Common Funding Sources

Identifying the best funding source for your entrepreneurial endeavors is one that should be approached with great consideration and the guidance of your CPA. Here are the 3 most common funding sources for a franchise purchase.

#1 Home Equity Loans
Pros - Quick and easy application process, flexible repayment terms, typically lower interest rate then other commercial loans, possible tax benefits
Cons - betting the house

#2 SBA Loans
Pros - Access to capital that may not be available from other sources
Cons - Tedious application and approval process, Up to 30% down required, Controlled disbursement of funds, fixed payments (7-10yr terms).

#3 Using Retirement Funds
Pros- Easy process through third parties, No Interest, No financing payments, Starting the business without third party debt.
Cons - Betting your retirement - Be very comfortable you are buying a franchise that has shown to garner strong resale prospects as that is how you will reap the rewards of your investment. Look for opportunities that will build strong recurring revenue and talk to your account before going down this path.

We currently work directly with partners that can assist you with any of the options described above as well as unsecured loans and equipment leasing opportunities. Please contact me directly if you are interested in being referred to one of our partners.

Have a great weekend!


Regards,


Rob

No Short Cuts Here!

When researching business opportunities fight the urge and do not take short cuts. Not gonna do it you say? Everyday I speak to would be entrepreneurs who are putting off some very important (Required) steps in the business evaluation process. They found an opportunity on their own and are moving through the franchisors review process assuming that is enough.

Let me be clear that it is not. After all, it is never about what you know it is always about what you didn't!

Do not buy a business unless you have....

#1 Consulted an Attorney - Make sure you speak to a Franchise Attorney and make sure you pay to have a UFOC review. Many people skip the review due to the cost but make sure you are not one of those people!

#2 Talked to Your Accountant - Again this one might be obvious but you need the financial guidance of a professional. A few things you will need to engage your accountant in will be.. Reviewing your personal finances, corp. formation, financing guidance (home equity, SBA, 401K financing, etc), review UFOC financials, build pro formas, taxes and many others!

#3 Spent a day with a Franchisee - Walk a mile in their shoes or at least a few steps and see first hand if your dream meets the reality!

#4 Called as many existing and former franchisees as possible - This is an easy one to short cut as making the calls takes a lot of time and can be aggravating. No return call, lots of voice mails and never ending games of phone tag have many people say they have enough information after a couple of calls. Trust me. You don't and you need to keep calling!


Have a great week!


Rob

Support for Internet Marketing Franchises

Over the past few weeks several articles have been written providing some insight into new opportunities arising from the continued expansion of Internet advertising. I wrote recently about the boon online advertising may play for small businesses as the technology begins to allow more specific local targeting. E-Pizza

The projected growth in this area should have you exploring business opportunities in this field.

While the SMB markets surely will benefit from expanded use of this medium of advertising, what challenges will need to be solved by local Internet advertising professionals?

#1 Current ad agencies serving the SMB audience just do not have the technical expertise to truly guide this audience down the digital path. In fact, most enterprise companies complain that their agencies don't have the needed expertise to guide their journey.
#2 Solution Complexities - Effective Online advertising campaigns are often comprised of many moving parts. Creative development, Targeting, Location, Keywords, Offer, Conversion, SEM, SEO, Email Marketing, Database Marketing, Metrics Reporting and of course Web Development all play a very important part in executing a successful online campaign.
#3 Majority of SMB websites are not built to convert or sell online. These version 1.0 sites are great brochures but are poor at generating the needed visitor actions to create conversion. A new wave of web development is needed to bring first gen sites up to snuff
#4 Understanding these components is important but being able to explain these components to a small business owner is where the rubber will truly meet the road. Being able to simplify a complex solution set will be key to success.

From a recent Red Herring article (Hillary Schneider, VP local Markets at Yahoo! quoted): The untapped “regional local” online ad market consists of 85,000 businesses with an ad spend potential of $48.3 billion, said Ms. Schneider. The “local local” market is estimated at 22 million businesses with a total of $33.6 billion to spend. “I would say we have a long way to go,” Ms. Schneider said.

There are already a a few franchisors looking to take advantage of this opportunity by focusing on both Web Development and Web Marketing for local businesses. Could this be the opportunity you are looking for? Check out the Spotlight Franchises on www.northstarfa.com where one of these concepts ( TruePressence® ) is highlighted!



Have a great week!

Rob

Franchiseoverdosis Strikes!

Last week I was contacted by a potential client who was suffering the ill effects of Franchiseoverdosis. She was referred to me through a friend and I wanted to share her story so you maybe able to avoid the effects of this dreaded disease!

Sue (not really her name) had always dreamed of owning her own business. She had been climbing the corporate ladder for years and had experienced great success and been blessed with a fantastic income. Recent downsizings, restructurings and new management (sound familiar) had made her decide to start taking action on her business search. She really was not sure what she wanted to do but decided franchising sounded like the best bet for her.

