Monday, September 14th, 2009
As every experienced businessperson knows, great business opportunities don’t come around every day, so when one does come along, the last thing anyone wants is to let it slip away for lack of funding. Because few of us have the cash-in-hand to up and purchase a good franchise when it comes along, however, the average entrepreneur has to resort to finding financial resources elsewhere. Here are some of the more common means of paying for that perfect franchise opportunity.
Commercial Banks
This is the most commonly used avenue for obtaining financing for a new franchise business, particularly for a home based business, and it’s a fine way to go. Generally, a person can get a loan from a bank for up to $100,000 on nothing more than personal credit, which is perfect, because home based businesses typically don’t reach prices in the $100,000+ range.
If, however, an entrepreneur were looking at starting a franchise that was over that pricing threshold, a commercial bank would still be more likely to finance him than they would his non-franchised small business counterpart. The simple fact is that far more franchise businesses see a successful 10-year lifespan than do independent business ventures, and banks know this. In fact, the difference in 10-year success rates is 92% to 20% in favor of franchises, making any bank’s choice of whom to finance a much easier decision.
Knowing that the franchisor has a successful track record and a solid business plan absolutely counts in the eyes of the bank. They take that business connection so seriously, in fact, that it’s often possible for the franchisee to use it to either whittle down the interest rate a little or obtain a larger total loan than he would have gotten without the franchise connection.
Private Investors
Whether they’re family and friends or only business partners, private investors can either be a great business advantage or a terrible trial in your career.
Just the same as any lending agency, a private investor contributes to the initial purchase and startup for your work at home franchise, helping it get off the ground. Then, as the business begins to see money come in, the investor gets a predetermined, and generally rather large, cut of the gross income each month until his initial investment is paid back. Then, depending on the contract terms, he still receives a certain cut of the income for the remaining life of the business.
This can be a great plan for all parties involved, but it can also be a headache if the investor is not as interested in the success of the business as he is in filling his wallet. Sometimes an investor will take such a large chunk of the growing business’ monthly gross income that there doesn’t even remain enough to adequately maintain operation.
It’s important to lay out a very clear contract at the beginning of the relationship with any investors, so that the person who got your business off the ground doesn’t also become the one who shoots it out of the sky.
The Franchisor
Knowing how hard it can be to amass the capital to start a franchise business, even for capable businessmen who would bring as much to the company as they would receive from it, many franchisors have begun lending franchise fees and startup capital to franchisees. This is becoming an increasingly popular means of obtaining financing for a franchise opportunity, in part because it’s so much easier for the franchisee than going to a third-party lender. However, there’s always a price for convenience, and in this case, it’s generally a higher interest rate.
Home Equity
For some people, this is the way to go. Home equity loans offer some of the best interest rates available, so for those who have a sure-fire work from home business plan and perhaps a home all to themselves, it could be a good option for getting business under way. However, the franchisee with a wife and kids has to stop and ask himself if risking the home equity is the wise move for the family as a whole.
Small Business Administration
As surprising as it may sound, the government is a great place to find the financing necessary for a franchise business, because they are genuinely interested in getting more small businesses up and running around the country. That is actually the sole reason for the existence of the US Small Business Administration.
Though they themselves don’t actually provide the capital to start and maintain businesses, the SBA does provide a 75% guarantee (up to $750,000) to private lenders on behalf of businesses that they feel have what it takes to succeed. Needless to say, this kind of support prompts most lending agencies to provide the loan.
The SBA does require some information though. What they most want, and reasonably so, is proof that the business is worth their backing. Potential business owners must provide a complete picture of the business, its plan and goals, a cost outlook, and a history of their own experience in similar business. In many cases, this process is accelerated for people buying franchises, because all that information has already been provided by the franchisor and recorded in the SBA’s franchise registry, which officially makes it a trusted and acceptable business for the SBA guarantee.
Weigh the Differences
The biggest difficulty in finding a financing source for your business is determining which is right for you and your situation. As you continue to learn more about the different ways that you can get the financing you need for your specific business endeavors, keep in mind that your situation is going to be different than everyone else’s, and therefore, so will your perfect lender.
Tags: Business, Business plan, Finance, franchising, Investment, Loan, Small Business, Small Business Administration
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Tuesday, January 20th, 2009
Before you go out and buy a restaurant, you should consider the possibility of discovering important data. Restaurants may be the most sought after business for sale. You can find you in the position of buying a restaurant that is already doing quite well with a strong customer base. However, make sure you know the full story behind the company before signing on the dotted line.
What is the true story?
There is a real story behind every attempt to sell a restaurant. The answer may lie in the area, on the other hand, find the real reason may take some probing. If customers stopped coming, that will benefit you know why. When the organization plans to buy a restaurant, you need to know if there are outstanding legal and financial issues surrounding the need to sell.
