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