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The year 2020 brought with it challenge after challenge for businesses of all shapes and sizes. The hospitality industry was hit particularly hard, and many restaurants and other foodservice providers have been forced to think outside the box and make significant adjustments to their daily operations.
With that said, meal and delivery orders have seen an astronomical rise over the last couple of years, and that trend is expected to keep increasing for the foreseeable future. After all, people still need to eat, and people still love to eat delicious, unique food.
If you’re a Cloudkitchen or Food Hall entrepreneur, or if you’re interested in becoming one, then now may be the ideal time to start a business. There’s more talent available, as qualified workers are still looking for jobs. Business loans are being offered with historically low interest rates. Other businesses are selling off equipment as they close. And these are just a few of many reasons.
Presented by Legacy Purchasing Group, below you’ll find some practical tips for how you can obtain funding and launch a business that flourishes long after the pandemic resides.
Be selective of the funding you accept.
Bootstrapping is the best way to fund your startup. If possible, pay for the launch of your business with your own money. The less you owe other people, the better.
Other popular funding options include crowdfunding and asking friends or family members to invest upfront for your product or service; these methods typically come with more favorable terms. Of course, there are many other sources of startup money that can help you get off to a strong start, including small business loans, angel investors, venture capitalists, incubators, accelerators, and more. Just make sure you only commit to something that you will be able to pay back on time.
Hire an advisor.
Early in the process, Inspire to Thrive suggests you may benefit from working with a business expert who can help you navigate the myriad challenges that come with starting and running a business. Whether it’s developing your business budget, creating your brand, or tapping into available resources, an advisor can help you make the right decisions and grow your business the healthy way.
Form an LLC.
Of all the steps you’ll need to take when setting up your business, few are as important as choosing the ideal legal set structure. The structure you have in place will help determine many essential factors for your company, including liability and taxation. LLCs tend to work great for new businesses because they help prevent personal liability and double taxation.
To establish an LLC, you will need to learn your state’s regulations and file a Certificate of Formation. Consider bypassing exorbitant attorney fees by hiring an online formation service.
Doing business from your rental.
If you’re a renter planning on a home-based startup, be aware that some businesses might not be allowed in your location. Check your lease/landlord for limitations. You might be able to get a waiver for your new venture, or you might prefer to move to a new location better suited for your startup. Research properties carefully, and ask plenty of questions when searching for the perfect solution. You might even find a less expensive rental, also easing financial strain.
Keep up with cash flow.
Cash flow refers to the available funds you have at any given time for operating and growing your business. Rivero, Gordimer & Company points out that lots of small businesses suffer from negative cash flow, which can result in debt and many other poor business situations.
Manage your cash flow, and you’ll keep your company in a strong position for growth. A few things you can do include regularly assessing your savings and debt, seeing where you can cut costs, modifying your inventory to save money, and making it easier for customers to pay.
It may be a great time to start a food service business, but you must approach it the right way. Be sure to choose the best type of funding for your situation, find a reputable business advisor, and consider setting up an LLC. Lastly, open a business bank account, and be vigilant about managing your cash flow. Implementing these tips will help you start your venture off strong.