Congratulations! You’ve given it tremendous thought and made the life-changing decision to buy a franchise. You’re excited, but now you need to figure out how you’re going to pay the franchise fees and initial start-up costs.
Although you might have some idea in mind for how you’ll cover the expenses, you might still be wondering how to finance your franchise. Financing a franchise isn’t uncommon. Here are some of the most popular ways franchise owners pay to start their new business.
Get a Small Business Loan
Getting a small business loan is one of the most common ways to buy a franchise. It gives you the capital you need to make the upfront investment, allowing you to pay it back once you’re earning money.
In the past, these loans used to be difficult to get. But, 2016 looks to be the year where small business loans are easier to come by for franchise buyers. Banks are approving more loan requests making it easier for potential franchisees to get the money necessary to open their doors.
Dip Into Your Personal Savings
Many franchise owners save up to buy a franchise. They use their personal savings with the goal of turning a profit and making more money than they put in.
Although using personal money is a popular way to finance a franchise, it should be done strategically. Make a budget for yourself. Set a maximum amount you will spend on your franchise before you get started. This will prevent you from draining your family’s savings and potentially causing unnecessary financial stress.
Open a Line of Credit
If you have the personal savings or business loan and just want a little extra credit to get the necessary capital to start, you might choose to open a line of credit. Credit cards are popular in the franchising world because they offer smaller amounts of money up front for unexpected costs. It is best to avoid putting too much on a credit card initially. Instead, use your credit card as backup financing.
How Will You Pay for Your Franchise?
There are a variety of ways to finance your franchise. The first step is to create your business plan so you know how much you will need. With this in hand, you can decide which financing option (or options) is right for you.
How do you plan to pay for your franchise? Let us know in the comments below.