The leap from investigating a franchise to buying one requires a reality check from any potential investor. Franchise loans are out there, but getting selected as a franchisee has different requirements. There are three main components that will determine if you are financially solvent and solid enough to buy into the franchise you choose: your net worth, your liquid capital, and your credit history.
Putting together a solid business plan before you file any applications or sit down with a finance company, a loan officer—even with a family member—will help you make a clear, compelling case for funding. A plan is the best way to have a clear path and direction when owning a franchise.
Your business plan should include each of these basic components if you want to make sure your franchise management is solid.
As the owner of a startup business, you’re going to start out spending working capital—money you’ve set aside to live on and run your business with until it becomes profitable. In time, you can expect to reach a point where your business breaks even, when you’ll have more cash coming in than going out. When that happens, the business becomes self-sustaining.
Thomas Edison once wrote, “If we all did the things we are capable of, we would astound ourselves.” The skills and strengths you bring to business can help determine if entrepreneurship is right for you. We all have talents and abilities that stand out. Having a firm handle on yours will help you make smart choices as you look at investments and lower your levels of fear and anxiety. Consider the following questions to help assess your own skills and strengths in franchise entrepreneurship:
Classic comedian Milton Berle once quipped, “If opportunity doesn’t knock, build a door.” In a nutshell, that’s what many aspiring entrepreneurs are looking to do. Owning a franchise is a great way to start the process!
Becoming an entrepreneur through franchising offers many different ways to build that door, depending on whether you want to gradually build a bridge from your corporate job while still working or whether you’re ready to go all-in right away.
For example, I recently worked with a candidate who already owns a business in one industry. He wanted to diversify his investments, and told me he could set aside 10 to 15 hours a week to give to a second business. We were able to find a perfect opportunity for him in a fitness franchise—one that allowed him to add his new business to his existing schedule, rather than trade one for the other.