OT: Banker, business problem

[gunnwong]

First let me tell you guy a little about myself, I'm a sushi chef for about 7 years experience. I been working with so many restaurant both in OC and LA. My current position now is the Head chef at a big name restaurant and club. I think I'm a little too early for this position for my experience, since most sushi chef I know they all have more than 10 years exp. I think one thing I know more than them is I not afraid to create someting new or creat new item for the restaurant. My current position teach me a lot than I could expect to learn in short time. I learn how to teach other, such as train sushi helper, communicate and train server. I have to do stock check and order, I been contact with more than 7 provider to get the best posible deal. I learn to create menu and make diff. kind of food. I have to deal with catering and even planning.
Last week they a person who give me a business oppunity, he want me to open my own restauran in Newport Beach and he want to be my investor( I don't know much in this area). I feel like it time for me to do something big for myself now. What do you guys think about this. This guy that want to be my invester, he have more than enough money to throw around (he a big name hotel owner).
But I rally want to open my own restaurant, with my own money. But that will take me other 5 year at least. I also just find out from some of my friend that I can borrow from the bank. There are a lot of program for the first time business owner. I heard if you be a minority( such as asia) in your area, and first time business owner then they will consider you first if your plan is good.

My question is should I try to go to bank and try to get the small business loan first, so I can have restaurant of myself?
How to write the formal business plan, do I have to hire some one to write that for me?
Or should I just go with the investor round?
Or stay at the restaurant I work now and learn more, til I make enough money to open one? (that like 5 more years)


Thank you for reading all this, any input is welcome.

[Bebo77]

its hard to tell someone what to do with their future... do what you feel is best for you... and don't be afraid to let people help, just make sure you dont leave any lose ends that can come back to haunt you...

[gunnwong]

Thanks Gabriel, but some time I just need to heard other openion. You know, kind of like listen from other point of view.

[xroads]

First thing I would do is pull your credit score. If it isnt a minimum of 700 the banks wont even talk to you. If it is below, start working on it first.

What terms does the investor want? If he will put in all the cash & take 50% ownership it might not be a bad idea.

How old are you?
Do you own a house?

Good luck
Craig

[Reefers4U]

A partnership with an established entity within the hospitality/service industry can be beneficial to you. Certainly he has an understanding of the balance involved in such a dynamic industry and can help you with sustaining yourself until your customer base can be established

It would really depend on how "hands-on" he intends to be. If he wants you to run the place and he manages the finances then you really don't need to worry about a business plan. Just worry about how to please customers and let him worry about the rest.

If he expects you to build a complete package/business than I would insist on no less that 51% of the ownership (would do this no matter what) and providing the business is a success a possible chain/partnership with his current hotels and a buy-out clause.

To get a loan from the Bank you better have great credit, better representation and a solid plan. Another option is getting a loan from the Bank in consideration of your partnership with said investor allowing you to put up some of the $$ too and increasing your "shareholdership" percentage.

[wannareef1]

my 2 cents,

Take the investor up on his offer, It would be nice to open up your own business, they say with all new business, it takes 3 to 5 years before they turn a profit, I had a friend open up his own bussiness (active wear), the first year made a ton of money, second year made about 50,000 profit, third year lost his butt, closed it down and owing alot of money to creditors, Work something out with the ivestor and use his money to get the experence you need and if it works out you can always open up another resturant and keep going, it's his credit, his money, and when you make money, it's your money too, you can't lose anything but your time, my advice is take the offer split the business and learn from this and then open up your own.

[babyjess210]

My buddy went in on a night club and the investor ran away with 50k of his money. Do it yourself if you can come up with the capital.

The bank will ask you for a 5 year plan and your past experience. There are a lot of (fast food) sushi place in downtown Los Angeles making big money here.

[golfish]

Originally posted by gunnwong
I heard if you be a minority( such as asia) in your area, and first time business owner then they will consider you first if your plan is good.

consider you first overrrrrrrrrrrrrr

[ktrandc]

My own experience when going for an SBA loan (which is what I assume you want to try for) is that you'd better have some type of collateral and a substantial amount of cash to show the bank you have some money invested in the project. I applied in 1999, had good credit and all, but still they won't give you a loan without some sort of collateral such as a home (even though it's supposed to be an unsecured loan, I don't think so).

If you do own a home and have equity in it, I think you may be able to use the equity out of your home by applying for a HELOC. They're supposed to be pretty good rates.

