Small business funding may be the key for catering and event companies to thrive in the coming years
By Matthew Gillman, business finance expert and founder of SMB Compass
Small business financing has become increasingly vital to small businesses operating in the hospitality industry over the last few years. In 2020 alone, more than 110,000 U.S. restaurants and drinking establishments temporarily closed due to the COVID-19 pandemic. Some were able to recoup their losses, but many didn’t have the liquid funds to bounce back.
That said, small business financing is no longer just a growth strategy. For many small business owners, it’s a means of survival.
Following are five reasons a catering and events business may need financing to thrive in the coming years.
1. Repairing, Upgrading or Purchasing New Equipment
If you own your own catering or events company, you know how much you rely on your equipment to operate—things like refrigerators, stoves, vehicles for food and décor transport, etc. Small business financing can provide you with the capital needed to repair any damaged equipment you may have or to purchase new items.
2. Consolidating Debts
While it may sound counterproductive, taking out a loan to pay off existing loans is a great option to maintain healthy credit.
For catering and event companies, we saw how the COVID-19 crisis dramatically impacted sales and revenue. Strict safety measures and the implementation of a lockdown resulted in virtually zero demand for such services, making it much more difficult for you to make your debt repayments.
As 2022 begins, there’s a good chance you’re still working to catch up and finish repaying debts. A small business loan or credit can help with just that.
3. Increasing Brand Presence Through Better Marketing
Demand for catering and event services grew in 2021 as vaccines were administered and people felt safe to gather once again. As this momentum continues into 2022, you’ll want to make sure you have enough capital for marketing and advertising to attract new clientele.
Financing allows you to develop and execute long-term marketing campaigns, either through paid ads on social media platforms or via traditional media. When it comes to marketing, one size certainly does not fit all. Having access to outside funding gives you the flexibility to do some trial and error to see which strategies work best to reach your target audience.
4. Staying on Top of New Technology
Investing in technology allows you to optimize your time by streamlining operations and to provide better services to your clients. Let’s look at some specific technologies worth pursuing:
• If you’re in the events business:
Be a one-stop shop for your clients so they can come to you for all their event needs—everything from sound systems and decor to photography and videography.
• If you’re in the catering business:
Keeping track of your expenses is key to your operations. If you’re still managing your books by hand, a digital accounting solution is a worthwhile investment. These programs generate your financial reports for you, eliminating the chances for human error and saving you loads of time.
• If you’re in the restaurant business:
You need the proper equipment to deliver the highest quality product to your customers.
5. Having an Emergency Fund
If the COVID-19 pandemic taught us anything, it’s that emergencies and unforeseen expenses can arise at any time, and you never know when your business may take a hard hit. Small business financing allows you to create an emergency fund, so you’ll have access to capital if and when sudden challenges present themselves.
Find what small business financing is right for you
Not all types of financing are applicable to everyone. In fact, traditional lenders might frown upon small business owners who don’t have good enough qualifications to prove their creditworthiness. In that case, getting alternative business funds such as a line of credit, equipment financing or invoice financing may be right for you.
No matter what type of funding you need for your business, always talk to an expert first. Explore your options, and inform them of your needs, goals and current challenges.
ABOUT THE AUTHOR
Matthew Gillman is a business financing expert with more than a decade of experience in commercial lending. He is the founder and CEO of SMB Compass (smbcompass.com), a specialty finance company providing education and financing options for business owners.
