Dedicated to generational wealth for building long-standing family success? Looking for ways to set your family and beneficiaries up for financial freedom for generations to come?
Building wealth for future generations may not be easy for African American restaurant owners without access to capital. But with these valuable tips, it most definitely can be done!
What Is Generational Wealth?
To well-established families who have had wealth for generations, this is known as “old money.” But for entrepreneurs just getting started, it’s the process of creating wealth and equity that gets passed down from generation to generation.
In this article, we cover various ways to create generational wealth for your heirs through Black-owned restaurants. Use these strategies to generate income, so you and yours never have to worry about employment again.
Dedicated to Black Generational Wealth: Succession Planning
When planning the future of your restaurant business, succession planning is key to long-term success. This helps you plan tactics for keeping the company thriving if you choose to leave the business someday. Who will be your successor when it’s time to turn over the reins?
Since you plan to leave the business to your children and grandchildren, including them in the daily management and operations is vital to your future plans. Your family members must know how the business functions as well as your trade secrets to keep the cash flowing for generations to come.
This means putting structured operating procedures in place that everyone follows. These procedures should be a bit flexible to keep up with the times and stay up to date with industry innovations. All of this helps you decide who the best successor is during your succession planning.
Investing in Black-Owned Restaurant Real Estate Ownership
Establishing a restaurant that brings value to your local community helps create a successful business that sustains the tests of time. But renting versus buying real estate to operate your restaurant business is something you need to think about for the long haul.
Real estate is one of the most valuable assets you can leave your heirs and other family members. Typically, it’s a secure and stable asset that appreciates in value over time. Strategic real estate investing provides unlimited opportunities to create a wealthy legacy that you can pass down to future generations.
Black communities must put more value into building generational wealth through homeownership as well as business real estate. However, there are major obstacles for these families that have made this practice impractical and almost impossible due to discriminatory practices such as redlining.
Over the years, redlining has made it harder for business owners to purchase their own property. Although it’s now illegal in the US, other related unethical practices still take place, such as higher rates and fees for minority businesses looking to buy commercial real estate. Such systematic racism also leads to more Black people getting denied mortgage loans.
One way to tackle this issue is by improving your personal and business credit profiles. Your credit profiles are key to gaining capital through investors, grants and small business loans. Here are two tips for establishing business credit to help you purchase real estate for your Black-owned restaurant:
Step 1: Establish Credit with Suppliers Who Report Creditworthiness
One of the simplest ways to establish and build business credit is to apply for it with suppliers and vendors who report to business credit reporting agencies. Every time you purchase materials, inventory or supplies for your restaurant on credit, your creditworthiness increases with each purchase and payment.
In time, your activity will improve your business credit profile and report. After establishing several trade lines that report on-time payments, a business credit score will be generated. The better the score, the more access you have to real estate loans with competitive mortgage rates so you can own the brick-and-mortar housing your family-owned restaurant.
Currently, there are three major credit reporting agencies for businesses in the U.S.
Keep in mind that not all the vendors you do business with report to business credit reporting agencies. So, make sure you ask the right questions to ensure that your attempts improve your chances of creating generational wealth through your restaurant’s real estate efforts.
You need to collaborate with vendors that report to one or more of these three companies. This is very important when you’re dedicated to generational wealth.
Step 2: Monitor Your Business Credit Reports
Each one of the three major agencies above uses a different process for collecting data. Therefore, your company’s information may vary a bit from report to report. But they all offer multiple ways for you to keep your information up to date and accurate. If you find that any of the information in your reports is out of date or incorrect, contact the agent so they can make changes accordingly.
An established business credit report will help you get approved for a commercial real estate loan faster. This will also lead to better repayment terms and mortgage interest rates than you would get without commercial credit.
Also, be sure to establish several types of credit for your restaurant business for a more diverse portfolio. A line of credit and a business credit card are outstanding ways to increase your company’s creditworthiness, making its portfolio more impressive to mortgage lenders.
Dedicated to Generational Wealth: Franchising Your Black-Owned Restaurant Business
Another way to set your restaurant up for generational wealth is by creating a franchising strategy. This provides a way to grow your business while allowing others to provide equity toward that growth.
What does it mean to franchise a business? Franchising is the process of granting one or more parties licenses to conduct business using your restaurant’s trade name, trademarks and other identifying company aspects.
These aspects may include limited rights to training systems, supply chain networks, intellectual property and more. Such franchises use their funds to open new locations using your restaurant’s name. In return, these funds become capital for your business, increasing the company’s overall worth over time.
How To Pass Down a Restaurant Business to Your Family
Wealthy business owners use Estate Planning to keep their wealth within the family for generations. Restaurant owners can utilize the same avenue to make sure family members are left with valuable assets through a clear, laid-out plan.
Your estate plan should include a will or living trust that clearly dictates the new ownership plan once you leave the business. A business advisor or attorney will help you create a plan that’s fair to all of your heirs while allowing the restaurant to continue to thrive.
If your company is a Black-owned restaurant looking for ways to improve foot traffic, restaurant business directories can help. Melanin Foodie offers free listings to eateries across the country. Check out the Melanin Foodie directory pricing plans for details on how an upgraded listing could increase your business.
Are You Dedicated to Generational Wealth?
Tell us your plan for building generation wealth in the comment section. You can also search for Black-owned restaurants across the country at melaninfoodie.com.
