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Most New Franchise Owners Forget This

Most New Franchise Owners Forget This

By FranchiseKing, Guest Blogger
Published: July 28, 2011 Updated: September 22, 2016

There’s a lot of excitement leading up to the purchase of a franchise business. Searching for the right franchise business to invest in involves many steps, and they all have to be done right, in order to minimize financial risk.

One step has to do with the money; setting a budget for the franchise business, and arranging a small business loan. (Hopefully, the SBA can get involved!)

All franchise buyers need *a plan. Most forget to do the following though, even with all the planning in the world;

They forget to set-aside money for living expenses during the very predictable, and usually difficult, start-up phase.

I’m not really sure why this is. In my experience as a franchise advisor, I’ve seen most franchise buyers meticulously figure in their operating expenses when they’re crunching their numbers. They do seem to know how important that is. But, when it comes to figuring out how much money to set-aside for those all important day-to-day living expenses, they seem to enter an *alternate universe of sorts. And, it’s a scary one.

As a franchise advisor, one of my goals is to make sure that the people I’m working with don’t forget something. (Actually, that they don’t forget anything.) That’s why I always make sure to remind them to make sure that they figure in the money they’re going to need every month for the following;

  • Mortgage payment
  • Utility bills
  • Car payments
  • Kid’s braces
  • Car/house/life insurance

Those expenses can add up pretty quickly, and if they’re not accounted for, they can prove to be large enough to force a young franchisee to close their doors. That’s right;*franchise failure. Running out of money is one of the most common reasons that franchise owners end up going out of business, and it need not happen.

Investing in something as big as a franchise business requires total focus. It’s also something that shouldn’t be tackled alone, and it doesn’t have to be. There are plenty of resources available, both paid and free.

I’ve listed some of the free ones below. The point is this; choosing a franchise that makes sense for you is only one part of the process; the planning part…that’s serious stuff. Get some help. You’ll increase your chances of success, and be that much closer to reaching your goals.    

Free resources

SCORE- Get assistance from retired business owners and executives in SCORE offices located across the country

Small Business Development Centers(SBDC’s) are located in all 50 sates, and provide worshops and counseling for would-be small business owners.

SBA.gov- Several free online courses are available for people wanting to start a business

 

*Non-US government websites

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.