Small business is the backbone of the US economy, generating nearly 62 million jobs for Americans and over $14 trillion in revenue.
It is also one of the most difficult things to do successfully.
That’s what Romeo and Milka Regalli, the husband-and-wife team behind Ras Plant Based, encountered when they launched their Brooklyn-based vegan Ethiopian restaurant in 2020.
The Regallis faced numerous hurdles when securing capital to launch their restaurant. And they aren’t alone in finding the process of opening a restaurant daunting, especially in a landscape where funding is limited.
“The No. 1 reason for restaurant failure, as with any retail food business, is undercapitalization — not having enough money,” said Steve Zagor, professor at Columbia School of Business and restaurant and food business consultant.
The idea for Ras Plant Based came when chef Romeo Regalli began cooking plant-based meals for his father during his battle with pancreatic cancer. After deciding to open a business with Romeo’s food, the Regallis had to get creative when raising funds to build and launch their restaurant.
At first, they applied for three business loans, but their applications were rejected each time.
“We didn’t have a proven concept, so no bank was rushing to give us capital,” Milka Regalli told Yahoo Finance, noting that banks often categorize restaurants as high-risk, complicating loan approvals.
After being denied business loans, the Regallis “cleared out” their savings to help complete their restaurant, a decision that is pretty common among entrepreneurs.
According to the US Chamber of Commerce, nearly 70% of small businesses depend on personal savings. While sometimes necessary, this strategy can put entrepreneurs like the Regallis in a precarious position.
“While it’s not something that I recommend today, it’s definitely not something I regret looking back,” Milka Regalli said.
At the time, the couple still needed cash to complete the build-out of their restaurant, so they pivoted to a crowdfunding site, where they attracted supporters by offering restaurant perks and telling their story. After raising more than $30,000, the Regallis were able to complete renovations and get Ras Plant Based up and running.
They soon faced another hurdle, however. “Without having much prior management experience, Romeo and I didn’t really know how to manage the team that we had,” Milka Regalli said.
The two sought guidance on team leadership and turned to consultants, who helped them streamline operations, reach profitability, and foster a positive work culture.
