Funding Growth Through Franchising
As a small business owner, the question near the top of everyone’s mind in almost any market and particularly today’s is when do I fund the development of my business? A growing business maybe being a fine Italian fancy car, it looks great and drives well, but if there isn’t gas in a vehicle it’s not going very far.
1. Debt. Using Debt to finance your growth can be as high of an opportunity to build capital in today’s market as is available of discovering a sunken pirate ship with your neighbor’s swimming pool. Unfortunately, all the “leg work” created by our friendly politicians to improve lending to small business owners hasn’t exactly panned out yet. It still is pretty tight in the bank. Expect to be required to have a minimum of 30% in collateral for the loan and also over a 700 credit history. SBA loans possess a bit more opportunity, nevertheless, they cap the limits from the loan amounts.
2. Private Investors. Targeting private investors in today’s market has brought on a new light with all the difficulty in the credit markets. It still is difficult, a good investment package should have a clear, concise, and targeted business plan that identifies experience, growth potential, investment, return on your investment, and timeline for that return. Don’t get fancy, don’t fudge and turn into simple. If you aren’t creating a profit inside your business now and also you haven’t hit home runs inside past it will likely be a good road, but always worth a trial.
3. Venture Capital. Looking for Venture Capital funding to develop your business has lost a lot of its luster within the last several years. Possibly since the faucet has switched off for new deals, and also maybe because businesses started realizing that the terms to VC deals are about as friendly like a badger with hemorrhoids. You need to possess a pretty tight concept with a background to get VC funding generally, and typically these deals won’t help you even though they do work.
4. Franchising or Licensing your Business. Franchising remains to be a viable expansion tool depending on the business concept and model these days. How does this connect with funding? Franchisees purchase a business structure from the structure of the franchise relationship. The upfront franchise fee and royalty payment time for the franchisor (you), substitute because of the investment with your business. That, as well as new locations of your respective operations, bigger brand, marketing capability as well as other attributes of a growing franchise system, equals higher sales and opportunities for strategic partnerships.