Franchises

How Financing Plays an Essential Role in The Establishment of a Franchise Business

Funding your franchise business requires talent
How Financing Plays an Essential Role in The Establishment of a Franchise Business
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2 min read

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Today’s franchise businesses are competing in a tough economical ecosystem, forcing creativity and out-of-the-box thinking when it’s about financing. Young franchises have always been the key to economic recovery when it’s about hiring. But hiring also requires capital, which sometimes is a hard process to come by.

Small franchisors often fund their business from several different sources, depending upon the business model, projections, and your vision. When it’s about initiating with the funding procedure, remaining flexible, vigilant, and positive is the key towards easing the further steps.

Do It Yourself

As the industry is getting tougher with newer strategies invading the market, entrepreneurs and young franchisors are focusing more on boot-strapping more than ever. Try to fund your own business with a significant amount, before approaching for formal funding opportunities.

You can achieve this by utilizing your savings, opting for zero interest credit cards, or even leveraging your personal assets.

In return, interested investors could turn more comfortable, realizing that you are in the game totally. Make sure to focus on profitability.

Family & Friends

Lending capital from family and friends is one common funding procedure. In fact, it’s an effective step for gathering initial revenue, enough for establishing your own business. Trust and words play a major role here.

It is necessary that your close ones believe in your vision. One downside of this process is that you will be risking your relationships, as a  business can succeed or even fail. Therefore, you need to be strategically ready and confident before turning your vision into reality.

Loans

Banks have always been the first or the last option for franchisors, willing to borrow credits for establishing their business.  Usually, startups which are interested in taking loans from banks require a good business plan, with profitable projections and their own money invested in the business.

Regardless of which path you take, chances are that you may do all of these at some point as your business grows.  

This article was initially published in Franchise India by Shahram Warsi.

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