“Wet-finger-in-the-air estimates don't cut it, either. Financiers like to know specifically where their cash will go: fixed assets (such as equipment and real estate), current assets (like inventory and accounts receivable), operating expenses and the like. Understand, too, that it's much easier to raise money for tangible fixed assets (which can be sold off in the event of default) than for more ephemeral things like marketing campaigns.
How do you determine what you need? First, calculate sales projections (for more on this, see "How Great Is Your Company's Potential?"). Then use industry databases to determine the level of assets needed to achieve those projections (check Dun & Bradstreet, RMA, financial Web sites and trade associations).
Next, deduct from those assets your cash savings, cash flow generated by the business, accounts payable (essentially, money you are borrowing from suppliers) and any relevant accruals in the normal course of business. What remains, roughly, is the amount you need to finance.”
A short quick lesson on a very highly charged and emotional facet of the restaurant business
