Financial Considerations When Financing Business
Money makes the world go round. It also makes business go round … and then some. Without the proper amount of funds, businesses can’t be set up in the first place, let alone ran, or managed to the point of being successful. (And therefore making more money.) Because, as many common stats show, it can take years for a venture to actually be profitable (and to stay that way) – simply due to the amount of fees that have to be paid in order to get up and running, and letting customers know that you exist.
And unfortunately, that timeline, along with high numbers, are what keeps many potential entrepreneurs from getting started. Rather than taking a large financial risk, workers prefer to play it safe. Where paychecks are consistently coming in, and there’s no nighttime stress about how much business will come in the upcoming week. For some, that’s a great way to work. But others just want more. They want the chance to be their own boss. To head growth, to hone their skills, to help others, and to combine their passions and work preferences into one profitable being.
And that generally means taking a risk. Professionally and financially.
While funds for the company are business related, they can also affect your personal life in a number of ways. Such as when or how much you’re getting paid. Even if that money comes from your business loan until you’re more established.
Before setting out to fund your business, you have to talk numbers. To a financial planner, to your spouse, or simply to yourself when writing up a set plan. How much do you need to make in order to keep your bills paid? Are there expenses that you can cut back on until more funds are coming in? Does your spouse earn enough to support the household? Can you afford to take out enough in loans to pay yourself a salary for the next few months? Have you saved money so bills can be paid ahead? Are there bills that can be paid in advance? How many personal expenses can be covered (legally) by the business?
Essentially, it’s time to take every financial consideration you have, and see what situation might work best. Or how you can finagle funds to work best in your favor.
When breaking out into franchising, chances are the money won’t be that over the top. Each brand is on a different scale of numbers, and as soon as you start working, you can begin paying yourself a business salary. However, it’s those who fail to plan that most often see issues. For instance, not setting up set figures or completing a budget. If needed, talk with a financial professional. Or, work with your respective franchise in order to find a comprehensive plan.
Just don’t forget to plan for the worst. That means setting up allotments, looking at timelines for funds, and so on. And most importantly (as all successful franchisees agree), to budget more money for all setting up expenses. Repairs, overhead, and anything else that is due before opening day. That way, if money is due, you’re prepared. And by planning for anything, you’re also ready for anything.
While it’s likely that you won’t land all of your worst-case scenarios (at least at once), planning ahead can ensure you know what to do, should one arise.