Tips for Staying Comfortable When Opening your Business
Save it for a Rainy Day: Tips for Staying Comfortable When Opening your Business
One of the biggest fears of new franchisees is having "enough" money to remain comfortable. New expenses or surprises are likely to pop up; this is simply the standard of starting a new business. And it can become overwhelming to continually fund new projects as your franchise is just starting to gear up. Rest assured that funds will come in. Business will begin and you'll have funds pouring in just as soon as they're going out … until they overcome and surpass the bills once and for all.
This is simply how starting a business works.
However, in the beginning it can be a tricky balance. Funding your ventures until opening day is an important; the better prepared you are before starting, the smoother the transition will be. This means having a bit of "cushion" funds for emergencies … and for comfort.
And you might not need them! Though hosting even the slightest bit of additional savings will ensure some peace of mind until profits start pouring in.
To set your business up for its ideal round of success from the beginning, consider:
As you're transitioning into your franchise, it's likely that you still have a full time or outside job. Cut out unnecessary personal expenses and begin setting those dollars aside for your future. Drop the cable package, eat out less, and so on. With just a few small sacrifices you can set back enough of a buffer for added comfort.
Consider getting a part time job for extra income, having your spouse help you save, or simply working more hours. Doing this for even a few weeks can be a great starting point for your upcoming business. Then, once you're able to make the switch to full time with your franchise, you can be much better off.
Whether you're taking out a loan or using investors, consider getting a bit more than is deemed necessary. Of course, all of this will be on the books, and if it's not used, the dollars will be sitting safely in your bank account to be paid back. (Hopefully collecting interest while it's there.)
Use these dollars as your "cushion fund" to buffer out any upcoming expensed that you didn't specifically plan for. They can also be used to offset billing periods or to stock up on inventory.
Another way to approach possible expenses toward the future is by getting a head start. Whatever tasks or licenses that can be filed and/or purchased now, get them done! Of course, you want to ensure that they won't expire before you'll actually need them. But getting such steps done ahead of time will not only ease your upcoming bills, but amount of tasks that need to be completed before opening.
This can decrease stress from a financial standpoint and by checking items off of your to-do list as early as possible.
You can also approach future expenses by having the option to earn or borrow more as it's needed. This can be promised by loan institutions, such as a bank, or by business investors. It's a move that's often preferred by both parties as "the man" gets to hold onto money (and therefore re-invest it), while the franchisee knows they have access to funds if and when they are needed. There's less to be paid back, less to keep track of, etc. but yet funds that can be used in the event of an upcoming expense.
It's a step that's beneficial for all involved.
Looking for Deals
No matter what your funding situation, it's best to look for the most budget-friendly moves possible. While there are many areas where things simply cost what they cost (franchising fees, building rent and/or mortgage fees, and so forth), there are also sections where you can save. This is true of remodeling or redecorating, stocking your overhead (simply re-up when items are needed; don't put thousands into stock that will just sit), and more. Meanwhile, work as many hours yourself to avoid paying a manager or additional employees.
In order to ease early spending for your franchise, consider having some buffer funds. Then work to ease your bills as much as possible whether by tasking ahead and getting important steps done, or by working yourself to avoid paying outside help. These simple steps are easily accomplished and set your business up for better success.
By Bethaney Wallace | Jan 25, 2019 | General Franchise Information