How to Best Finance Your Franchise

How to Best Finance Your Franchise

If you’re interested in starting your own business but don’t know where to start, a franchise might be a good option. However, unless you are independently wealthy or you have savings, you are going to need financing for your business.

In this article, we’ll offer you a few funding options for financing your franchise. We will also explain what you should and should not do when it comes to franchise funding.

Options for Funding Your Franchise

When it comes to funding your franchise, there are several options, including:

Franchisor financing: some franchisors are willing to finance the purchase of the franchise.

Traditional bank loans: if you have a decent credit score, a solid business plan, and a relationship with a bank, you may be eligible for a commercial bank loan

SBA loans: the SBA offers several loan programs, including the 7(a) or 504 loans. In this type of loan, the SBA guarantees a certain percentage of the loan, making it attractive and less risky for the lenders.

Alternative lenders: if you do not qualify for commercial loans or SBA loans, you may consider alternative options. The approval rate is much faster- but the rates are high and terms are shorter.

Personal assets: if you do not have the cash to cover your startup costs, consider using your assets to fund the venture- as long as it does not impact your own financial stability.

ROBS (Rollovers as Business Startups): typically, if you withdraw money from your retirement before you are eligible, you must pay a penalty. However, the ROBS allows withdrawals without penalties.

Crowdfunding: some people choose to turn to online forums to raise the money for their franchise efforts.

Loans from friends and family: if none of the above options work for you, consider asking your friends and family for a loan- but keep in mind that this could cause the relationship to become strained.

Do’s & Don’ts of Franchise Funding

When it comes to financing your franchise, there are certain things that you should and should not do. We’ll explore these below:

Do’s of Franchise Funding

Below are a few of the things you should do when you’re seeking funding to buy a franchise.

  • Carefully weigh all of your options, considering the advantages vs. disadvantages of each one.
  • Make sure to do your research and make sure that your personal finances are in order.
  • Obtain a pre-qualification to find out ahead of time just how much you qualify for.
  • Decide if you want to own more than one unit.
Don’ts of Franchise Funding

Below are the things you should not do when seeking franchise financing:

  • Don’t give up on obtaining funding
  • Don’t underestimate your funding needs
  • Don’t assume all providers are exactly the same.
  • Don’t wait until the last minute.
Learn More about Financing Your Franchise

If you want to start your own business but are hesitant about starting it from the ground up, a franchise may be a good option. If you want to know more about financing a franchise, contact Abundant Wealth Financial today. We can help you evaluate your situation and determine which option is best for you.

How to Create an Effective Facebook Ad Campaign

When Facebook rapidly became the go-to social network, it’s hard to imagine anyone didn’t foresee the huge potential Facebook could provide in terms of marketing. Facebook advertising has certainly lived up to its potential and continues to provide advertisers with a rich platform in which to market their goods and services. 

You don’t have to be a social media expert in order to make Facebook work for you. Here are a few tips to help you get started on your next Facebook ad campaign.¬†

1. Know Your Target Audience or Audiences

There’s no reason to target just one audience. In fact, marketers know different audiences are drawn to different types of advertising. Facebook advertising makes it easy to target several different audiences. 

2. Utilize Audience Insights

Facebook has a nifty tool called Audience Insights at your disposal. Use it. It will help familiarize you with a specific audience so you can determine whether or not that audience is the right audience for your product, or if your ad is the right ad for that audience. It is an essential tool for the success of your campaign. 

3. Enticing Images

The image you use is the first thing people will see when they look at your ad. If your image doesn’t appeal to them in some fashion, they won’t bother with the ad copy. Use an image that grabs, pushing them to want more information. Facebook has designed its marketing tools around the theory of the importance of the image. Obviously, it works. 

4. Where They Land

Landing pages are standard practice in ad campaigns. It’s not your home page. It’s not your “about” page. It’s a page designed for this specific campaign. Your audience needs to understand why they were led to a specific site and your landing page provides that information. Just like your image, your landing page needs to be striking enough that it has them wanting to know more. 

5. Establish a Budget

If you establish a budget, Facebook will automatically keep your CPMs within that budget. Facebook will then do the bidding for ad space on your behalf. 

When you put all these strategies together, you have a killer ad campaign. Best of all, Facebook advertising tools do the majority of the work for you. Each step is important and each step is vital. All you have to do is bring an image and some copy, then watch the action happen. Contact Abundant Wealth Financial and we will put together an effective Facebook marketing strategy for your organization.

 

Equipment Financing: What to Expect

Equipment Financing: What to Expect

Equipment financing is a great option for small business owners who can’t purchase the equipment they need outright. Unfortunately, many equipment leasing companies bury the true costs so that you don’t realize what you’re paying until you’re so far in that it’s difficult to back out.

While there are online equipment financing calculators, many of them only reveal the lowest cost, which most shoppers do not qualify for. Also, most of the ads that you see only discuss 4% rates, which is not the norm.

Problem with Deceptive Leasing Calculators

Equipment leasing companies that do this believe that if you know what it will really cost you, they won’t be able to get your business. They want to make you dumb. However, most small business owners want to be informed so they can make smart business decisions based on facts.

For example, if a piece of equipment is going to cost you $800 per month, but you’ll make $3,800 per month with it, you can use that information to determine if it makes sense for your business.

The truth is, if your credit score is low, your payments may be double or more than what the payment calculators tell you- depending on your particular situation.

Why are Equipment Lease Payments so High?

Honestly, not all equipment lease payments are high- it depends on your credit score and cash flow. If these are low, equipment leasing won’t be cheap. After all, for lenders, loaning money to small businesses for the purchase of used equipment is risky.

