The key-task in the early stages of your hospitality business is to prove your concept to potential investors. Unless you can show them that you’ve put serious thought into your business model, you’re unlikely to get that initial kick start that most businesses need.
As your business starts to expand, there will inevitably be occasions where you will an added injection of funds. Whether it’s an extension, a refurbishment, or a new staff livery, there are various debt financing options available. Care must be taken to find a good deal and not to borrow more than is necessary – asking an experienced accountant like us certainly helps – and bear in mind that often repayments will start before any income is made from the growth.
Many businesses reach a stage where they wish to buy out shareholders or other members of their management, or continue their expansion across new sites. For this sort of plan, private equity may be the most suitable option, with follow-up funding that private equity houses often provide. A private equity backer should also be able to support your hospitality business with strategic guidance.
Once your business is booming, it will have a well-established debt and equity structure, and funding will be more accessible. From then on, there will be multiple options on the table. Perhaps you’ll be looking to move on, creating the need for a smooth succession plan, or maybe you’ll be considering a secondary buy-out. You may even be thinking about floating your business. It is essential to find out from funding sources exactly what they intend to contribute beside funding, and how they wish to be involved as your business moves forward.
These tips were adapted from Benoit Broch, a director at equity firm Livingbridge. To read the full post at BigHospitality, click here.
Cornish Accounting Solutions recognise that building a business is tricky, and each enterprise has its own different journey to success. We have extensive experience working with the hospitality industry, so we’re well-positioned to offer you professional impartial advice on how to grow, whether it’s the occasional query, or step-by-step mentoring. Contact us to discuss how we can help.
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