Opening a franchise is an exciting prospect. You’ll get the chance to contribute to a company you’re passionate about and have the benefits of having your own franchise. But financing can be an overwhelming prospect for anyone wanting to start a franchise. Fortunately, there are tips you can use to help ensure you get the financing you need for your franchise.
Why You Need Financing
Not everyone has the money available to fund a franchise. Even though a franchise works under a corporation, it requires the same time, money, and effort to start as any new business. Typically, the financial burden of starting a franchise is on the person starting the franchise. That means you have to come up with the money for all contractual obligations as well as opening the location, supplying inventory, and everything else needed to open your doors.
Tips for Financing Your Franchise
- Look to friends and family who want to help support you. They may be willing to contribute financially.
- Look for lenders who work with franchisers as a type of small business. They’ll understand your unique situation.
- Be open and honest about everything with your lenders. The more information they have, the better they can assess your needs.
- Be careful about filling out your application completely and neatly. This will be the first impression your lender has of you and your franchise.
- Try to make sure you have some capital available; don’t pay off all your outstanding debts and exhaust your liquidity before you secure financing.
- Consider partnering with someone who can contribute financially.
- Think about leasing equipment instead of purchasing to help save on start-up costs.
- Think about buying pre-used equipment instead of purchasing new to help save on start-up costs.
- Keep your expenses and debts to a minimum. Don’t take on too much without the cash flow to pay off your debts.
- Make sure you do lots of research ahead of time so you have all the information you need before you do the legwork.
When you’re ready to start your franchise, make sure you can get the financing you need. Using these tips are a good start so that you can secure financing and open the doors of your franchise on time.