You want to start a café but you don’t have a lot of money at your disposal. Don’t let this stop you, as it is still possible to begin your new venture despite this.
Starting a business with no money is a difficult prospect, regardless of your industry. However, starting a café presents several unique challenges that you need to overcome.
Of course, you need to have a physical location, which creates costs related to rent and maintenance. Your café may also require specialised equipment, creating even more costs. And that’s all before you start thinking about spending on stock, marketing, and other business-related issues.
This may make you wonder how to start a café business when you don’t have a lot of money.
The good news is that there are a few good low-cost ideas for opening a café. But before we start with those, there’s one thing you need to do…
Determine Your Budget
No matter how you look at it, starting a café will cost money. What’s key here is that you understand exactly how much you will need. Doing so will help you should you choose to either get a loan or speak to investors about your idea.
This means you need to create a budget for your café that feeds into a business plan.
Start with the concept behind your café. The hospitality industry is extremely competitive so you need to find a way to stand out. Figure out how you’ll differentiate your café and what extra costs that may create.
From there, budget for everything – from the cost of rent and equipment through to staff salaries. Get as clear an idea as possible of the costs beforehand. This ensures you have the required answers if you use any of these low-cost ideas for opening a café.
The Five Low-Cost Ideas
Idea #1 – Speak to Family and Friends
Relying on your family and friends to loan you the money comes with several advantages. You won’t have to deal with banks, which means no complex loan applications. And you also won’t need to prove your income or deal with hefty contracts.
However, this isn’t a perfect solution.
Remember that you’re starting a business, which means that things can go wrong. If the café fails, you could damage the relationships you have with the friends and family that you borrow from.
As such, it’s crucial that you explain all of the risks involved in the venture. It may also be a good idea to create a more formal arrangement with the person who’s lending you the money.
Idea #2 – Consider Doing It Online
This is a concept that’s becoming more prevalent, especially in recent months.
People have grown more used to the idea of ordering everything they need from the web. This means your café may not even need a physical location. Instead, you would just need your kitchen, a good menu, and the ability to deliver food to your customers.
A good website is a must if you use this idea. The site has to explain the concept of an online café effectively and help people feel confident about ordering from you.
Timeliness will also be a priority. Your customers will expect to receive their food quickly, which means you have a logistical component to figure out.
If you get this right you can run a successful café from the comfort of your own home.
Idea #3 – Avoid the Things That Café Owners Often Overspend On
If you want to start a café, you need to keep a close eye on your expenses. Unfortunately, there are several that can run away from you if you’re not careful.
The following are the areas where café owners often overspend:
- Overspending on new equipment when you can find suitable second-hand options
- Spending money on technology, such as point-of-service tech, when you don’t really need it
- Overinvesting in your marketing and sales efforts
- Making poor menu choices, which can lead to overspending on food
When you’re trying to figure out how to start a café business with very little money, expenses are a key issue. Failure to track them means they eat into your limited budget so you have nothing left over for business-critical needs.
Idea #4 – Try Crowdfunding
No longer a brand-new concept, crowdfunding is a great way to get investment from regular people.
Generally speaking, you will use a crowdfunding platform to pitch your idea for a café. Regular people will then invest their money in return for something that the business can offer them.
For a café, such returns could include things like discounts on certain menu items or lifetime free delivery.
Crowdfunding campaigns succeed based on the strength of both the idea and the rewards for investors. But if you struggle to offer something concrete for either, you might not make this option work.
Idea #5 – Get an Unsecured Business Loan
Typical business loans require you to place an asset up as collateral on the loan. For example, a new business owner may have to use their own home as collateral. This creates a lot of risk, as well as requiring you to have access to a suitable asset.
If you’re trying to figure out how to start a café business with no money, you may not have such an asset.
Thankfully, there’s another way to get financing without any asset or collateral.
Unsecured business loans provide you with cash and a low barrier to entry. You may be able to access thousands of dollars without having an asset to your name. And better yet, application processes for these loans are often much simpler than they are for traditional business loans.
An unsecured business loan could provide you with the capital needed to start a café. You can then rely on the income the business generates to make your repayments.
Could an Unsecured Business Loan Work for You?
Each of these ideas can provide a route to café ownership. However, it’s the final one that we can help you with directly.
At Unsecured Finance Australia, we offer unsecured business loans of up to $300,000. With these loans, you can access the money you need to start your café without having to invest heavily up-front.
To find out more, apply online for an unsecured loan today.