By Tim Parmeter on March 29, 2017Wouldn't it be great to own your own business? How great would it be to finally take control over our lives, careers, and income potential? Or to gain this control while building the personal wealth and equity not possible in the corporate world?
We can envision the pride that comes with business ownership, the relationships built with staff, the customers, and the community. We can even think of business ownership from a legacy standpoint. After all, can you pass on your vice president role to your kids? Of course not. However, you can absolutely pass on your business to your children, or, at the very least, cash out the wealth and equity in your business by selling it when you decide you're ready to move on. However, none of this matters however if we can neither afford a franchise, nor fund it.
Affording a FranchiseThe total investment, cash required, and uncertainty of what funding options are available can be frightening. Much of the fear, however, is simply based on a lack of knowledge.
There's a common perception that says owning a franchise requires hundreds of thousands of dollars in cash and a net worth over $1M. The reality is, unless we're looking at big food or retail franchises, this just isn't true. In fact, there are several hundred franchises that require a cash injection similar to buying a small house. These same franchises also have funding options available to them that are easier to qualify for than some mortgages.
So, the cash required is no longer daunting, which is great. However, funding options can provide their own misconceptions.
Funding for a FranchiseIt can be nearly impossible to convince the bank to give you a six figure plus loan for a start-up. What proof do you have the business will work? How can you prove to the bank you have what it takes to own a business? And what assets do you have that the bank can acquire if and when you fail? Thankfully, funding options for a franchise are significantly easier.
The bank knows a franchise has a track record of success. It knows that a franchise thoroughly vets potential owners and then extensively trains and supports new owners to help ensure their success. Therefore, for some franchises, the bank doesn't even require collateral outside of the initial cash injection to the business.
Furthermore, there are a half dozen or more different types of funding available for a franchise. These can be stand-alone funding options or they can be used in conjunction with one another. And, there are companies out there whose sole existence is to help potential owners find the best funding options to fit their financial portfolio.
Now that the funding picture is clearer, there is one last common myth for franchise ownership.
Replacing Your Corporate Salary with a FranchiseHow can a franchise help me replace my corporate salary? We are often asked by clients, “I need to replace $xxx,xxx corporate income, what franchise do you have that can provide this time of money to me?”
The answer is simple.
Any of them.It is all about finding the perfect fit for what someone can do, and wants to do, as an owner. Once we have the fit, we simply scale the business accordingly to reach the financial goals. As an example, Subway owners don’t get rich from one store. That is why they own dozens. For some clients, one unit of the right franchise is enough. For others, the right number of units could be 10 or more.
Finding the right franchise, in the right investment range, and with the right funding options is not a one-size fits all proposition. Fortunately, FranCoach is here to help educate clients on the investment ranges, the funding options available, and the financial qualifications required, in addition to helping clients find the franchise that best matches their skills, goals, and core competencies.