Following your dreams of entrepreneurship? Check out these tips for budgeting as a new franchisee.
Taking the plunge into business ownership is an exciting time for entrepreneurs. They are able to reach lifelong goals, establish a name in their local community and pursue their passions. The experience is rewarding, but does come at a price. That’s why proper budgeting from the get-go can be essential for securing lasting success.
Lonnie Helgerson of the Helgerson Franchise Group offered tips for new and aspiring franchisees to set themselves up for financial success.
1. Think Outside the Box
Helgerson recommends following all of the finance suggestions given to you by the franchisor, but not letting your efforts end there. These may serve as a starting point, but in order to really set yourself up for success, it is best to go the extra mile early on in your franchise journey.
“During the start-up phase, nothing matters more than driving customer count to your location. On top of the marketing methods your franchisor suggests or requires you to do, budget for much more,” he said.
2. Budget More than Recommended
While the franchisor may give franchisees advice on overall budgeting, it can wise to think of this number as a minimum rather than a set goal to reach.
“Always finance more than you need, “said Helgerson. “The biggest failure in financing is not getting enough money to do it right. Nothing will crater a franchise location faster than a lack of funds. Having more money than you need for a startup is a nice problem to have.”
3. Anticipate Future Growth
When signing the franchise agreement, future locations may not initially cross your mind. However, if your franchise begins to thrive, it is natural to consider delving into multi-unit ownership. Keep that in mind when planning your financing.
If multi-unit ownership is your goal from the beginning, finance for multiple locations. Helgerson explained that "the biggest mistake you can make as a new franchisee is expecting the first location to finance the second, third and so on. Plan and secure financing for all your locations in the beginning."