Hospitality businesses are funded from a patchwork of sources: personal savings, friends and family, bank loans, asset finance for kitchen kit, government-backed lending schemes, crowdfunding through rewards or equity, angel investors and, sometimes, a landlord contribution to the fit-out. Each source has a price. Debt costs interest and often a personal guarantee, equity costs a share of the business and a say in how it is run, and crowdfunding creates hundreds of backers who expect perks and updates.
Investors and lenders look for a clear concept, realistic numbers built from covers and spend rather than wishful thinking, and an operator with genuine trade experience. The most common mistake is spending everything on the fit-out and leaving no cash runway, because most new sites take months to find their level. Building in contingency for delays, opening costs and a slow first winter can be the difference between surviving and closing within a year.
What we ask on the show
- How did you fund your first site, and would you do it the same way again?
- What do investors misunderstand about hospitality?
- Is crowdfunding a funding route or a marketing exercise?
- How much cash runway should someone have before opening?