Many restaurateurs start their business with a dream and a plan to invest their personal savings to provide an excellent dining experience to their customers. From the very launch of a restaurant business, however, finances need to take pole position in one’s list of priorities, since everything that will make or break it– finding the most talented chefs, sourcing top quality produce, or possibly expanding in the future, depends on how stable your finances are.
Why is a Solid Business Credit Profile So Important?
Your restaurant may be making profit and you may be building an excellent reputation in your area, but you never know when the chance will arise to expand… perhaps open a second restaurant nearby or even in another city with a strong demand for the cuisine and ambience you have dreamed up.
Expansion normally means either partnering up with other entrepreneurs or obtaining a loan, and the first thing prospective lenders or partners will look into, is your credit profile. They will want to know if you can pay suppliers on time, if your internal client (your staff) is well paid and your retention rate is sound, and most importantly, if you know how to manage cash, setting aside savings during high season which you may need to rely on in leaner times.
Speaking of partners, be as vigilant of the latter as vice-versa, only choosing someone with a good history of entrepreneurship and an impressive credit rating.
Also check the credit rating of your suppliers, to ensure you aren’t left empty-handed when you are expecting an important order.
Paying Less for More
A solid credit profile will not only attract investors, but also determine how much insurance you pay, how much interest you pay on credit cards, and the extent to which payroll providers will be willing to take a gamble on you.
Building a Higher Credit Score
Start with the basics; rely on suppliers you can afford to pay on due date. As your relationship becomes consolidated, they may agree to later payroll dates and offer better prices on your most commonly ordered supplies and goods.
Money for Nothing
You should also have a talk with your bank and ask about interesting financial products that could enrich your business, including using cash back cards that will give you a percentage of money back for every purchase above a certain amount. These cards will often offer additional perks, such as returning money for a set amount spent within a set time of the opening of your account.
Separating Business from Personal Credit
If you have used your own savings or are currently paying supplies and other expenses with your own credit card, you won’t be doing much of a favor to your business. Take out specific cards for your restaurant, and ask your suppliers to report your positive payment history to relevant credit bureaus. Check your restaurant’s credit score regularly, to remedy any wrongs quickly and avoid surprises at the worst possible time – such as when you are expanding, or selling your restaurant.
From the time your new restaurant is just an idea, it is important to think of ways you can boost your credit rating. Your dream may be of owning just one small establishment, but ideas can change as business grows and the more prepared you are for any new opportunities you may encounter, the better.