Be sure to check all books
His plan to buy a restaurant business should be expected to contain elements that will make a profit ordered. If so, put on your detective hat and make it a point to consider carefully the costs and the recent sales to ensure that the restaurant has its sights set on is in the black. This means taking the books to your accountant to see if you see anything suspicious on the surface. Åre all payments to be? The restaurant has a bank account? Are there hidden costs that will appear when you least expect?
It is the restaurant’s reputation Sterling?
Restaurants call customer base to reputation as much as anything else. A great way to get the inside scoop on the purchase of a restaurant, is asking suppliers of the restaurant if the company has been paying their bills on time. If your prospective vendors are unhappy with the payments, it should send up the red flag in a hurry. It is also a great idea to spend time at the restaurant is going to buy an actual customer. There is no better way to measure customer service and get a general feeling that to come to the table and serve.
If the restaurant is one of a kind or a restaurant that is part of a chain of business, consider that there are principles that your company will give you a better chance of success. A restaurant concept that is well defined is a better chance of successful long-term and after the purchase of a restaurant, it should set specific goals from the beginning to define and measure the success of your restaurant.
Longevity
For the adventurous heart of the plan go out and buy a restaurant business, it is prudent that companies know conditions can change overnight, and its success may depend on being able to meet new demands and customer buying habits . And you can bet your customer base changed regularly. “Winning” is essential, and the means to maintain success over a long period. Aspects of your business will change over time, is simply the nature of how things are. Stay on top of trends without veering away from the loyal customers can be a winning combination.
Market Appeal
If you want your restaurant to be busy, an attractive concept is what wins the day. Restaurants that have a broad and well-developed topic so that they can dominate a market niche. People often a restaurant that has a good resource and it is more familiar with the demographics of your potential customers, the better your chances of being a good performance and success of the operation. A restaurant with strong appeals to a person “feels” good to be there, and word of mouth endorsements that certainly can be a great benefit.
Thing in terms of capacity expansion
After the purchase of a restaurant, you can never know which direction to take your business. If you have a winning business plan, can be a good platform for a lease or go to one source of money for funding. Also, a good business plan will help develop systems and procedures necessary to maintain a state of coherence. Who knows, the opening of this second restaurant could be a viable option! And before long, you may be looking for in a restaurant chain by opening statements.
Fully consider the Assets
You must have full access to the assets to the business of restaurants. This means taking a close look at the age of the equipment. How old is the stove, and any other assets obsolete? Is the location of the restaurant to the building codes? Even the name of a restaurant can be considered an asset. Why the name implies, and is in step with the customer base that wants to attract? How to buy a restaurant and reap the benefits realized it’s better when you have a comprehensive action plan in place.
Tags: Business, Business plan, Consulting, Customer base, Customer Management, Customer service, Goal, Small Business
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Monday, January 12th, 2009
There are currently operating franchise opportunities in almost every category of business you can imagine. They are available in most price ranges and can meet most people’s lifestyles. Franchises
Now is a very reputable way to start a business and has revolutionized the way of doing business worldwide.
Are you considering buying a franchise? If so then you need to decide on the type of activity that suits your lifestyle and budget. The best way to decide whether a business is right for you is to begin to attend exhibitions of franchises, the search for franchises on the Internet and buy some magazines franchise.
Franchise exhibitions are a good place to start. You can talk to many franchisors in one day and also to evaluate the alternatives. Most franchisors have their marketing materials and brochures available for you to take their stands. Some will offer refreshments and snacks, while trying to persuade to buy into a franchise.
Often you can also meet with the lenders that specialize in helping to raise funds to buy a franchise in the exhibition. That not only can help you with your financing needs, but also discuss the pros and cons of the various franchise options available.
There are a lot of information available on the Internet that can be accessed easily in the comfort of your own home with a mouse click. The best of the Internet is that almost all necessary information is available for free.
Franchise journals provide a wealth of information and also probably the first place you’ll find information on the launch of a new franchise. It takes time for a new company to start the show and to appear on the radar of search engines.
Narrow your choices to three potential franchise opportunities and to request brochures franchisors. It is essential then that contact with the franchisees. This will help you decide which franchise business is right for you.
Discuss with them the potential of the company and the difficulties they have encountered. Analyze and compare their territory with it. It might be worth paying a visit so you can meet them face to face and see for yourself how easy or difficult it is to manage the franchise.
Make sure you have accounting and legal advice before signing the franchise agreement and pay the money. Ask your accountant to help you develop a business plan and ensure that there are some contingency funds in case the company takes longer than expected to become profitable.
You should never rush into buying a franchise and business opportunity to choose just probably keep you busy for at least the next three to five years.
Once you have signed the franchise agreement will be prepared for some hard work. Buying a franchise does not necessarily guarantee success. Hard work, effort and determination are also required to make your business successful.
Tags: Accountancy, Business, Business plan, franchise, franchising, Legal advice, Opportunities, Web search engine
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