Financial security as a new franchise business owner
We understand the importance of job stability, financial security and the value placed on home comforts. Therefore, taking the plunge to leave a salaried role and follow your dream of setting up your own business can seem like a daunting option, but there is a lot of support and guidance to help you take that next step in your career.
The HR Dept values transparency, so we won’t deny that buying a franchise is a big investment. There is normally an initial upfront fee in order to set up your business. After this, there can be a monthly service fee or a percentage of profits taken for the rights to trade under the brand and for on-going support. Ensure you have carefully researched what your preferred franchise will require from you, and that you have considered your finances beforehand. However, the main reason in buying into a franchise is because it adds extra security and confidence to your decision of setting up a business. You have a ready-to-go business model proven by existing franchisees (or licensees in our case), a national brand with a reputation you can benefit from, and resources or a central support team to help you with finding your feet.
So the real question is, once you’ve found the franchise that’s right for you, how do you finance it initially and what should you plan for?
Our Finance Director, Lian McQuade, has some top tips on how to prepare for starting a business and where to look for financial security as a new business owner:
What types of funding are available for Start-Up businesses?
“There are several schemes out there for start-up loans or grants to help get your business off the ground, or assist with investing in a franchise model like ours.
Start up loans are on the government website with information on how to apply. They usually range from £500 to £25,000 and are repaid with interest over a period of 1-5 years. The good thing is that they don’t tend to have application fees, or any fees if you wish to repay the loan early if your business is doing well! The HR Dept works closely with a partnered provider who have a start up loan scheme for UK entrepreneurs.
Several of our Licensees have used grants, loans and other funding initiatives to help them cover the initial investment with our franchise and give them that extra layer of ‘cushioning’ for their first year in business. Banks are more likely to invest in a proven and established business model and, with a network of Licensees on board, the model is certainly lower risk and well proven.”
But which type of funding is best for me?
“It’s so hard to advise which is best for you, as it is all dependent on your circumstance and own personal finances, as well as what your aims are as a business owner e.g. lifestyle business vs building a bigger operation and legacy. However, there are lots of schemes out there that can help if you’re looking for full, supplementary or future funding for your business.
Sometimes it can be hard to know where to look, so our Growth & Development Team are always on hand to listen to you and your goals, and to advise the best place or type of funding to look for if you’d like some extra guidance.”
What do you recommend I do to prepare for setting up a business?
“I would recommend talking to a financial advisor for some guidance (both if you’re looking for extra funding, and just if you are looking to setup a business) as they can look at your existing personal commitments (e.g. mortgage etc.) as well as what a business loan or grant could be used to help with. Citizen Advice Bureaus and local councils offer help and advice on this too.
I’d also always recommend you prepare a business plan and do some cashflow analysis.”