How Do I find Out If I’m Eligible For Funding?
When looking to purchase a franchise, one of the most critical tasks a prospective franchisee faces is obtaining finance.
Your franchisor can help by advising on the information you need to present to the bank in order to make the process of gaining finance as easy as possible. Funding is still available for sound business propositions.
Prospective franchisees are in a stronger position than stand-alone start-ups due to the help and support of the franchisor and other franchisees in the network.
Requests for funding are more likely to be successful if you present a professional and credible business plan.
Good lenders understand that every franchise is different, with individual visions, ideas, success and direction and therefore provide a range of business services tailored for franchise owners.
Experienced business managers can make fast, effective decisions, helping to establish businesses in the UK and internationally. Here are some key pointers to help you prepare for that first meeting with the bank.
Ensure you produce a concise plan that sets out a clear strategy for the business. The business plan should include well-thought-out financial projections, including a cashflow forecast, profit and loss account and balance sheet, ideally for between one and three years. This is a key area where you can have an advantage over conventional start-ups. Your franchisor may assist you with the figures, based on the performance of existing franchisees.
You must, however, own and understand these figures to present a credible case to the bank manager – all too often our local managers tell us that they have been presented with figures that a potential franchisee cannot explain. Include a marketing plan detailing how you will target your potential customers and the unique selling point of the product/ service offering. Again, your franchisor may be able to assist you in this.
The plan should address any risks facing the business and what action needs to be taken to either prevent them or minimise their impact. Finally, practise your presentation before meeting with the bank to ensure you deliver a professional “pitch”.
Cathryn Hayes is Interim Head of Compliance & Finance at British Franchise Association and was previously Head of Franchising for 10 years at HSBC.
