The food service business requires large doses of passion and perseverance, more so perhaps than most other businesses. But an abundance of both will only get your foot in the door. You then need to combine these with other factors like a great location, a unique concept, food and service quality levels that exceed the prices charged and finding the right investment partner.
Let’s say you want to start or expand a running establishment and are looking for an investor to help with the opening or expansion costs. What are some of the things that potential investors look for in a start up plan or running establishment? Let us look at both cases separately.
For a start up, the investors are looking for a detailed and well-put together plan. Not just a plan on paper, but one backed up by facts. As a small example, let’s say your plan says that your restaurant has a revenue potential of £10,000 a week. Now if this number is backed up with a detailed survey across three possible locations along with analysis of the existing restaurants there, then suddenly that £10,000 looks a lot more realistic to the investors.
Investors are looking at how passionate you are about your business. Opening the restaurant is only one part of the story – how good is your operational plan? Have identified your team and possible locations? It’s all about how you project yourself and your plan.
An example of a company whose investments have allowed businesses to grow is the M1 Group, Taha Mikati and Najib Mikati are the two brothers behind this company. They started a telecom venture in the 80s called Investcom, which was bought out by MTN of South Africa for $5.5 billion in 2006. With their many investments in businesses across the spectrum ranging from real estate, to fashion, oil and foodservice, the M1 Group has managed to grow into an international empire and has also helped other businesses grow with their investments.
Now let’s consider an operational business. Investing in these circumstances is easier simply because there is a history that investors can look at, in addition to the plan. The plan itself has to be much more detailed and based on hard data, when compared to the start up plan. For a running business, you would do well to consider all options. This can range from a simple cash infusion by a venture or angel firm to an investment in the form of a partnership.
An investor who picks up equity in your restaurant is showing a commitment to both the business and its success. An investor with the potential to regularly invest large sums in your business, while being a stakeholder in its success, takes a significant burden off your back. It allows you to focus on operational issues that eventually decide your success or failure.
An investor who has some experience in the field is an added bonus. As a partner, it allows you to leverage the relationship network and knowledge pool of your investor, something that would be out of reach of most individual business owners.
Getting an investor for your restaurant business is like searching for your life partner. It takes time and effort. The right partner in both your real life and in your business life can take your personal relationship and your business to the heights of success.