Capital Investment & your Restaurant

Is a capital investment (like Credibly.com) enough to help your restaurant or small business grow, survive a rough patch or simply solidify your company?  Ensuring you utilize the right company for a great rate is just the beginning, what you do with the capital and how you ensure its maximized for your growth potential is paramount (When and where to invest your capital investment).  In this instance we will utilize the restaurant industry to solidify the uses of a capital injection into your company and how to maximize it.  What are the three most effective ways to maximize the capital you need in your restaurant?

 

Consolidating debt / Strengthening cash holdings

This may be the most practical use of an equity investment, working if supported with proper operations, systems and a well-kept building.  If your business is losing revenue from poor operations and repairing out dated equipment, then you will waste the capital inestment over time fixing the issues that got you there in the first place.  Imagine putting water into a cup with a small hole, eventually the water is going to escape no matter how much you put in there or how often; you must fix the hole first.

Lowering operational costs, increasing profitability and paying down debt works in your favor short and long term. If you pay down debt with poor operations your debt will repeat causing your equity investment to be merely a delay, not a solution.

Replacing/upgrading old equipment

When utilizing a capital investment, restructuring debt or taking a loan to reinvest you must ensure that you have the right variables taken care of to ensure your investment is protected. For example if you remodel your kitchen and all the equipment but not the old and outdated hood system designed to remove the heat, smoke and grease you will not operate properly. Knowing the chain of events and how your equipment works together and affects your operations is key to understanding the equity injection and where you wish to use it.

Remodeling your restaurants environment

Though a remodel may be needed, understanding the return on investment and the threshold to which your investment to return ratio diminishes needs to be evaluated.  Understanding the value of a remodled dining area, new TVs (sports bar) or outside image all play a role.  If your kitchen and operations cannot keep up with the new customers your remodle will bring in then you will spend time, energy and money creating a negative reputation instead of growing sales.  There is a point of diminished returns when remodeling versus new build that has to be taken into account.

Where does this leave you?

With traditional loans available, alternative financing (Flexibility in Alternative Financing is key) and your own current state of affairs to be considered it takes the proper evaluation to ensure the course to be set, organized and laid out for your company’s success.  Before you look to utilize a capital investment to bolster your restaurant or small business take the time to evaluate the costs involved, the state of your company and the threshold to maximize your rate of return.  Utilizing Blue Rock’s Range (Company) programs works alongside your company to maximize profitability and longevity.

Leave a Reply

Your email address will not be published. Required fields are marked *