Opening a cafe - loan question

Hi guys, haven't posted in a while.
Not sure if this is the correct place.
Myself and a friend are looking at opening a cafe. We have found a few good places and need to do a business plan & apply for a business loan.
Does anyone know what way business loans work? We are obv looking for a loan to start our business, do we have to have 10% of what we're looking for or what?
We are going to make an appointment to see the Business Advisor in our local bank but don't want to look like fools.
Any comments appreciated.

Have you a business plan?
Have you done market research?

If you are going to see any financier, these are the first questions you are asked.

Also, have either of you worked in a Cafe before?

Thinking about starting a business myself since getting redundancy some months ago and feet starting to itch. I was advised to check out the different support agencies, do a lot of market research and get a good business plan with detailed cash flow projections together. I don't know where you are based, but, check out the Fingal Enterprise Centre website. This is one link, to a 10 week start-up biz course, that may be of use... [broken link removed] There are similar enterprise centres around the country.

A lot of cafés, newsagents and other small business start up and then close up. Don't let this put you off. Good ideas, good planning, hard work, healthy cashflow, location and a bit of luck work wonders. You are also entering a very competitive sector what with Insomnia, Café Kylemore, Starbucks etc., but this can work to your advantage too. As an almost daily café user there is room for good independents e.g. Brewbakers on South Frederick Street. The big lure is good consistent coffee, friendly staff and value for money snacks and food.

The inconsistency across franchised branches drives me crazy e.g. Insomnia in the Pavillions at Swords can be great and then the same coffee in another branch the next day can be poorer quality. It's usually a training issue... e.g. observe how they actually make Americanos in different branches. I have visited Seattle, the home of coffee culture, on a number of occasions and have been amazed how small independent shops thrive alongside the big branded outlets..... customer service and individuality is key.

Best of luck.

Yes we have both worked in cafes & restaurants - I as a Supervisor & my friend as a Manager.
We are doing a business plan at the moment. Just looking for a rough idea of how much money we'll need thats all.
Property we have our eye on will cost about €120k.
Thanks.

Thanks Carpedeum. Some good tips there. Will check out that website.......

carina said:

We have found a few good places and need to do a business plan & apply for a business loan.

Click to expand...

runner said:

Have you a business plan?

Click to expand...

hmmmmm

Exactly....

I'm quite interested to see peoples opinion on the perscentage of capital the bank will normally require as well. I presume it may depend on the individuals involved and that the banks are unlikely to take a view on a project finance basis and will look for personal guarantees or other security.

Toying with the idea of a cafe/delicatessan myself.

Have you looked into locations etc; Saudi?
Most places that I have come across are for Leasehold as opposed to Sale... Not sure if that's a good idea?

No I haven't Carina. Haven't even looked at likely turnover/profit etc.

I've a well paying job at the moment but would love to do something on my own eventually.

well do we have an answer to the origional question? what % needed to start up?

A bank will not give you a loan to start a café unless there is security or a guarantor. If you are buying a leasehold interest, they would not consider this as security.

You may have to remortgage your home to release funds for this type of speculative venture.

Why do you need €120k? Cafés fail from time to time and you should be able to lease one with little or no key money. You would need some money for supplies and for decoration, but I don't think it would be €120k. However, without a business plan...

Brendan

Hi Brendan,
Thanks for that. One of the places that we are looking at has a leasehold for sale at €90k, the rent is then €21k & we obv need some money for supplies etc; Thats where the €120k came from.
We cannot remortgage because I bought my apt with my friend - she has nothing to do with this venture. The girl that is involved doesn't own her home. She is renting.
We are trying to do a business plan at the moment but we are having problems because we haven't decided on a definite location - we have quite a few areas that we are interested in.