Franchise Services
Money talks P
rior to raising fi nance, you need to fully understand the total investment required for your franchise venture. Some prospective franchisees assume that the initial investment is the franchise fee alone – this is not the case. In order to calculate the full investment, think about working capital, professional fees and vat in addition to the franchise fee. Critical to eff ective fi nancial planning (and the bit most people get wrong!) is calculating the working capital requirement. Underestimating this fi gure will mean you run out of cash, which could lead to the closure of your business.
So, how can you avoid this common pitfall? It’s simple: you need to prepare. A quality business plan with comprehensive fi nancial projections is essential in the preparation process. The plan should set out the total investment requirement and the returns you expect the business to make; it should act as your application for fi nance and also as a tool to monitor and
Lenders will sanction varying
percentages of the total startup costs, depending on factors such as the prospective franchisee’s risk profi le and the strength of the franchise brand. It is likely the amount that can be borrowed will be between 50 and 70 per cent of the total startup costs. Taking the above information into account, you can better understand the personal contribution needed, in addition to the amount a lender is likely to sanction. Unless you have extensive experience of putting together fi nancial projections,
How much money do you need to start a franchise? Rob Orme of Franchise Finance explores
eff ectively manage the business. Calculating the investment requirement
relies on a full set of fi nancial projections. This includes a projected monthly profi t- and-loss account, cashfl ow forecast and end-of-year balance sheets. I would suggest that the projections should cover a minimum of three years. These fi gures should be driven by realistic sales and cost assumptions, not merely ‘fi nger-in- the-air’ guesswork.
Franchise Finance would strongly advise talking to an independent adviser who will give you honest and impartial guidance. If you would like business planning assistance, or to discuss your funding options, contact Franchise Finance via the details below.
Franchise Finance Adviser
www.franchisefi
nance.co.uk info@franchisefi
nance.co.uk 01844 355 575
£50M LENDING FUND YES £50 MILLION!
**
* ** *
Including Loans, HP and Leasing deals At competitive rates
Allocated to the Franchise Market through Franchise Finance Limited* Example uses:
Decisions normally within 48 hours For amounts between £5,000 and £500,000 With up to 5 year Repayment Periods
For you to use for buying or growing your business
*Subject to terms and conditions and normal credit checks
To apply for funding please Email or Telephone us:
info@franchisefinance.co.uk www.franchisefinance.co.uk
01844 355575 94 |
BusinessFranchise.com | March 2018
Raising Loan Finance Store Purchase or Expansion Refurbishment Rebranding Working Capital Stock Finance
Signage and Security Air conditioning and Lighting EPOS, Telephone or Computer Equipment Fridges, Freezers and Chillers Display Cabinets, Counters & Shelving Vending Equipment Commercial Vehicles
Do ask us if you do not see here what you need! Franchise Finance Limited is Authorised and Regulated by the Financial Conduct Authority
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