5 RED FLAGS THAT KILL YOUR CHANCES OF FUNDING YOUR NEW RESTAURANT 🚩
Securing a business loan can be the key to launching your dream restaurant. But lenders have a keen eye for weak business plans – especially those created by new restaurant owners.
5 RED FLAGS THAT KILL YOUR CHANCES OF FUNDING YOUR NEW RESTAURANT
#1: A Business Plan with No Numbers
Problem
Many early-stage restaurants have great “ideas,” about their restaurant but don’t necessarily realize that they need to be backed up by numbers, even if they may be just best-guess assumptions at this stage. In fact, of all the information you may put in your Business Plan, this is the most important and without it, your Business Plan will be a non-starter for the lender.
Lenders aren’t just looking for ideas; they’re looking for profitable businesses. The lack of a financial plan or unrealistic financial projections raises doubts about your ability to manage finances and repay the loan.
How to solve it
Build (or have us build you) a simple set of financial projections: Just 3 years of projections are good enough for now, but they must include a forecast of your Customers, Revenues, Costs, and Profits.
Keep it credible: Lenders will be most interested in ensuring your restaurant will generate enough revenue to pay back their loan, so keep your assumptions realistic and make sure you include the loan payments in it.
Drop your numbers into the Business Plan: Your Business Plan must include sections like Key Financial Metrics, Funding, Uses of Funds, and Financial Statements, so the Lender can easily find what they’re looking for.
#2: Presenting the Wrong Materials
Problem
Lots of first-time restaurant founders announce they need a “Pitch Deck” in our first meeting because that’s what they may have seen on Shark Tank or read on X (Twitter). But if that’s what you’re also thinking you’re probably wasting your time and money.
Pitch Decks are essential but only for equity investors – whether angels or VCs. Bankers and government loan programs, on the other hand, don’t request Pitch Decks as part of their application process because the information will be too high level for them, they want to dive deep into the details of your business.
How to solve it
- Prepare a Business Plan (instead of a Pitch Deck): Essential for a bank or government-backed small business loan.
- Stick to 20 Pages or So: Be sure to include high-quality content and don’t miss including details about your Restaurant and team, SWOT analysis, info on your Competitors, and of course Financials as above. Note that 50-100 pages is too long and will just overwhelm potential lenders.
- Edit and Edit again: Lenders want to understand your business proposal in detail, yes, but you must also stay respectful of their time and limited attention spans. Keep it tight, don’t ramble, and avoid repeating words and phrases.
#3: An Unprepared Operations Plan & Team
Problem
Restaurants are complex businesses. Lenders need to see you’ve thought through daily operations in detail, and that you have the team in place (or a plan to build one) to ensure smooth execution. A poorly defined operating plan or a team lacking relevant experience raises concerns about execution and your restaurant’s chances of success.
How to solve it
- Nail your logistics: Outline how you’ll source your food and beverages, what your expected margins will be, how your front-of-house operations will be managed, who’ll be in charge of your kitchen operations, and how you’ll staff the restaurant once open.
- Experience is everything: Even if it’s your first time opening a restaurant, be sure to highlight relevant experience within your staff, or demonstrate that you have a robust plan to recruit and train the right people…or educate yourself quickly.
- Mentors & Advisors: If the team lacks direct experience, strong mentors and advisors with industry knowledge can boost credibility for lenders.
#4: A "Build It & They Will Come" Marketing Strategy
Problem
It’s natural for us as first-time restaurateurs to believe that as soon as we open our doors, customers will find out about how great our restaurant is and come flooding over. Well, it doesn’t quite work like that in real life and your lenders will want to see how you’ll attract and retain customers given the competition in your area.
Generic marketing buzzwords or relying on word-of-mouth don’t inspire confidence. They need an assurance that you have a strategy that will work because hope is not a strategy.
How to solve it
- Target with precision: Be clear about who you’re trying to reach and tailor your marketing accordingly to attract this particular customer segment.
- Be channel-smart: Your marketing budget will be tight and you don’t want to spread yourself too thin. Pick the most cost-effective marketing channels initially where your ideal customers are active (social media, local partnerships, PR) and develop solid plans for them.
- Budget and timeline: Outline your marketing budget, a realistic timeline for launching various campaigns, and an estimate of the number of customers you expect to win from each.
#5: Market Misunderstandings
Problem
Overly optimistic market assessments are extremely common among first-time restaurant owners: underestimating the competition, failing to analyze local demographics, or addressing real gaps in the market that their restaurant can fill.
Lenders need to see you have a firm understanding of the landscape and that you’re not being overly optimistic in the early days.
How to solve it
- Location, Location, Location: Research the local area thoroughly. Understand foot traffic, potential customer demographics, and the presence of other businesses.
