There are some sources for financing a small business franchise opportunity. However, having a franchise with no reserves may cause you trouble and headaches in the long run and not to mention a disaster for your business. A good rule of thumb is: Never invest more than 75% of your cash reserves. An example is if you have $10,000 only invest $7,500.
The prices of the franchise don’t always reflect the actual cost of the business itself. There are many expenses that may not be included in the franchise cost. Land acquisition, rental deposits, remodelling expenses and others are usually not part of the price. You may also need to pay for equipment, fixtures, signage, inventory, administrative costs and business permits or licensing.
Always make sure that you know what you are investing and understand the cash requirements that a small business franchise opportunity needs. Working capital is needed and the business plan if made properly will show what to do to prevent issues as the business is progressing.
Below are some tips for financing a small business franchise opportunity:
- Talk to your franchisor before searching for outside financing; get approved or pre-qualified.
- The most common source of start-up capital is friends and family. Use them.
- Seek out lenders that understand not just small business but franchising as well.
- Be totally honest and upfront with lenders. Hide nothing. Be prepared to explain everything.
- Neatness counts. Fill out your credit and loan applications clearly. Typed is better.
- Don’t weigh down your loan application with attached documents.
- Don’t exhaust your liquidity by paying off outstanding debts before filing a loan application. Lenders want you to have capital available.
- If you lack liquidity, find a partner with money.
- Consider equipment leasing to conserve start-up capital and improve the appearance of your balance sheet.
Keep debts and expenses to a minimum. Many business owners take on too much debt, forgetting that cash flow must pay that debt.- Consider buying used equipment, furniture, vehicles, etc.
- Let your fingers do the walking on the Internet before wasting time, energy, gas and phone calls. You’ll find useful information. Some sites even allow you to file loan applications online.
- Don’t overlook angel investors and venture capitalists.
- Avoid dipping into your retirement money or your kids’ college funds. Any start-up-even a franchise-is a risk.
- Don’t give up on your small business franchise opportunity.
Source: The Small Business Encyclopedia, Start Your Own Business, Entrepreneur magazine and Entrepreneur‘s StartUps magazine.
Related posts:
- Franchise Small Business Starting your own small business is a lot of challenge...
- Advantages of a Small Business Franchise One can start a business without involving many people except...
Related posts brought to you by Yet Another Related Posts Plugin.
Tags: small business franchise, small business franchise opportunity, small business opportunity