For example, let’s say you purchase a car to drive to work in. This is low-risk lending because you have a job and will probably be able to make the payments. If you don’t, the lender just has to send a tow truck to pick it up and it can re resold easily.

On the other hand, if you have an equipment loan and your business has a hiccup and doesn’t have a high profit margin for 6 months. Plus, equipment tends to depreciate quickly. The lack of funds makes it hard to make your payments. Unfortunately, if you don’t pay, it’s much harder for the lender to send a tow truck to secure it. Plus, since it’s equipment, it’s harder to find a buyer for it- especially if business is down across the industry.

Therefore, when you are purchasing equipment, unless you finance through the dealer, the rates charged by financing companies are fair. After all, in order to remain in business, the lender must make enough to compensate for the people who can’t or don’t make their payments and make a profit.

Ready to Secure Equipment Financing?

If you need equipment to start a new business or want to upgrade your current equipment, contact Abundant Wealth Financial for more information. We can help you understand your options and guide you through the process.

Creative Financing Defined

Creative Financing Defined

You’ve been told that it takes money to make money. Unfortunately, the world of financing can be complicated- especially if you’re just starting out. Traditional options require several years in business, excellent credit scores, and consistent revenue- which most new businesses simply don’t have.

This is why many small business owners turn to creative financing- it provides a variety of options to fund a business. You’ll have to think outside the box, but chances are that you will find exactly what you need.

7 Creative Financing Options

Below, we’ll take a closer look at 7 creative financing options:

Bootstrapping

Bootstrapping is using your own money to finance your business. While this does decrease your liability, it also impacts your ability to grow. If you are starting your own business with your own money, it may take years to get going. A business loan, on the other hand, could have you launching within a week. However, bootstrapping means that you don’t have to worry about making debt payments- your business is 100% yours.

Friends/Family

You may also want to consider asking friends and family for help. However, you’ll need to have the agreement in writing- and be very specific about the terms. This keeps everyone on the same page and can help avoid spoiling your relationship.

This is one of the most popular- and most affordable- options for funding your small business. In fact, research shows that over 40% of startup funding is obtained through friends and family.

Competitions

You can potentially earn startup funding by pitching your business idea to investors in a competition. You’ll be competing with other entrepreneurs- so there’s no guarantee that you will get the funds. Still, it will give you a chance to improve your pitch skills, draft a viable business plan, and meet other entrepreneurs and venture capitalists.

Accelerators

A startup accelerator can provide a variety of services to help you launch your business including funding, networking, and counseling. In exchange for financing, they will require equity, but you don’t have to pay it back in cash. Since they are investing in your business, they also want to help you succeed.

Grants

Many people believe that loans and grants are basically the same types of funding. This isn’t true. A lender allows you to borrow money to be paid back, with interest. On the other hand, a grant provides money with no repayment required. However, there are usually restrictions on how the grant money can be used based on the grant source.

Angel Investing/Venture Capital

Both angel investors and venture capitalists offer money to new businesses, as well as partnership relations, mentorship, and networking. However, venture capital requires an exchange of equity. This may seem like a good option in the beginning, but you are potentially giving up a portion of control for the lifetime of your business.

Crowdfunding

In recent years, crowdfunding has become a popular option for securing business funding for startups. In this type of funding, you present your idea to the public via a platform such as Indiegogo, GoFundMe, or Kickstarter for them to make donations. However, keep in mind that when using these platforms, they get a percentage of your donations.

The world of business financing can be complicated. Unfortunately, many entrepreneurs don’t qualify for traditional financing. Fortunately, there are some creative options available. If you need guidance, contact Abundant Wealth Financial to learn more about these options.

Why Your Business Should Use Alternative Lending

Why Your Business Should Use Alternative Lending

In a general sense, online lending- also known as alternative lending- is funding that does not come from a traditional bank. In the past, this included government loans, credit unions, and other credit lines structured like bank loans but from a different source. Now, these are part of the traditional lending market because the terms, criteria, and regulations are the same.

Alternative lenders, on the other hand, are not traditionally part of the financial industry, use different methods to communicate with clients, do not use FICO or other metrics for qualification, and use different approval processes than traditional lenders.

Due to these differences, online lending offers several advantages for borrowers:
  • More options for obtaining funding
  • Faster funding, which is useful during a financial emergency
  • Smaller amounts available
Types of Alternative Lenders

The category of alternative lenders is a catch-all for anything that falls outside of traditional funding. Some of the most common types of alternative loan include:

  • Lines of credit
  • Peer-to-peer programs
  • Factoring
  • Merchant cash advance
  • Working capital loan

The type that is most appropriate for your business depends on your situation.

Tips for Finding Safe Online Lenders

Before you go online and apply for the first loan offer you find, take some time to research your options. These tips can help you reduce your risk of falling victim to a scam:

  • Do they have a physical address? Even though they operate online, a legitimate lender will have a physical address visible. You can then use Google to verify the address.
  • Do they have third-party verification? Look the company up on BBB to find their listing and rating. If the company meets or exceeds security and privacy standards, companies like TRUSTe will award their seal.
  • Do they have customer reviews? You can’t always use reviews to fully form your opinion because people are more likely to post a negative experience than a positive one. However, find out what people are saying- look for patterns in the comments- to help you determine the safety of the company.
  • Who owns the website? Look the site up on WHOIS to find out who owns it and how long it has been around. This will help you determine if they are truly an online lender.
Considering Alternative Lending to Fund Your Business?

Legitimate alternative lenders understand that their success depends on their reputation for protecting their customer’s information. These companies will do everything they can to protect themselves and their customers. If you’re ready to move forward with applying for an alternative loan, contact Abundant Wealth Financial today. We can help you find the funding you need.