- Map your competition: Identify direct AND indirect competitors. Analyze their strengths and weaknesses, and then market your strengths accordingly.
- Understand the trends: Research local and national restaurant industry trends that could impact your business in terms of broader consumer preferences.
READY TO DO THIS RIGHT ?
Let Numberly help build you a Winning Business Plan!
DIY Simple Restaurant Financial Plan
$49
Immediate delivery
A lender-ready Excel or Google sheet with Key metrics, 3 financial statements, and assumptions you can easily change
👀 Preview
- 3 financial statements
- Dashboard with summary KPIs
- Customers, Revenues, and Costs forecast
- Single adjustable assumptions tab
- Walkthrough videos
Restaurant Business Plan Editing
$249
3-day delivery
Share your draft plan, and we will edit it and incorporate your existing financials to make it lender-ready.
- 30-minute call with our restaurant expert
- We edit your business plan
- We incorporate your existing financials
Full Restaurant Business Plan Writing + Design
Starting at
$999
1-week delivery
Brief our team on your restaurant concept, and we’ll craft a lender-ready plan that maximizes your chances of securing funding.
- 1-hour call with our restaurant expert
- We write and design your business plan
- We create your customized financial plan
- Financial plan walkthrough videos
- Up to 2 revisions
Our Customers LOVE Us
We’re at 450 happy startups…and counting. Check out our all 5-star reviews on
“Numberly made the process of setting up a professional and detailed proforma a breeze. I would highly recommend Numberly for entrepreneurs and small business owners seeking a highly competent and thoughtful partner to build out their business plan and financial documentation.”
Arley Marks, Midden Hospitality
“Numberly is very responsive and has a high level of professionalism. They went above and beyond on my Business Plan and Financials to ensure I understood the content for recitation.”
John Sanders, Laugh & Wine
“Numberly’s expertise is unparalleled, they are consummate professionals. Their advice is spot-on and work is excellent.”
Jonathan Barraclough, Silent Electrics
How It Works
Step-by-Step
01
- Download our Simple Restaurant Template
- Watch our 2 instructional videos on how to use it
- Add your assumptions and copy over key metrics and charts into your draft Business Plan
DIY Financial Plan
02
- Book a call with us
- Share your Draft Plan and Financials
- We’ll edit your Business Plan to lender-ready standards
business Plan Editing
03
- Book a call with us
- Fill out a form to share your restaurant ideas and plans in your own words, as well as any design preferences
- We will create a lender-ready Business Plan including a Financial Plan
Full Business Plan Writing + Design
Frequently Asked Questions
Restaurant Business Plan
- What makes your team qualified to help restaurant startups specifically?
We’ve walked in your shoes as restaurant founders ourselves, built our restaurant over 9 years, and sold it successfully. We’ve also helped dozens of other restaurant startups just like you raise funding.
- What information do I need to provide to get started?
- If you choose to start with the DIY simple restaurant financial plan, you don’t need to provide any information. Just download the the template and watch the instructional videos to get started!
- If you have an existing Business Plan and just need us to edit it, you’ll just share it with us. Feel free to send it before the call to hello@numberly.io.
- If you choose the full-service Business Plan and Financial Plan, we’ll take notes on the call and ask you for any follow-up information we need, don’t worry.
- If you choose to start with the DIY simple restaurant financial plan, you don’t need to provide any information. Just download the the template and watch the instructional videos to get started!
- If I buy the restaurant DIY financial plan, what happens if I get stuck or need more help?
Just drop us a message on hello@numberly.io and let us know how we can help.
- I’ve worked with consultants before and been disappointed. How is your service different?
Well, we’re not really consultants because consultants typically just tell you what to do and don’t do the work themselves. We listen to what you need and then do the work to help you get there.
- How long does the process take?
It depends on which service you’ve chosen, but the Business Plan editing service is usually a few days and the full Business Plan and Financials service is usually about 1 week.
- I’m worried about sharing my confidential business information. How do you protect it?
We treat all our customers’ information and documents with the strictest confidentiality. If you’d like us to sign an NDA, we’d be happy to sign it.
- How will I receive feedback and revisions?
We’ll be in close contact throughout the process. We work in Canva for the Business Plan and in Excel or Google Sheets for the financials so it will be easy for you to share comments and make edits on either.
- Do you offer support during the loan application process?
If you need additional support in any way, we offer this at $100 an hour.
- Do you offer any guarantees?
We want all the founders we work with to be thrilled about the service and deliverables they get. If that’s not the case, we’ll do our best to fix it if at all possible. If not, we’ll work with you to determine if a partial or full refund is justified and fair under the circumstances.
