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Financial Planning Franchise Advice

There is a common perception by our clients that banks and lending institutions are unwilling to finance a franchise. That isn't the case, but does involve showing that you're properly prepared. More often than not you ought to be spending time on the financial planning aspects of your business. This can be carried out by utilizing simple cash flow templates.

A business plan prepared by yourself or an advisor will hopefully show you have thought out your cash flows and profit potential. Everyone wants to become a' winner' in franchising, that's understood, and it seems only common sense that the more successful a franchising brand you attach yourself to will translate into financial success.

And, of course, we must also consider....

At the end of that quite simple exercise you'll be left with either a profit of a loss. We would suggest that if you're left with a major loss that you reconsider the investment. However, if you're within the striking range of both paying yourself and creating a small profit then you probably have a reasonable franchise risk investment.

Other factors to consider are the number of your own investment in the franchise. It doesn't make sense to over invest in the business. However, there is a good line between what you put in and what'll then create somewhat of a comfort buffer in case sales do not happen as quickly as you wish them to. Remember Murphy's Law, which is 'what can go wrong will'.

In addition, though many franchisors offer low investment opportunities, there's always some money required to start a business franchise. Some franchises require a small investment of about $5, 000 while others have franchises for sale that require $50, $75, or 000, 000 of total investments. Additionally, you'll need liquid capital. This ranges from about $10, 000 up to six-figure amounts.

The thought of investing shouldn't discourage you from pursuing a home-based franchise opportunity, of course. Franchising requires capital, as with any profitable business opportunity. Again, the benefit to you here is that you're not have to invest even more capital in a store. Furthermore, with most work from home business franchises, you don't have to hire employees. You are literally your own boss (and nobody else's).

In summary, how to finance your franchise is often as critical as picking the right one. Plan carefully, assess which of the 5 options, on their own or together might work for your franchise acquisition, and sit here and carefully work out a realistic profit and cash plan. If necessary work with a trusted, credible and experienced advisor who can help you in this unique area of Canadian business financing.

Don't be the product, buy the product!