She spent the next week online bouncing to the plethora of franchise listing websites....searching, reading and requesting information on any business that sounded interesting; expecting to get brochures in the mail to peruse at her leisure. A total of 10 requests to franchises spanning 6 different industries (restaurants to car washes). Pleased with the proactive step she had taken she sat back and looked forward to receiving the mailed brochures.

It first began with a few emails, Thanking her for the request but rapidly expanded to continual phone calls. Usually a call within 2 days of the Internet request followed by 2 more calls over the next week from each business. Over that next week she received 27 calls in total, 15 emails (2 with brochures) and one mailed brochure (from the business she was the least interested in). During that week she didn't answer her phone as she was not ready or able to speak to 10 different people. This flurry of activity and information came too fast and was simply too much information to process. She decided in the week following to put her plan on hold and did nothing else for nearly a year. The dreaded Franchiseoverdosis strikes again!

Here are a few tips to avoid the same fate.....

#1 Contact a franchise consultant - Reputable consultants will work to your timeline and provide invaluable service helping you build a profile of your ideal business and then acting as the middle man to gather relevant information on prospective businesses before actually engaging with any opportunity directly.
#2 Use the Internet to gather research and fill your curiosity but fight the urge to submit that information request until you have narrowed on a particular industry or are prepared to invest the time to talk with the business.
#3 Most Franchises do not send media kits immediately - Many business simply get too many requests and can no longer afford to mail marketing material to everyone. Expect to get a phone call before you get packet.
#4 Don't be surprised if the person calling from an online request is a franchise consultant. Many franchises utilize consultants as a means to pre-qualify prospects and consultants know the draw to these information request forms are strong. If you get a call take a few minutes and speak to the consultant. They just might be the remedy you need to realize your frantrepreneurial dream.


Have a great week!

Rob

The Required Skill

There are many skills business owners must possess or develop in order for their new businesses to succeed but none is more important then the ability to sell.

Just saying the word "sell" is often enough to get the butterflies going and probably one of the questions I am asked most frequently during a business review...ie "How much selling am I going to have to do for this business to succeed?" My typical response... a lot, all the time, non-stop, 24/7 etc. Businesses do not succeed if they are not generating revenue and revenue does get created unless someone is selling a product or service.

There are two types of selling that businesses will require and it is important to match yourself to the style you will be most comfortable performing.

Soft Selling - The activities in a soft selling business are most frequently referred to as PR and Networking. These would include actively participating in local chambers, community groups, church groups, volunteerism and of course participating in networking (leads) groups like AmSpirit Business Connections, BNI, LeTip etc. At these groups you will need to be able to proactively build relationships and trust while effectively promoting the value of your product and service. You most likely will find this type of selling activity when your main customer is local consumers.

Direct Selling - The activities in a direct selling business are most frequently referred to as Face To Face Selling. This type of business would include the soft selling activities above and would add prospecting (cold calling) and direct one on one meetings, presentations and proposals as the means to generate business. You will most frequently find this type of selling activity when your main customer is other local businesses.

Considering the type of selling you are willing to engage in will help you begin to narrow in on the industries you should be considering in your business search.

Looking for some great books to help with your sales skills? Suggested Books


Have a great week!


Rob

More Free Tools For Small Business!

The SBA and the US Postal Service launched another really good resouce earlier this week. The new tool provides a video on demand service on highly relevant topics for business owners and would be entrepreneurs. Link and part of the press release is below.

A couple of stats mentioned in the release that caught my attention...

* Small businesses make up 99.7% of all employers.
* Small businesses generate more then 50% of the Non-Farm private gross domestic product.
* Over the past decade, small businesses generated 60% - 80% of new jobs in the economy



U.S. Small Business Administration, U.S. Postal Service Announce Internet Tools for Entrepreneurs

WASHINGTON — The U.S. Small Business Administration and the U.S. Postal Service today unveiled a new Internet tool for small business owners, designed to deliver business solutions to entrepreneurs.

Delivering Success, an online video-on-demand resource of successful entrepreneurs, is a nationwide cosponsorship with the Postal Service to provide small business owners with invaluable information through video interviews that are both accessible and convenient for entrepreneurs.

The Delivering Success video interviews, online at www.sba.gov/deliveringsuccess, chronicle the experiences of successful entrepreneurs from around the country, offering guidance and sharing insight on the road to success. The video interviews provide key information on the ingredients of small business success, including an overview of business basics, resources to help with business plan development, small business friendly financing, business promotion, and planning & research.

Assisting Seniors

In the to the 1/2007 issue of Entrepreneur, Senior Care Services were once again highlighted as a top growth franchise industry (growing by more then 342 units in 2006). With this type of growth pattern, the industry has also seen the number new concepts going to market sky rocket with Home Health Care being the predominant service offered.

The AARP recently released an article on its website discussing another new service trend, Senior Move Manangers. These consultants primary responsibility is providing support and guidance to clients facing the challenge of downsizing or transition to extended care facilities.

One of our senior care franchisors has already built this service into its model and would expect to see others follow shortly.

Senior Move Manager Article on AARP.org


Have a great weekend!

Rob