If you are in the restaurant business, you certainly won’t need me to tell you how tough it can be financially.
While you are building up the reputation of your establishment, money is often tight and one bad night can mean an unprofitable week. As for cash flow – well, the cash certainly flows, doesn’t it? You just wish that more of it was flowing in than out. And what about those slow periods? What do you do if they last longer than you anticipated? How do you get the funds you need to get your restaurant business over that hump.
OK, I’m painting a negative picture here, but funding can be a problem for even the most successful restaurant, especially if you wish to expand quickly. The question remains: what is the best way to get financing for your restaurant?
A loan may be an obvious way to raise finance for your restaurant business, but look at it from the point of view of the lender.
The 2004 Restaurant Industry Operations Report published by Deloitte & Touche LLP indicates that average pre-tax profit margins range from 4-7%. This means that, from the lender’s point of view, even a profitable restaurant is a big risk. The bigger the risk, the bigger the interest payments – that is, if you even get approved for a loan at all. High interest rates, of course, can bring their own problems, particularly for a very low margin business such as the restaurant trade.
Lenders will, admittedly, look more favorably on you if you also own your premises. However, you need to be aware that funding your business using real estate as collateral means that it is the potential resale value of the property that lenders are looking at. The purpose of the property itself may actually reduce its resale value as there would be a smaller pool of potential purchasers. Thus, many lenders set very high minimum loan amounts, which may not be suitable for your particular circumstances.
If you do decide to go the loan route, then speaking to a specialist lender with expertise in the restaurant industry is essential.
ACCOUNTS RECEIVABLE FACTORING
Factoring is a form of commercial finance where a business can accelerate its cashflow by selling its accounts receivable at a discount. This means that the business doesn’t have to wait for outstanding invoices to be paid in order to receive the cash necessary to finance the business moving forward.
For many service based businesses, accounts receivable factoring is an extremely good way of quickly accessing cash. However, restaurants rarely have much business of this kind.
What they do have, however, is a high volume of credit card transactions. By leveraging these, budding restauranters can – literally – fund their restaurants with other people’s credit cards.
CREDIT CARD CARD FACTORING
Essentially, restaurants can sell their future credit card transactions and receive an advance on that money – usually up to around $120,000. The money can be used for any purpose – from expanding premises to buying new equipment or whatever you want. This isn’t a loan, so there is no personal guarantee needed. It’s simply an advance against future credit card settlements.
The company purchasing takes a small, fixed percentage of future credit card transactions until the advance is repaid.
The advance cash can often be made available within 14 days, so – for the restaurant business that is in need of a quick injection of funds – this is a good option. Of course, there are restrictions on who can apply. Generally speaking, a restaurant would have to be running for over 1 year, take over $5,000 per month in Visa/Mastercard transactions and have more than 1 year left on their lease to qualify.
For the restaurant that has been in existence more than one year, this represents the best method of further growing your business at minimum professional or personal risk.
COMPANIES PROVIDING RESTAURANT FINANCING
There are a number of companies out there offering financing of this kind to restaurants. The main points to watch out for when selecting such a company are as follows :
i) Application Fee – Companies charging an application fee should be avoided. To be honest, there isn’t much paperwork involved in this process, so an application fee is unnecessary.
ii) Closing Costs – Again, companies charging ‘closing costs’ are best avoided. There are enough companies out there competing for your business.
For the young or established restaurant business, credit card factoring is the most effective way of getting the funds you need to expand your business. So, fund your restaurant using someone else’s credit card !
RC3 Financials Re-Launches Awesome Looking Makeover Website!
RC3 Financials, the number-one go-to-online source for business financing, has recently revamped its website and is today officially re-launching awesome looking interface that features business financing, payroll, and tax preparation.
“It’s more like we have created a brand new website, the makeover is total,” says Ray Charloux, Owner, RC3 Financials.
“In celebration of our new look website, we are offering a Payroll Special that will run till December 31, 2013,” says Ray, who specializes in helping business owners find financing for a wide variety of reasons to include equipment, land, and debt consolidation. “Anyone who signs up before December 31, 2013 will get one month for free.”
RC3 Financials, along with the website re-launch has also launched an agent program. If you know someone that is in business that could benefit from the services that RC3 Financials offers then check out the agent program. It can be full time, part time or even a one-time occurrence.
RC3 Financials, designed to help entrepreneurs save both time and money, is now a member of the online cloud bookkeeping programs, like QuickBooks, FreshBooks Certified, Xero Certified, and Wave Network.
With its aim to help small business owners achieve their financial dreams, RC3 Financials works with a network of nationwide lenders to help new and existing businesses with all credit types.
No matter what the financial needs a company may have, RC3 Financials has been there to help persons in a variety of ways, from setup, reorganizing, financing, refinancing, credit card processing, and bookkeeping.
Mindful that the economy has not been in its best state, Ray says they know how tough it is to run a business without getting the proper funding. In addition, while the economy has its full share of difficulties, he notes they (RC3 Financials) are still here to help.
