So you have decided that “Go Big or Go Home” is your mantra for business ownership.
What is one of the most important things to know if you think multi-unit ownership is right for you? Is that how the lender funds the first unit and how it affects your ability to fund future units.
Here are some general tips to consider for you the multi-unit operators:
- Retain as much of your current liquidity, as possible, when funding the first location. Invest the smallest amount of capital allowed and borrow the largest amount you are qualified.
- Make sure your initial projections are reasonable and achievable. Your success in meeting/surpassing those initial projections will weigh heavily in future loan decisions.
- Be willing to invest a more significant percentage of the project costs into a second location if the first has not yet reached sustained positive cash flow. (Another critical reason to hold onto liquidity at the beginning); your increased “skin in the game” increases the lender’s willingness to say yes.
- Be able to explain “why now” to the lender who wants to know why you want a second location if the first is not yet profitable. Know the economics of the concept. A second location in reasonable proximity to the first can reduce expenses and increase profitability; be able to explain how.
Funding is going to be a significant part of building or scaling your venture and is a considerable discussion when we get to that point in the process.
If you feel this is a road you wish to pursue, let’s talk strategy.
