If you're thinking about starting a business, you likely already have an idea of what you want to sell, or at least the market you want to enter. Do a quick search for existing companies in your chosen industry. Learn what current brand leaders are doing, and figure out how you can do it better. If you think your business can deliver something other companies don't (or deliver the same thing, but faster and cheaper), you've got a solid idea and are ready to create a business plan.
Your accounting system is necessary in order to create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. You can set up your accounting system yourself, or hire an accountant to take away some of the guesswork. If you decide to get started on your own, make sure you consider these questions that are vital when choosing accounting software.
You can arrange to borrow from ordinary commercial banks or credit unions for your new venture. According to the Small Business Administration (SBA), new franchise owners have a higher tendency to borrow from commercial banks than new business owners. Lenders prefer advancing cash to new franchises over other new businesses since they already have trust in the brand and business model of the business being funded.
Visuals – As Instagram is a visual platform, special attention has to be given to the visual aspect of your posts. As well as choosing a color scheme to match your brand, you should also use a consistent filter. Using the same filter for your posts will help users recognize your images. For instance, Madewell’s Instagram incorporates its color scheme for consistent images and branding.
Lenders prefer financial statements that have been audited by a certified public accountant (CPA). But many small businesses don’t want to incur the costs of an audit, so one alternative is to have the financial statements “reviewed” by a CPA (which is cheaper and faster). However, some lenders may not require either audited or reviewed statements.
Keep in mind that whenever you’re applying for a business loan, whether it’s for start-up costs, working capital, or real estate, it’s a good idea to complete more than one loan application so you can compare rates and terms. Most lenders will only do a “soft” pull on your credit in the pre-qualification stage and will not do a hard pull (the kind that dings your credit score) unless you accept the loan offer.
The franchise industry, like all businesses, was not immune to the economic crisis of 2008 and the ensuing credit crunch. But the vital signs of a recovery are there. According to the International Franchise Association (IFA), many of the country’s business sectors currently starting to show growth mirror those sectors expected to be the leading drivers of employment in franchising this year. These include food service, health care, hospitality and construction—all sectors with a high concentration of franchise businesses.
If your business will have employees, you will, at minimum, need to purchase workers' compensation and unemployment insurance. You may also need other types of coverage depending on your location and industry, but most small businesses are advised to purchase general liability (GL) insurance, or a business owner's policy. GL covers property damage, bodily injury and personal injury to yourself or a third party.
James D. Stice, PhD, is the Distinguished Teaching Professor of Accounting in the School of Accountancy at BYU. Professor Stice has been at BYU since 1988. He has co-authored three accounting textbooks and published numerous professional and academic articles. In addition, Professor Stice has been involved in executive education for Ernst & Young, Bank of America Corporation, International Business Machines Corporation, RSM McGladrey, and AngloGold Limited and has taught at INSEAD (in both France and Singapore) and CEIBS (in China). He has been recognized for teaching excellence by his department, his college, and the university. Professor Stice currently serves on the board of directors of Nutraceutical International Corporation.
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Personal Assets – Getting a traditional loan for a franchise can be difficult. The more personal resources you can bring to the table, such as retirement funds and personal savings, the easier it will be to buy a franchise. If you’re planning to get a bank loan or an SBA loan, then you at a minimum need a 10-20% down payment and some collateral (if the franchise involves the purchase of real estate, that can be used as collateral).
The idea here is to get clear about what’s important to you, where exactly your passion lies, and what the point of the whole venture is. As a small business owner, it’s easy to get caught up in the minutiae of paying bills, writing the website copy, changing the website copy several dozen times, filling out tax forms, and so on. Don’t lose sight of the big picture.
If you prefer a little more guidance as you search out a franchise opportunity, consider hiring a consultant to locate the perfect opportunity. Consultants gather information on your financial situation and preferences and give you a few options that fit. However, make sure you’re working with a reputable franchise consultant. Ask questions about franchisees they’ve successfully helped and contact those franchisees as references.
United Capital Source offers franchise business loans, or franchise financing, to help franchise owners invest in growth, open new locations, and stabilize revenue amid upcoming bills or deductions. We understand that franchises deal with an above average amount of weekly and monthly expenses. This is why our franchise business loans tend to carry repayment systems that are different from those assigned to an independently-owned business. Terms will be structured to ensure your deductions do not prevent you from paying your rent and employees at the end of the month.
So what’s the catch? You must have an eligible retirement account (Roth IRAs are not eligible, but most tax-deferred retirement plans are), and generally speaking, you should have at least $50K in the account to rollover. This means that ROBS are often not an option for young franchisees who haven’t had sufficient time to save money in a retirement account. In addition, there is a risk to doing a ROBS. If the franchise fails, you could lose your retirement funds.
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