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    20 Replies Latest reply on Sep 10, 2009 9:13 AM by jhknyc

    Burger Joint Startup - Please advise

    onglueme Wayfarer

      I am looking to open a burger joint in NYC. I have done most of the research and have figured that for 3 - 4months of operation and build out cost I would be looking for about 300 to 350k. Here is the catch. I have excellent credit but no collateral (house, car or anything). Like most people here I rent. I am now refining and finalizing my business plan and was wondering if then banks will even hear me out. Please advise on what might you think would be the best way for me to make this happen.

      Little about me.

      I have held a steady job in finance for about 5 years. There is nothing about me that would raise any kind of red flags. I am 28 and food has been my hobby ever since i've started eating.
        • Re: Burger Joint Startup - Please advise
          Bridge Navigator
          For an SBA guarnteed loan, no collateral is not a reason in itself to disqualify a loan. As a side note, if you owned a house, they would make you put it up as collateral.

          You will need to invest some of your own money and have experience in the type of business you are looking to start.

          That being said, it is sometimes easier to get a loan for a franchise (less risky) or to buy a current businee (proven track record).

          You need to work with a bank that specializes in small business loans. You can go to the SBA website to get a listing of approved lendesr that they guarntee loans through.
          • Re: Burger Joint Startup - Please advise
            LUCKIEST Guide
            Burger Joint Startup, Welcome, It sounds interesting

            How soon do you need to come up with the money??

            Bridge had an interesting idea "it is sometimes easier to get a loan for a franchise"

            You will need to develop a Business and Marketing Plan.

            And thing about SCORE. SCORE is FREE.

            Good luck, LUCKIEST

              • Re: Burger Joint Startup - Please advise
                onglueme Wayfarer
                My timeline is about 6 months, I am not sure on likelihood of me approaching a franchise or maybe i'm just not understanding it correctly. I have an idea with a twist, a name, a marketing approach and a business plan. When the time comes to talk to any investor every detail of this business will be worked. Breakeven, cost, distributors you name it, it's covered. Please elaborate on the idea of approaching a franchise without loosing track of my concept.

                Thanks ahead.
              • Re: Burger Joint Startup - Please advise
                Lighthouse24 Ranger

                If you're really passionate about this, my advice would be to get as close to the nitty gritty of owning and running a restaurant as you possibly can, for as much time as you can as soon as you can. This may mean going to work a few hours in the evening for an existing burger joint, or providing a restaurant owner in your neighborhood with whatever skills or assistance you can offer in exchange for some mentoring.

                The purpose of doing something like that is so you gain relevant experience and expertise -- and learn "insider" things about runnning that type of business (for instance, how effectively you deal with suppliers in your locale can impact your operating costs by as much as 60 percent). You'll also begin to establish a network of contacts you can leverage later.

                A solid plan and financial projection are the prerequisites for consideration by any potential lender, investor, or other partner -- but the ultimate decision to fund your enterprise will be based on what you bring to the table. They want to know that you know what you're doing, and that you have already learned all the potentially costly lessons on someone else's time and money.

                Hope this helps. Welcome to the community and best wishes.
                  • Re: Burger Joint Startup - Please advise
                    Bridge Navigator

                    This is excellent advice that I provide to clients thinking of purchasing a business - work in one first.

                    You will either:
                    1) gain an imeasurable amount of usefule experience (that any lender will want/require)
                    2) realize this is not your passion
                    3) be able to modify your business plan with new ideas

                    In short, someone is paying you to learn your future business.

                     


                    To address your follow-up questions, approaching an established franchise would not help you develope you own concept; I missed it in your original post that this was a unique idea. There are companies that specifically work with enterprenuers in developing franchise ideas - expect to give up a large percentage of ownership if you approach this type of company. No owner likes this, but its your idea and their money/expertise.
                      • Re: Burger Joint Startup - Please advise
                        onglueme Wayfarer
                        It seems the general theme here is that I lack experience and all of the ideas above unrealistically true. Currently I live in NYC and work 8 - 7 to support myself from which finding time to work at some restaurant is just unrealistic. My interests for this business comes from within my family. My dad has been chef for 20 years, food and cooking has been in my family as long as I can remember. I have absolutely zero doubt that I will dislike what I'm trying to get myself into. The business model I am striving for is complete in all aspects with mediocre experience in business plan writing and experience in the service industry. There is no need to reinforce my passion with experience at this point and I know experience speak miles over passion with any investor but the advise that I am looking for here is how to find funding with all that I already have.

                        Thanks in advance.
                          • Re: Burger Joint Startup - Please advise
                            Bridge Navigator

                            I do not believe anyone here said your ideas are unrealistic! You asked for advice on how to obtain money and succeed and you received some.

                             


                            It is up to you whether to accept or reject the advice. Please remember that everyone who respond to you has not vested interest here and we spent our time with no compensation in order to assist you.

                             


                            I think you can see a common theme - experience is important - whether you think so or not.

                             


                            As they say, you are entitled to your opinions but not your own facts. And the fact is, lenders like experience. That is not to say you can not get money without it, but it helps. And it also may help you.

