Finance Your Franchise

Having the correct knowledge of how to Finance Your Franchise business is the road to success to open your own business franchise one day. Before applying for loans, you should know some important things like: NET WORTH Determining your net worth helps you check your credit rating according to which the banks provide loans. Make a list of all your assets like your holdings- on hand cash, savings account, real estate’s current market value, bonds, securities, insurance cash values, automobiles and other assets. Similarly, make a list of your liabilities-bills, mortgages, auto loans, and so on. Subtracting your liabilities from your assets will help you determine how much financing can you sponsor yourself and what your credit rating looks like. Most lenders look for three factors using this credit rating- income, your personal financing and track record. BUSINESS PLAN To get your loans approved instead of rejected, you need to model your business plan effectively. The business model should include all the details of the franchise along with a technical study of the business- projections and cost analyses, accurate pro forma, complete marketing strategy, and the objective you are willing to achieve for the franchise and the benefit of the employees. The business plan also needs to include a statements of your net worth. Finance Your Franchise FINANCING OPTIONS Depending on your credit rating and your business model, there are more than one options to source the funding.

• Ask the Franchisor

The first place to turn your head for help and guidance for a franchise would be the franchisor. A franchisor can offer in-house financing. They might also help with partial funding.

• Bank Loans

Getting loans from the bank is the best and easiest source of funding. However, a bank would only want to work with someone who is serious about the business. The entrepreneur is expected to have a complete understanding of the business and to prepare a loan package suitable to the requirement. The franchisee needs to be aware of all the intricacies that comes along the way and be prepared to tackle them, reducing the risk factor for banks.Finance Your Franchise

• Angel Investors

An angel investor is an individual who invest their personal funds into a potentially rewarding business. Asking angel investors or lenders for financing is also a viable option. However, you must devise a foolproof plan with thoughtful reasoning to convince the lenders to lend you money for your franchise

• SBA Loans

Small Business Administration is a branch that works with banks to provide low interest loans for franchisees and small business ventures.

• Soft Loans

Not only banks and lenders, one can seek financing from friends and family. The advantage of this funding is the trust and bond which is absolutely necessary in any business relationship.

TIMING AND RESEARCH

Researching the market and analysing the needs of the customers is also a big factor in deciding the course of a business. Talk to other franchise owners about the same. With the right pieces of information, you can make an informed decision when to start your franchise for maximum revenue generation. Also, spend thoughtful amount of time in considering options of funding to make sure that you don't fall short in giving the best working experience to your customers as well as your trusted employees.