Franchises You Can Afford: Taking The Leap
Franchises You Can Afford: Taking The Leap
Are you looking to venture out on a new business endeavour this year? Ready for that career change that you’ve always dreamed about? By all means, take that leap and dive straight into it. This may be your big moment for a career change and in return – business success!
Before you get too carried away, it’s important that you are aware of the hidden terms and conditions, costs and, most importantly, assessment of your own reliability in terms of owning and operating a business. Of course, there’s nothing to say that you can’t leap head into a new opportunity that you’ve been waiting years for, especially if it’s an idyllic fit for your current living and working situation. However, when taking that initial leap into unknown territory, whether it be franchising our your own solo endeavour it’s important that you perform your due diligence and do your research into the bigger picture. That way, the path to franchise success will be much smoother and profitable in the long haul.
When it comes to assessing your new franchising endeavour, you must first assess whether you can afford to take this leap. An obvious point, but crucial nonetheless. Having a thorough understanding of your current and future financial situation. This goes both ways: whether you’re looking to franchise your business or are interested in taking the reins by investing in an already established business model and franchise network, ensure that you’re financial stability is healthy and will be able to carry you through the initial set-up and capital requirement.
Whether your sights are set on a fast-food chain or a retail outlet, it’s important to choose an option that’s suited to your budget, saving you from overcommitting your finances. In assessing your finances, you can calculate your net worth by compiling a list of your assets and liabilities. Franchise experts say that you shouldn’t invest more than 15 per cent of your own money when considering franchising. Seeking the advice of a financial advisor is crucial to your initial success – although this will increase your expenses column, it’s an additional cost that will benefit you in the long run. You cannot progress (or make an informed decision) without the guidance of a financial consultant and advisor. Before signing a franchise agreement, it’s highly recommended that all future franchisees seek independent advice.
Even when purchasing a low-entry franchise, you will most likely need to borrow a portion of funds for your initial investment, administration fees or the purchase of your franchise business. To progress with the investment, you will need to have an equity behind you for any Australian financial institution to consider you for a loan. Most banks or brokers will require substantial evidence to process your request. Remember that in recent years, banks and lenders have tightened their lending requirements and in most cases, you will need a number of specific documents, such as a business plan and financial model, in order to even apply for finance. In this circumstance, you will need to consider your own risk profile, as well as whether the franchise system you’re interested in has bank accreditation. Moreover, initial set-up costs will also be a factor. Keep in mind that the business will take a length of time to grow, before you begin to turn over a profit and start to see your investment returned. Working capital is crucial for the first few months of operations and running the business, as you will need to have money that can continue to support yourself, your business, and your family during the first few months of franchising.
With all these points aside, research is critical, because there are franchises out there that appeal to those with a lower initial investment. This is where due diligence and financial assessment will pay off, as low-cost franchises (which also boast successful business systems) are available to those who are ready to make the investment after performing their own initial assessment.
When assessing which franchise to choose, whilst it should perhaps align with your interests or even previous work experience, you should also research the market and the likeliness of your franchise to succeed. There are numerous low-cost franchises across Australia that reflect current trends in the marketplace, everything from burgers and bubble tea to mini excavation hire and fitness; the supply and demand is there. The low-cost entry point makes it all the more profitable for you and your family in the initial stages.
Whilst the overarching international presence and brand recognition of a six-figure franchise may be initially more appealing, it is important to weigh up the pro’s and con’s of the investment. Additionally, it is important to recognise that there are franchise opportunities available for less than $150,000 available to individuals, some of which have gone on to be the most successful in the country, if not the world.
Yet, no matter the initial fee, in order to begin your journey to business success and obtain financial growth, it is vital that you seek legal and financial advice. The slightest hesitation or uncertainty you may feel in the initial leap, can be eased with the guidance and advice of a legal practitioner, or financial advisor. This is, however, another cost you must consider when beginning your franchising journey, but as explained, it’s unavoidable. Seeking advice can aid in making the entire process more affordable too, by showing you ways to avoid nasty surprise bills along the way, as well as creating a financial programme that will make franchising costs manageable rather than unexpected.
Overall, starting new and exciting business adventures are nerve-wracking, yet rewarding all at the same. Whether you’re looking to venture into a developing industry, or if you’ve honed in on your skills and are prepared to go out on your own, it’s important to always remember the financial and emotional commitment required. From franchising with a small yet highly successful company, to going out and creating your own, the financial matter of the process should be held at the top of your priority list in terms of organising and managing your spending. It is critical that you seek out both legal and financial guidance in the industry of franchising so that you are protected from any hidden costs that may appear along the way. Professional advice will help you to assess the risk factor of your investment and whether or not you are financially equipped to go ahead with this business endeavour. Having said that, low-cost franchises are proven to experience all the same business success and obtain the same if not more brand recognition in the long haul, as well as being easier for the franchisee in the initial investment into the business. Therefore, franchises that you can afford ARE possible, and they ARE out there, it just takes a little bit of guidance, and a little bit of research, and of course – a big leap! You’ll thank yourself later.
Building the foundations of successful businesses for over 35 years, DC Strategy is Australasia’s expert end-to-end franchising business, specialising in consulting and franchise development, extensive legal services and provides a wide range of franchise sales and marketing capabilities. Working with retail, food, industrial, financial, community, IT, professional, trade and service organisations, DC Strategy’s multidisciplinary approach ensures that the appropriate talent and experience are applied at every stage and that clients’ business needs are served professionally and cost-effectively under one roof. DC Strategy have advised over 200 networks and established over 2000 franchised locations in Australia alone, creating well over $2 billion worth of enterprise value for clients.
For more information contact DC Strategy at:
1300 682 657