Canadian entrepreneurs can be forgiven for feeling overwhelmed when it comes to buying a franchise and financing a franchise once they have made that very significant decision to own their own business within the franchise model.
Being armed with critical information about financing a franchise is a key part in your overall success when you purchase a business within the franchise model.
The excitement of owning your own business and finding a solid opportunity is often very quickly overshadowed by the entrepreneurs concerns that financing prospects might be limited. When we talk to clients about their desire to purchase and finance a franchise we try and make it clear that franchise financing is
Start up Capital in franchise financing at the same time is no different than if you were starting a business in any other industry. That original capital comes from you as owner and from a lender or lenders as debt, or loans, etc. Many potential franchisees in
So you have focused on a specific franchise, you have done your due diligence, and we are now at the point of implementing a finance strategy. If there are any secrets we share with clients around franchise financing it’s simply that it is rare, in the current environment, for one particular method of financing to access all the capital you need. Therefore a carefully crafted business plan that outlines your own investment and your proposed sources of capital is critical in a franchise finance strategy.
We can’t over emphasize the requirement for a business plan. It doesn’t have to be 100 pages long with pictures, but it sure better include info on yourself and your experience, the proposed business, how you will finance it, and some reasonable credible projections around sales, expenses, and projected profits. Typically we find that a 3 year projection is satisfactory. One of the mistakes many owners make is that they focus on getting the business, and not fully getting into how the business will finance itself on a day to day business, allowing for future growth. So focus on both, that’s important.
The ability to present your business plan and finance proposal in a confident and positive manner is key, if you are not comfortable doing that seek the help of an experienced franchise financing business advisor who can work with you in every aspect of the plan and its presentation.
One of the big mistakes we see our clients make is that they feel they can rely on the franchisor, your new business partner so to speak, to either provide or assist in the financing of your new business franchise. The reality is that they are in the business of selling franchises, not financing them, so you must stay much focused on obtaining external financing.
So lets get on to another ‘ key secret ‘ we are sharing about franchise financing in Canada – which is simply, how are they in fact financed .If the words ‘BIL ‘, CSBF Loan, and SBL mean nothing to you that is not a surprise to us. All of these terms are acronyms for the government’s small business financing program, under which the majority of franchises are financing in
It is true that the majority of businesses in
Franchising is booming in