“Budgeting.” Not a word that normally gets people excited. But, now that you have made the significant decision to become a franchise owner, don’t let the very important function of creating a franchise budget hold you back. You want success, right? So, plan and budget for it and then proceed with optimism.
Reasons to Create a Budget
The process of creating a franchise budget will help ensure that financial resources are available and aligned to meet your goals and to support growth:
- Budgets set targets. They help project revenue and spending toward meeting your goals.
- Budgets support strategy, so spending isn’t done without direction.
- Budgets communicate priorities.
- Budgets support long-term needs including equipment and facilities.
- Budgets provide for a profit margin.
Tips for Creating a Franchise Budget
Creating a franchise budget should be a deliberate and thoughtful process that includes these critical budgeting components:
- Start-up costs. This represents a significant capital investment even before you begin your franchise operation including:
- Franchise fees
- Securing of commercial property or leasing space
- Operating equipment
- Beginning inventory
- Working capital to support continuing costs:
- Monthly rent
- On-going inventory
- Payroll and benefits
- Property maintenance
- Insurance and taxes
- Legal and accounting
- On-going franchise royalties
- Your own salary
- A careful review of timing so that you know when to expect funds will come in and expenses will flow out. Your planning should look far enough ahead to anticipate normal cash flow ups and downs.
Key Considerations to Avoid Difficulty
In your franchise budget planning, consider these aspects to avoid difficulty:
- Don’t be undercapitalized. Make sure you have enough capital to support your needs while your business builds to a sustaining level.
- Expect the unexpected.
- Question all expenses.
- Use solid financial systems.
Get Experienced Financial Assistance
Contact Norris Commercial Capital, with offices in Knoxville, TN, and Houston, TX for help with your financial needs. We can help you with expert assistance in small business loans, unsecured lines of credit and commercial real estate loans. We are built to scale as your company grows.