The US is becoming the center of a lucrative food industry, with about 50,000 restaurants opening every year. The number of coffee and snack businesses is also increasing yearly. So, there are a lot of reasons to be optimistic if you’re looking to start one. But like any other venture, funding is crucial to get your business off the ground and keep it thriving, especially in such a competitive industry. If you’re interested in starting a food business but concerned about funding, these tips can help you.
- Go the bootstrapping way
One of the common ways to start a food business is through bootstrapping. For the uninitiated, this means relying on personal finance, sweat equity, quick inventory turnover, lean operations, and a cash runway to help your business thrive. Of course, this option means your business progress might be slower, but you’ll also have greater financial control without being tied down to unfavorable terms from investors. The best way to make this work is to start small, keep your expenses as low as possible, and find creative ways to invest your money for quicker returns. Also, if you have a regular job, don’t quit until you have enough saved to grow your business.
It’s also advisable to create a minimum viable product and build an audience for it before launching your business. This way, you can be sure of immediate revenue to at least break even when you start operations.
- Explore organizational grants specifically designed for the food industry
The food industry is critical to human survival, and many organizations (local and international) know this. That’s why various grants and support are available for foodpreneurs to explore. So, research what options are available in your location, if you qualify, and how you can access them. These options also often provide more than financial funding, as you’ll get networking and mentorship opportunities to start your business. For example, organizations such as the Good Food Fund, Good Food Innovation Fund, and the Food Innovation Network offer resources in addition to grants to help support innovative food-related ventures.
- Leverage venture support
Venture support focuses on investing in promising startups and growing businesses through fundraising. Some also assist in recruiting staff for startups, helping with customer acquisition, and supporting product strategy and general business operations. Different organizations offer different forms of venture support targeting specific groups. So, your qualification for such support may depend on what group you belong to. For example, if you’re starting your food business as a veteran, you may qualify for venture funding from sources like Alumni Ventures. Others focus on underprivileged and marginalized groups.
- Consider crowdfunding
When regular loans and investor companies aren’t an option, crowdfunding can easily fill the funding gap. Crowdfunding is comparatively easier to start, and you can raise millions, depending on how you go about it. One of the many benefits of the digital world is that it connects people beyond social benefits to providing financial support. Today, various crowdfunding platforms have merged, helping many entrepreneurs realize their business dreams. Indiegogo Crowdfunding Innovations and Kickstarter are two great examples helping thousands of entrepreneurs raise the business funding they need.
But crowdfunding works in two main ways – through equity-based and donation-based crowdfunding. GoFundMe is another of the major crowdfunding platforms, where people basically donate to your cause. With equity-based crowdfunding, an organizer or fundraiser accepts money from people looking to invest, particularly to help launch a business. Both options are great, but take the time to decide which is best for your business.
- Look into equipment financing
If your food business requires using equipment, you know how easily they can drain your finances. You can cover these costs by looking into and applying for equipment financing. How this works is that a supplier, equipment manufacturer, or financier can help you acquire the necessary machinery, tools, or equipment you need, spreading the cost over time instead of paying everything upfront.
- Look for government grants and subsidies
In addition to organizational grants, various government grants and subsidies are also available to food business startups. In the US, for example, they target food ventures that contribute to economic development, sustainability, and community well-being. These grants are available at federal and state levels and with local government agencies. Some examples include Small Business Administration Loans, USDA Grants and Loans, and Research and Development Grants. You can also find state-specific programs, environment development grants, and various local development grants.
The most important thing is to conduct thorough research into what type of funding best meets the needs of your food business and what requirements you have to meet to qualify.