quality items that are well maintained will last for years, and you will only pay a fraction of their original prices.
At the end of the day, restaurant equipment is a significant expense, so it is definitely worth trying out different ideas to save some money. However, there are certain things you need to keep in mind.
First of all, make sure you thoroughly inspect the equipment. Cosmetic issues are not necessarily a problem – they can be fixed, but they can also be overlooked. The technical aspect is what matters.
You must ensure the equipment is in good condition. If a different restaurant sells it, try to find out why – it could be refurbished and may not last.
It may sound bad, but you would rather buy used equipment from a restaurant that has just gone bankrupt, rather than a restaurant that buys different equipment.
Maintenance records are just as important – it is just like buying a car. You want to know it has been looked after, so this is the only way to check.
All the potential warranties should be taken in writing. You are less likely to get a long warranty, but you can still get a few months without too much trouble.
Avoid overspending
This is another common issue. Many restaurant owners find themselves able to get loans. They can get a fortune – way more than what they actually need.
Therefore, they feel encouraged to grab more things or perhaps more expensive staff. Just because a lender gives you the money, it does not mean you should take it straight away.
Make sure you can repay the loan. Even if you can, there is no reason to overspend. You may not necessarily need to take all that debt.
Define your budget before even applying for the loan. Double-check everything before taking the money and ensure you can comfortably repay it.
Conclusion
Bottom line, financing for restaurants could be difficult to deal with because new restaurants are considered risky businesses – not impossible though.
There are plenty of ideas to keep your costs low or secure a loan, but just like for any other opportunity that implies lending money, you need to try to get as little as possible and figure a way to repay it.
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