                            You actually did not tell us if you have ever worked in a restaurant? This is almost a necessity before trying to run one. Food has been in my family everyday for as long as I cam remember too - I try to enjoy it at least 3 times a day...that does not make me quantified to run a restaurant or supermarket.

                            Perhaps you could ask your family for a loan? They would know your passion and qualifications better than anyone.

                            As a side note, as many entrepreneurs on this site will attest, 8-7 is not long hours!
                            1 of 1 people found this helpful
                              • Re: Burger Joint Startup - Please advise
                                onglueme Wayfarer

                                Excellent! now that's a passionate answer.

                                The extent of my restaurant experience is working as a busboy while in high school. Outside of finance I have work in event planning for nighclub for about 10 years.

                                 


                                I appreciate all the help from anyone here even though I am at times stubborn and opinionated. There is good and bad in that.
                                  • Re: Burger Joint Startup - Please advise
                                    Bridge Navigator
                                    You will need your tenacity to succeed but there is just no replacement for experience - I too hated hearing that when I was younger.

                                    You will get a much quicker learning curve working for someone else for a short time than starting without any experience. Think about it, someone paying you to learn (this make any job tolerable) rather than losing your own money during the transition phase.

                                    Try working for a local successful restaurateur, If you play your cards right, maybe they will help finance your start-up.

                                    I am lucky that I enjoy what I do but when making business decisions you can not let emotions run you. I tend to save my "passion" for my wife and hobbies, my business is to make me money and supprt my passions. If you can do both, more power to you.
                                    1 of 1 people found this helpful
                                • Re: Burger Joint Startup - Please advise
                                  Lighthouse24 Ranger

                                  Your response sounds as though you know all you need to and are ready to roll -- just need the funding. Given the amount of money you're seeking, and the additional information you provided, I honestly believe you'd be wasting your time approaching banks. Find an investor who believes in you as much you do and wants to buy in to your success. Good luck.
                                    • Re: Burger Joint Startup - Please advise
                                      onglueme Wayfarer
                                      I would find a comfy pillow and a sleeping bag and live in the restaurant if need be and submerge my entire self in making this business work if, and only if I was to find financing inwhich I can maintain full ownership.
                                        • Re: Burger Joint Startup - Please advise
                                          Lighthouse24 Ranger
                                          Of course -- and convertible debt is usually a better choice for seed funding anyway, provided your business plan spells out when and how the next round occurs.
                                            • Re: Burger Joint Startup - Please advise
                                              onglueme Wayfarer
                                              I've considered convertable notes that pay interest for the duration of the loan period and if troubled times come along I can convert portion by portion (if needed) into equity. But it seems like a hard sell, although I've never tried. Need to read up on the advantages for the investor to make it more marketable. In anycase this could lead to multiple investors that can spread the risk and allow me to pay off the investors one at a time.

                                              Who and how do I draft these private placements?
                                                • Re: Burger Joint Startup - Please advise
                                                  Bridge Navigator
                                                  Private Placements are expensive. Probably cost prohibitive for what you need.

                                                  regardless, you are probably more interested in having a note drawn up by an attorney versus a true "private placement".

                                                  Remember the more investors, the more cooks in the kitchen. Silent is usually never silent.

                                                  Put yourself in the investors shoes, you can't expect them to drop a bag of money at your doorstep and say trust me, I'll pay you back now leave me alone.

                                                  your might try looking at:

                                                  www.virginmoneyus.com (this is the old circle lending)
                                                  • Re: Burger Joint Startup - Please advise
                                                    Lighthouse24 Ranger

                                                    I think I'm getting confused -- not sure why you'd do a private placement, given the circumstances you've described and your stated objective.

                                                    I'll preface this by saying that my experience with seed funding from angels is very limited, but it has pretty much been (1) pitch to the investors, (2) they ask for a follow up meeting and give you their terms. The better your plan and the more alternative options for funding that you have available at that point, the more leverage you'll gain -- but the terms for a convertible debt deal are pretty simple and straightforward, and I've yet to see a business founder draft the term sheet. It's more about due diligence than negotiation, in my experience (though, as I said, my experience is not extensive when it comes to start-up funding from "outside" sources, so perhaps other members can comment).
                                      • Re: Burger Joint Startup - Please advise
                                        designer Tracker
                                        Hello! This sounds like an exciting endeavor! Good Luck!

                                        Now, you know...there are burger and fast-food establishments everywhere you look on practically every street corner...so, not to be negative or anything - - -but! Why are your burgers going to stand out from McDonald's, Burger King, White Castle, In-and -Out Burgers, Carls, Jr., Wendy's, and on and on it goes? Will you offer something truly different or have a unique theme? Of course, food is food and if you are basic and just plain tasty and good it can all work, too!
                                        • Re: Burger Joint Startup - Please advise
                                          MKTG.com.au Adventurer
                                          Hi

                                          You should see the program Risking it All - its a UK program on Channel 4 (look up their website). 2 guys started a burger place with healthy food called Real Burger World - it was really interesting to watch and may give you some ideas and use their experience to make sure you dont encounter the same mistakes they made initially.

                                          mktg.com.au
                                          • Re: Burger Joint Startup - Please advise
                                            jhknyc Newbie
                                            hi - i am interested in a somewhat similar concept

                                            did you ever get yours off the ground?