Local restaurateur doesn’t let financing setbacks stop him
Steve Kaufman, owner of Red Mountain Grill in Dillon, likes to coach people on starting a business without a ton of money.
“You don’t have to be a millionaire to do this,” Kaufman said. “There are opportunities out there, where you can get into your own business and don’t need a lot of money.”
Kaufman believes that most banks aren’t the best source for loans because they tend to be ultra-conservative, he said.
Sometimes he uses the financial institutions, but generally, he thinks outside the box when it comes to raising money for a new business. He suggests searching the internet, looking at Colorado Lending Source and Small Business Administration, asking bankers and Realtors for leads because some represent private investors, and researching commercial lenders.
“Don’t be afraid when someone says no,” he said. “If one door shuts, another 100 doors open. You need to know there’s always someone out there.”
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However, using alternative lending sources comes with risks. Kaufman has opened and successfully ran three restaurants in the Vail Valley, but his fourth endeavor, The Red Mountain Grill, cost a little more than he bargained for.
His original financing fell through, so he was under pressure to find another loan before closing. He found a Texas broker and placed a six-figure amount into escrow to secure financing. But when the deal fell apart, the Texas broker didn’t return the money. The broker now has a judgment against him in Texas and Colorado, as well as a collection agency after him. Kaufman said he didn’t have time to do the thorough background checks he usually does.
“I take my own risks, and I live with what happens,” he said.
He said those kind of crooked deals don’t happen often, and miscalculations are part of being an entrepreneur. Luckily for him, business is good at Red Mountain, which balances his loss.
“There’s no one with a perfect record, and eventually, how you gauge how successful a person is, is the good deals will outweigh the bad deals,” he said. “But you have to be in the game … nothing should be a pipedream.”
1. Contact your state, county and local development departments. Many offer funding programs to foster business within a certain geographic area.
2. Take advantage of organizations aimed at helping you. Some include the National
Organization of Women Business Owners and the National Minority Supplier Development Council.
3. Use community banks in your area. These smaller banks pride themselves on helping small business owners.
4. Find out if there are any revolving loan fund programs for which you might qualify. They provide “gap financing” that your bank won’t or can’t offer.
5. Visit http://www.sba.gov/financing, the finance section of U.S. Small Business Administration’s website. It provides details on SBA’s many funding programs.
6. Contact your local university business school or Small Business Administration office for information on potential funding sources.
7. Identify the most likely candidates of “angel investors” by asking your accountant, banker and lawyer.
8. Keep an open mind ” potential investors may be anywhere. You may find one as you’re pursuing hobbies.
9. Search the internet for companies that provide venture capital for startup financing.
10. Check the library for references.
Source: SCORE “Counselors to America’s Small Business.”