“We do make it possible for businesses to find lenders that will help them with all of their financing needs,” notes Ray, whose aim is to help small business owners succeed at running their business.
Delroy A. Whyte-Hall (ThePRwriter) | Phone: (240-347-6385
How would you like to hire someone that is more motivated and more qualified to do the work and costs you less than your average employee? No, I am not talking about hiring someone illegally. You can accomplish this simply by employing a telecommuter. Let’s take a look at 5 very good reasons, why it makes sense for you to consider telecommuting from an employer’s perspective.
1) Less Overhead
How much is all this office space, furniture, computer equipment along with your IT department to maintain them, utility bills etc. costing you? Telecommuters do not require any of the above, which will cut your overhead cost tremendously. Telecommuters use their own office, their own equipment from computers to paperclips; use their own power, phone and Internet connection. If their computer acts up, it’s up to them to get it up and running again.
2) Less Benefits To Pay
Most telecommuters are independent contractors. You do not have to provide for health care, workman’s compensation or paid vacation. Consider the tax benefits as well; there is no employer portion of federal and state tax to pay.
3) Hire Experts When Needed
Do you need someone to write the occasional press release and maybe come up with a revision to your brochure every once in a while? Instead of hiring someone fulltime as your marketing person, consider outsourcing the tasks to a freelance telecommuter. You will pay per project, or hire your freelancer for a few hours per month, instead of creating a marketing position. Freelancers give even small businesses the opportunity to hire an expert for almost any task.
4) On Demand Work
Do you expect a temporary increase in your workload, be it seasonal, or because you just landed a large project? Why not pick up a few telecommuters for the task instead of working with inexperienced temps, or hiring in-office personnel that you may not need three months down the road. Telecommuters combine the flexibility of temps with the on-the-job experience of permanent employees. You get the best of both worlds.
5) More Motivated Workers
Telecommuters have a very good reason why they want to work from home. Whether that reason is being able to stay home with the kids, a disability, or avoiding a long commute, being able to work from home makes them happy. As you well know, happy employees are more motivated, don’t count the minutes until they can leave the office and overall get more work done.
If you haven’t already done so, I encourage you to give telecommuter a try the next time you need a highly motivated, experienced worker, but aren’t in a position to create a permanent onsite position. Once you have experienced all the benefits a telecommuter brings to your organization, you may even consider converting even more positions to telecommuting.
Entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realize that they’re making a mistake.
As a business owner, you’re hardwired to enjoy a greater level of risk than the average person. But do you enjoy the thrill of business and investing so much that you’re willing to risk:
-Being hounded by creditors?
-Being denied a mortgage?
-Paying more than your fair share of interest on your loans?
-Losing your house?
If you answered “no” to one or more of these questions, this may be the most important report you’ve read in a long time.
Because, if you’re like most entrepreneurs, investors, and business owners I’ve met over the past 28 years, you’re in danger of facing all of these horrific problems.
And it’s all because of your business.
You see, entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realize that they’re making a mistake.
And to tell the truth, even when they do realize they’re making a mistake … they lull themselves into thinking that the consequences will be a minor annoyance.
Until, one day, they can’t qualify for a mortgage. Or they can’t get the to-die-for financing offered on the new car they’re buying. Or they’re hounded by creditors and eventually have to declare bankruptcy.
And it is all because they use their personal finances to fund the launch or expansion of their business. They then use personal credit cards to pay for business expenses. If you are in business or thinking about starting a business, business credit is a must.
Let me explain, most business owner have no idea that they can establish business credit and even fewer know how to how to establish business credit. If owners would take the time necessary to educate themselves about establishing credit they would no longer have to use their personal funds for start up capital or working capital.
They would also be able to use business credit cards which don’t report to their personal credit reports, therefore, not lowering the personal credit scores.
The most important goal of business credit though is to obtain unsecured business lines of credit, which can be done once the business credit profile is set up properly. Once a business obtains unsecured business lines of credit, they then have the working capital they need to start a business or expand their business. The business owner has check book control to use the business lines of credit as they wish. And best of all, the business lines of credit don’t report to the business owner’s personal credit report.
If you have set up your business profile correctly there are a number of banks that will lend to brand new start up business. That is right, brand new start up business with no track record whatsoever. The banks will extend unsecured business lines of credit so they can have the start up capital they need to finance the business of their dreams.
Make no mistake about it; business credit is a MUST for every business owner. You shouldn’t put your personal assets such as your house at risk to finance or fund your business!
Are you in business accepting credit cards and looking to make some changes? Changes that accepts many different payment types? No more asking debit or credit? Loyalty Programs?
Contact ME for a FREE rate review and let me discuss this more with you.
Also available for iPhones and Andriods. Free download of application, free reader, allows for tips adjustment to be added for Restaurants and Salons.
New Website theme as of 8/28/2013. Please bare with us as not all the pages are quite done yet and some of the links might not all work! Thanks!
Welcome to the new and exciting page for RC3 Financials. Please continue to follow the page as we are making updates daily.
If you need anything also check out our page on Facebook: www.facebook.com/rc3financials