How's Pocky? Have you decided to keep him?

Mike

[FishyBiz]

Originally posted by gunnwong
I heard if you be a minority( such as asia) in your area, and first time business owner then they will consider you first if your plan is good.

[Anemone]

I don't want to be a downer, but most restaurants fail. Looking at what you have written about yourself, I don't think you have the business experience or knowledge yet to do this yourself. Having a knowledgable business partner and financier at this point in your career could be a real plus in your eventual success (either with this partner, or later on without).

Kevin

[Titans]

Hi Gunnwong - I just so happen to work for a commercial credit center for a large bank where we approve multi million dollar business loans for all sorts of purposes. We also approve small loans $10k +

You will need the following:
- 3 years tax returns (to measure cash flow so we may see if you can handle the payments)

- A personal financial statement. This lists all your assets and liabilities, we will also pull your credit to verify your liability claims and make sure nothing is left out. From this we will determine your net worth and any possible collateral. Things such as cars, airplanes, boats DO NOT count. We look for tangible liquid items such as CASH, Property, Retirement, Marketable Securities, Cash value life insurance. We also need statements to verify the liquid items.

The credit report will also be used, along with any debt not listed on the report such as rent, to determine your annual debt or monthly debt service to once again measure your cash flow with income reported on tax returns.

Now depending on the amount you are requesting it will determine how we analyze your claim. For instance someone mentioned SBA loans which will be guaranteed by the government for business acquisition or newly developed business. This is a great product for you and possibly how you may want to proceed BUT has high fees/rate and will require all that I have stated above. IF you request a TINY business loan we will try to approve with CREDIT SCORE alone...if you do not qualify based on score we will once again require all that I have stated above because we are not doing a consumer loan, which is heavily weighted on score, we actually have to dig through your financial background, calculate your financial ratios, and measure risk.

Hope that helps. PM me with any questions you may have and I can get you all the information you need including rates and requirements.

One last thing, you were asking about discounts and business plans. You are correct some banks, including mine, offer discounts to minorities, women and veterans. It's anywhere from half a percent or more depending on where you land. As for business plans, the bank contact will usually go through that with you and write down everything you tell them. It's a pretty standardized list of questions that you will answer with the bank. If you wanted you could possibly do projections on the restaurants earnings but it will be taken with a grain of salt since you have no prior experience running your own restaurant.

[BurntOutReefer]

"First thing I would do is pull your credit score. If it isnt a minimum of 700 the banks wont even talk to you. If it is below, start working on it first."....

IMO...not 100% True.
1) Do you own you home?
2) Get a business Plan put together
3) Your are a minority.

Qualifications
Your business is eligible for SBA financial assistance if it is:

Operated for profit
Organized as a sole proprietorship, corporation or partnership (includes LLC and LLP)
Doing business in the U.S. or its possessions
Within the following size guidelines:
Retail and Services - Generally up to $6.5 million in annual sales. Collateral and Loan Requirements
For many types of SBA loans, the assets being financed - such as equipment or real estate - serve as the collateral for your loan. However, principal owners must have acceptable personal credit histories and may have to pledge available business or personally owned assets. SBA financing requirements can include:

Personal guarantees of owners with 20% or more ownership in the business. Personal guarantees from active owners with less than 20% ownership may be required.
Accounts receivable and inventory, depending on collection history and marketability.
Machinery and equipment.
Real estate and improvements.

I would read this to start:
http://www.sba.gov/services/financia...nts/index.html

[gps]

If I were you, I would work and save a few more years before going on my own. Working allows you to learn and to build valuable experiences not to mention save money too...

You can go on you own now. Unless you're exceptionally good and extremely luck, your first failed venture could easily set you back for at least 5 years....

Or, take your chance to go with the investors. You may not have more of the pie but you will have valuable business experiences and a chance to mess with other's monies...

[Super NooB]

I work at a CPA firm in OC and we have a large client portfolio. One of the biggest hurdles to overcome is the need for capital. A lot of times getting a loan from a bank is pain and regardless of what people tell you here, they are very strict. I used to work for Wells Fargo so I have an idea what I am talking about. If you do get a loan, most likely the interest rate is going to be crap. Also, take into consideration the state of the economy and where it is projected to be in the next year or two.

