How the rich get richer

I had an enquiry recently of a person who dreams of owning his own restaurant. Having a very nice restaurant in mind selling for R800 000, all he needs is the finance and he is on his way to reach his dream!
THE MOST OBVIOUS SOLUTION? ….. Find a financial institution to finance his dream.
Assuming he finds an institution willing to grant him a 100% loan (highly unlikely in our current economic climate as financial institutions are not even willing to finance 100% property bonds)
= Loan amount R 800 000
= Interest Rate 10%
= Loan repayment period (Years)
= Loan Instalment per month R 16 997.64
Reasonable? YES! ...... Important point to remember: a loan helps reaching the dream BUT will he be able to live his dream?

HE will most probably resign his current job and draw a salary from his new the business (being in the hospitality industry for 20 years, he has the experience to manage his own restaurant).Assuming he is prepared to sacrifice for the 5 years he has to repay the loan and draws only R10 000 per month.
The loan repayment is R16,997 + R10,000 Salary = R26,997.

But what would a reasonable monthly before-tax net profit be on an R800k business? He would do very well finding a business genuinely netting around R33,000 per month. (Many sellers claim different buy inflating their figures)

R33,000 Net Profit - R26,997 (loan repayment & salary) = R6 003 left for expansion and unforeseen expenses. This means for the next 5 years; He will not be able to implement any of the good ideas he had when he bought the business due to a lack of cash flow.

He lives in fear that the cold room or griller packs up needing replacements (he bought an existing business, all equipment is 2nd hand) He soon has a staling business and profits start going down because he does not have the capital to do sufficient marketing to retain his customers.

CRISIS SOLUTION: He approaches his bank to assist him with an overdraft facility. The bank informs him; his application has unfortunately been rejected due to insufficient collateral. Is this your grim reality of wanting to own your own business?