Raising Money for Your Business

Last Updated: September 18, 2018 in Business Advice

At The Collective we are all about collaborating with and supporting independent businesses. The Real Eating Company  is one such business. It was founded in 2004 by Helena Hudson and today she has 6 sites across the south coast of England. Helena has built a business that celebrates the cities it serves creating jobs for local people, sustaining local producers and bringing great food and drink to its customers whilst growing a dynamic, sustainable and commercially successful company that will last. With over 10 years’ experience of building and growing her business and plans to expand it to 15 sites, we asked Helena to share her knowledge and experience of raising money as well as found out what drives her to keep growing and what’s in store for The Real Eating Co Chichester.

 

What are the essentials you need to have in place when you want to raise money for a start-up business?

First of you need a well-thought through business plan.  If you’re starting a business from scratch, try to build something visual into your business plan – it will help people remember you and buy into your vision.  Whether it’s branding, logos, an example website, help bring it alive for the people who are hopefully going to invest. Second, investors will look for experience in the sector you want to be in, so if you don’t already have that specific experience that some of your business may rely on e.g. IT expertise for an app, a head chef for your restaurant etc, know who you’re going to turn to for that and put that in your business plan. Third, women, in particular, are notorious for under-selling themselves.  Stand up, stand tall and believe in yourself.  If you can’t, others won’t. Nothing is certain – you can only do your best and more often than not with most women, that’s pretty damn good! Finally, banks and most funding platforms won’t look at start-ups.  Risk-averse and weighed down with post-recession regulation, they just don’t want to know.  But, dig a bit deeper and there are often regional funds or sector-specific funds that are underwritten by the government, that might yield some support.  But the best route in the early days is to turn to friends, family, angel investor or credit cards.  Once you’ve got going and have some trading figures, you can go to your bank or an alternative finance company and get the initial investment re-financed.

There are several avenues for raising money for your business – friends and family, Angel investing venture capital, crowd funding, loans and grants, using your own money. Which avenue did you go down and why?

I’ve done most of these things.  It has largely depended on how much finance the business needed at the time and at what stage of our growth we were at.  External factors like the recession and now the perceived demise of the high street also has an effect.  You obviously can’t control that part but it does make it harder.  Banks generally can offer the cheapest finance but they rarely seem to want to lend anymore. Once you’ve got your initial start-up funding (hopefully from friends, family, credit cards or a mixture of all three) there are now many crowd-funding platforms as well as alternative finance companies who will lend.  Leasing is also a useful option if you are buying equipment or fitting out a shop.

What did you find were the main obstacles to raising money either as a start-up or to grow your business?

I can’t quite believe that I’m saying this in 2018, but there is still a lot of ‘casual sexism’ related to women-owned businesses with big aspirations and ambition.  I still get patronised at the grand old age of 52 and having run my own businesses without a man’s help for the past 14 years. It isn’t unusual for a man (as I have never yet had a female contact in any finance dealings sadly) who is half my age that asked if I understand how a loan works or if I know how much money we take every week!  Women would benefit from more women mentors and better female representation in finance.   

You now have 6 Real Eating Co establishments across the South Coast. Is it easier to raise money to grow your business than it was starting out?

Not especially – there’s no easy money!  It is easier in some ways in that it is an established, trading business which people can see.  It is harder because it is rare to have just one source of funding for one project anymore.  Usually, I’ll have to present numbers and talk to 6-7 potential funders, assess their appetite and the cost of borrowing and then whittle it down to two. When I was starting out, you just spoke to your bank and had one relationship to manage.  

Why did you start The Real Eating Co and how long did it take from light bulb moment to opening your first establishment?

My parents were very entrepreneurial, especially my father.  I grew up as the eldest daughter, watching him set up and run several successful businesses.  As a child, I didn’t really value the experience of seeing that at close quarters but it does shape your outlook in later life – of what is possible and what it takes to accomplish.  I always knew that I wanted to be mistress of my own destiny when I was younger but never quite knew how it would manifest itself!  I spent the early part of my professional life working for several well-known international advertising agencies.  I worked hard and managed to get to the position in my early thirties when I had a reasonable pot of money.  This coincided with having young children and a move from London to the South Coast. A consistent thread running through my life however had been food.  As a teenager, I worked in several restaurants (some abroad) and had an obsession about learning how to cook well, trying out complicated recipes on my unwitting family and learning pastry techniques from pastry chefs. When we moved to the South Coast, I had my lightbulb moment and thought ‘this is my time’!  I set about planning my new restaurant/café venture which finally opened in Hove.  It was a baptism of fire!  If I’d known how hard (and expensive) it would ultimately be, I would not have done it.  But I kept on going.  It took a couple of years for the business to settle down before the second site was opened.  But then, rather than being easier, my problems had doubled!  That is when the need of having the structure and processes to manage a multi-site business first started.

What drives you to keep growing?

To be honest, I’m not really sure!  It doesn’t get easier the bigger the company gets, the problems just change and there is more at stake.  But, I can see the opportunity for us to do something well in lots of places around the South East.  When I travelled around the UK in my advertising life, I would always try and find good quality independents  to support – nice, local restaurants and cafes, local craft shops etc and I still feel that there are opportunities for us on a lot of regional high streets –  to bring good quality food and coffee with a strong local ethos.  Plus, I feel that I have a responsibility to champion women who want to work in hospitality and maybe have their own business one day.  90% of hospitality businesses are owned by men yet 66% of its workforce are women.  I’m trying to do my bit to help change that.  

What can we expect to see at the Real Eating Company Chichester?

Watch out for our bespoke Chichester coffee cups (which are 100% decomposable) which will be coming soon.  They have a beautiful illustration of Chichester cathedral on them as we wanted to do something that would reflect our appreciation of being here.  Chichester has always been one of our best performing stores and coffee accounts for 30% of our sales so it seemed like a good way for us to demonstrate our love to the people of Chichester!  As well as this, Autumn always heralds new things on our menu so watch out for these as they begin to be introduced.  We are having a bespoke winter chutney being made for us by a company (also woman-owned) that uses all the fruit and veg that is thrown away by farms for not looking good enough for supermarkets to take.  It’s a great initiative to keep food waste down and one we’re keen to support.  Plus, we will be introducing our coffee in small retail bags at long last, for our customers to grind and use at home.  We’ve been badgered to do this and we’ve been a bit slow off the mark. But it will soon be here! ****

Thank you Helena. An inspiring and insightful blog post indeed!

Thank you for hosting our Coffee-Catch-Ups!