Getting a venture capitalist is not easy either. If this investor is as well off and willing as you say he is, find out what his terms are going to be. Even if he wants a bit more than 50%, I'd say it is still a good deal. It is his money after all. There are lots of ways to do this. You could start off with maybe 30% of the stock and make some sort of agreement that will eventually get your share to 50% depending upon certain goals or milestones. If you do go into business with this gentlemen, I suggest you hire your own attorney to review the agreement. Your money will be better spent there.

If the restaurant does fail, which is most likely because most of them do, think of the experience you will gain from at least trying. And if you are the kick @ss chef you say you are, then you shouldn't have a problem finding employment if it does fail.

If someone offered me this opportunity, I would jump all over it. You (I) are young. What do you have to lose?

[sps_addict]

Looking at your occupation....if you are still a student take a large school loan and use that towards opening your business. You can get the best interest rate compared to a bank or any other type of loan company can offer you. Also they give you an opportunity to postpone payment if you are struggling.

With partnerships...get a written statement of benefits and stipulations you both get. Is the partner trust worthy (big thing...you can get burned big time)? How are the costs/profits split? Is he going to be a partner or investor? etc etc etc

If you do it yourself save up as much $ as you can...also borrow from friends/family who are willing to help you. Take some business classes...talk with SBO's....etc.

Just my $0.02

[gunnwong]

I'm taking my master right now, so student loan is out of the question coz it is harder for graduate student to get the loan than under grad.

The invester guy, he want to be more like silen invester, and I'm sure he want at least 50% share.

I use to think it a good idea to have invester, but after I work at my current job right now, it not that great like most people think it is. The more invester the more slower the thing will get done and it will never going to get done my way.

[cayecaulker]

Ok... you provide the sweat equity and your experienced (big name hotel owner) partner provides capitol. Fairly common venture.
No offense, but you have very little business experience. However, you do have enough creative talent to draw the attention of $money$.

Let the partner bankroll. He'll have the avail. lines and liquid.

I've done this a few times.

Drive for a greater % of ownership. Settle for 51% if you must.

Get a leach, ahem... I mean lawyer involved to draw it up and be damn sure to cover your arse. Revisit your T&C's regularly and adjust as needed

You MUST have an exit strategy and DO NOT be afraid to ask questions on anything. Keep your books open and communication regular.

Most importantly... enjoy every moment of the climb because when you look back... it's the "climb" you'll remember most.

By the way, D. trump built most if not all his wealth with other peoples money.

[cayecaulker]

This might help you.

http://www.score.org/index.html

[Scissorhand]

gunnwong, it really sounds like you are not ready for this opportunity.

One, you are currently partaking in other interests, a master degree.

Two, if you are asking all these questions, and based on the doubts that you have presented, one can assume that you are not too knowledgeable about business ventures.

My recommendation is to hold off on it, really use the next year or two to do reasearch and become more informed about opening a restaurant.

For every Bill Gates that you hear making it big, there's a hundred Jane and John Doe who went bankrupt. So... best of luck.

[gunnwong]

Thanks Scissorhand, I just want to get more openion from more experience people. It just seem like great oppotunity here, it just not happen everyday that someone ask you to open the restaurant and you don't have to put a penny on its.
But I just still have a sceond thought on having my own restaurant.

[gunnwong]

And yes I don't have much knowledge on the business side, but I have 2 of my sister that can hellp me with that. One is, she having her own Thai restaurant in Hollywood for almost 10 years now so she know about running the restaurant a thing or two. And other one is just got her MBA and got her undergrad in accounting last year and now she work for some company in Long Beach for almost over a year now. So I thing I can ask them for help if I ever need one.
Thanks, still need more input..

[laverda]

gunnwong
You can be the best chef in the world but you also need some one to run the busieness. It is great your sisters can help, but you will need more then ocasional help with that.

There are still to many unanswered questions to make a decision for my view point. It sounds like you investor has connections and could probably be a huge help to you. I would get together with him and talk about it in detail. This should be the first of several if not many meetings between the two of you before you make your final decision. Talk to you sisters, and friend, then make up a list of questions and what you would like to have. make lots of notes at the meetings, take your sisters and get their feed back. Then as some one already seguested get a good lawyer involved that will be looking out for your interests.

SBA loans take forever if you can get one. My guess is you will not be able to, as it is much harder then they make it out to be.

Good luck!

[jjirsa78]

Always use other people's money. Take the man up on his offer, he probably knows more about business than you'll know in the next 20 years. Taxes, banking, financing, building, HR, promotion and advertising. It's a nightmare.