Quoting Fred Wilson ,

Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.

I should also say that for businesses that don’t have the benefit of venture capital backing, the reverse is probably true. Almost certainly non-venture backed businesses will not have the ability to get too big too fast. They will mostly fail because they have the wrong business plan and they don’t have the wherewithal to survive for the period of time it takes to figure out the correct one.

Regardless of whether you have taken venture capital or not, capital efficiency and bootstrapping are critical values. You must keep your burn rate low until you can show without a shadow of a doubt that you have a business model that works, can be operated profitably and is ready to be scaled. Then and only then should you step on the gas.

Restaurant loans are very hard to get nowadays especially in Canada.

• There is very little collateral or equipment for banks to attach in order to protect themselves.
• The restaurant industry is an industry with very high turn over and very few survive beyond 5 years.  As a result, bankers require the restaurant owner to personally guarantee any loan and will often require assets equivalent to double or triple the loan amount.
• Unless you have a very unique menu, ambience or fantastic service and relationship with your customers, it is hard to stop new and existing competition from taking your customers away.
• The current economic times force customers to eat from home more and also eat out at fast food places like MacDonald’s