While having your own business is no walk in the park, many people aspire to it because it allows them to have more control over the operations of their enterprise, more flexibility in terms of time, and a better chance of gaining financial freedom, according to AOL Smallbusiness. Franchising is a great way for a person to have his or her own business without going through the labor pains that come with building a brand, marketing, hiring workers, and getting the business up and running.
Buying a franchise
Many potential entrepreneurs are disheartened, however, when they find out how expensive it can be to purchase an established and well-known franchise. As a franchise owner, you know that having an adequate amount of working capital is vital to the success of your business. But is it possible to buy a franchise without having all that money up front? Fortunately, the answer is yes. Think about it – if all franchise opportunities required aspiring owners to have the entire capital from the get-go, the business industry would not flourish as much as it does.
Franchise ownership can be likened to buying a house. Instead of saving up millions of dollars to purchase a house, you simply make a down payment and then may regular monthly or quarterly payments over the span of many years until you can finally call the house your own. The process of buying a franchise is similar to this; the main difference is the monthly revenue that your business will be bringing in to cover your debt, as opposed to taking the money out of your pocket.
Business financing options for limited capital
Having insufficient capital is one of the most common reasons that prevent aspiring franchisees from buying a business, according to Hubpages. One way of working around this issue is finding a business partner or investor. This is ideal for people who are interested in owning a business, but do not have adequate experience managing one successfully. You can take the role of the managing partner while the other person takes care of the funds. An equitable profit-sharing agreement can be arranged between the partners and/or investors.
Family members and friends can also help you finance your new franchise. The familiarity and level of trust that comes with working with friends and family can contribute to the growth of the business in the long run. But when you think that you have exhausted all of your options and still do not have the amount needed to buy a franchise, you can explore the possibility of borrowing from private financing firms. These types of companies, which can be found online, offer capital for starting a business. All you need to do is prepare a detailed proposal of your chosen franchise and submit it to the financing company for their approval. Some of these private equity lenders do not just invest in established businesses, but also in new startup ideas. That is why it is important to come up with a professional business plan that will persuade them to put their money into your chosen franchise.