If you cannot get financing through normal channels, you may wish to look for some private investors who might be interested in your venture. These investors may be friends, family, business colleagues or just people known to you who have capital available.
To interest a private investor, and because there is a perceived risk to a restaurant business the return on their investment must be greater than they would receive through other investment opportunities. Therefore you will need to be able to clearly explain what the idea is, why it will be successful; and how you intend to give them a good return on their investment.
Asking family and friends to invest money in your business can be a very difficult task. On the one hand, they will probably be willing to invest but on the other, you don’t want to be responsible for not providing them with a return on the investment or, worse, to be responsible for losing their money. So think carefully before heading down this path.
Before approaching investors, you are advised to have a well-prepared Business Plan or Prospectus and a well-prepared Financial Estimate showing exactly how you intend to repay the investment, along with any relevant interest or dividend. You should also consult with an accountant to investigate any preferential tax allowance may be available for investors.
To incentivize investors, you may also think about other ways to make the investment more attractive. For instance, the following incentives may be of interest to potential investors:
- Annual Food & Beverage Allowance (actual cost to the business is 30% of amount)
- Preferential Reservations (Top of the Line)
- Participation in Annual Golf Tournament
- Annual Golfing or Tourist Trip to Ireland
- Special Food & Wine/Beer Evenings
- Access to Merchandise
- Visits to Wineries/Breweries