A potential franchisee seriously interested in becoming an entrepreneur will take several demonstrative steps throughout the ownership process. In this post, we focus on the financing options available to the franchisee. It is our hope that you will be able to avoid potential mistakes and find a suitable solution which matches up perfectly with your own financial position.
Allow us to introduce to you the Top-3 Pitfalls of franchise funding. Take heart, because making the right decisions will illuminate a path to success and growth. A costly mistake could jeopardize your break-even possibilities and even hamper your effort to achieve viability in the marketplace. Some of what you are about to read is just plain common sense, but you may find just find the “gem that keeps you out of a jam!”
Pitfall Number One – “Pump Your Brakes”
You’ve spent the requisite time in choosing to meet with a qualified franchise consultancy like FranNet, whose sole focus is matching the right opportunity with the right option just for you. You believe in the franchise concept, and you did your due diligence through the Franchise Disclosure Document process. You have arrived at this point because you were both cautious and prudent with your time in researching the development of your soon-to-be franchise. It’s time to explore financing options, not hit the gas and floor it. Stay as focused and patient as you have been up to this point, never let your emotions override the necessity for exploring any and all financing options – even if you do feel close to the finish line.
Pitfall Number Two – “Get Your Own Financial House in Order”
Are you really prepared to secure the necessary funds to activate your new business? Understand that during this time of extraordinarily tight financial credit, bankers and lenders have nothing but time to disqualify you for even the simplest of reasons. Maybe you received a healthy severance package from a previous employer. If this is the case, now isn’t the time to buy anything extravagant. Obtain your credit report and scour it for the most minute of details – know it by heart. Be ready to explain anything that could hinder your ability to secure the necessary funding. This is the time to get your own financial house in order.
Pitfall Number Three – “Consolidate Your Exposed Risk”
Credit lines, second mortgages, and even a charge card application at your local department store may be lurking, ready to raise a red flag on your credit report. While most informed people already know this fact, your credit history is “run” each time you apply for credit. And this process, if repeated, is enough to negatively affect your credit score. At a time when you are preparing to fund a business of your own, you have to take into consideration all purchases and all credit checks. Aim low, not high!
FranNet Bio: FranNet is North America’s most respected leader in matching individuals with franchise ownership opportunities. Founded in 1987, FranNet has more than 100 experienced consultants across the United States, Canada, Germany and the United Kingdom. FranNet uses a proprietary profiling and consultative process to determine a business model unique to each client’s goals, skill sets and interests, and has matched thousands of prospective business owners to rewarding small business franchise opportunities. Based in Louisville, Kentucky, FranNet has been recognized by Inc. magazine as one of the fastest growing private companies in America for the last five years.