Finding funds to buy or franchise a franchise business

funding-plans

In general anyone wanting to finance a business has three basic options:

  •  Use your own money – this is by far the quickest and simplest route to take but not many people are in that fortunate position.
  • Borrow money from others – this might be an informal loan from family or friends or a formal loan from a lending institution like a bank; or
  •  Get others to invest in your business – this means that they will own a part of your business and share in the profits and the decisions.

While most small businesses startup with money from friends and family, there are still a large number who rely on banks for financing. Commercial banks and financing institutions recognise the lower risk profile of franchising and recognise that most reputable franchisors have tested and fine-tuned their businesses before franchising. Many franchisors have financing agreements set up with selected financial sources to facilitate rapid funding of their franchisees. This is an advantage but that doesn’t mean you automatically get accepted. You still have to submit the necessary documentation and meet the criteria set out by both the franchisor and the financial institution. Read More

Recruit franchisees with the FASA – Inani Initiative

Nico Botha, the founder of Inani NPC Incubator Accelerator answers questions about the FASA – INANI initiative, creating training and funding opportunities for the franchise sector.   Also participating in this interview is Ornica Mukhavhuli who runs the Inani Talent Incubator and BBBE Specialist Tony D’ Almeida

 

Read More

Change your strategy before you take “free” funding

strategy-forward

Go Back To Basics

Over the last three weeks since the lockdown was announced we have seen panic run through the business sector, particularly the small businesses which is that portion of the market in which most franchisees fall. The first reaction of most of the operators has been to look to where they can get additional loans to tide them over the next few months. They are then hoping that things will get back to normal. All that they will have to figure out then is how they will repay these loans.

My opinion is that any business that follows such a strategy has just signed their death knell. You will ask me why am I so bold to make such a statement and my answer is this – the solution to this challenge is not resolved by throwing money at the problem or by cutting costs to fit an old business structure. Rather this predicament which businesses face calls for a revision of your business strategy. It is not the time for smart marketing campaigns or clever television ads. It calls for each business owner to go back to basics and look at their business again.

Read More

The Coronavirus scenarios – Much ado about nothing, the Camel’s Straw or Spain again?

coronavirus-unknown

Clem Sunter, renowned futurist and scenario strategist in a book published in 2015 entitled Flagwatching, wrote about how important it was to identify the flags changing the world as we know it. One of the flags was the increasing likelihood of a global pandemic due to higher rates of international travel and the growing concentration of people in megacities. Likewise, the transmission of viruses across different species was a major concern as was the appearance of multi-drug resistant varieties of bacteria.

At the time he quoted Louis Pasteur, the remarkable 19th century French microbiologist, who in a moment of pessimism said: “It is the microbes who will have the last word.”

The Coronavirus, alternatively called COVID-19, is now spreading so quickly around the world that, despite the containment measures taken by China where the virus originated, it now exists on every continent other than Antarctica. Clem Sunter spells out three possible scenarios.

Read More

How do I finance my business?

Financing a business, especially a franchise business, goes beyond just having some capital to start – you need to factor in everything from start-up capital to ongoing financing; from hidden costs to expansion funds. The financing of a franchise is always a huge hurdle that needs to be overcome through thorough research and careful planning. This is the one area of your business that needs a level head, clear thinking and to a large extent, a realistic approach. Don’t be afraid to ask your prospective franchisor, your financier and yourself these pertinent questions.
Ask the Franchisor….

How much will my total investment cost me?

This is probably the most important question as not all franchises calculate this cost in the same way. Some include certain costs, while others only add them on later. Knowing what makes up your total investment is important from the outset as this will influence which franchise you choose and whether you are able to afford the business. The total investment is the complete cost of starting up the franchise operation and should include the up-front fees, set-up and establishment costs and start up stock.

Read More

Need funding to grow your business

business growth and funding

Most businesses need capital before they can really get going. As a small business owner, you generally need equipment, materials and stock, as well as money to pay salaries, rent, telephone etc, until your business becomes profitable. But before going into the different ways that you can find finance to grow your business, you need to have thought clearly about what your business will do, how you will do it, what it will cost, and how much money you will make. To obtain finance, a prospective business owner needs to convince the bank or investor that he will be able to pay the money back. Read More

All eyes on the newly appointed minister of small business – will she deliver?

With the shock decline in gross domestic product of 3.2% in the first quarter from a 1.4% expansion in the prior three months, can government live up to its post-election hype and deliver on its promises? This contraction, the highest in a decade, puts South Africa at risk of slipping into a second recession in successive years and has all sectors, including the franchise sector concerned for its future.

Read More

The people behind the Franchise Brand

field-service

It is a known fact that, in franchising, you can expect to get the same product or service at every single of the brand’s outlets – no matter where they are. So, you can expect the Big Mac to taste the same whether you bought it in Beijing, Buenos Aires or Bloemfontein. Similarly, the service you get from PostNet or Cash Converters should be the same both here, in their mother country of Australia or anywhere else around the world. Who are the magic elves that ensure that the ethos and systems of a franchise brand are consistent throughout the network?

Read More

Tips to choosing the right franchise

flybynightfranchise

If you are thinking about investing in a franchise you should keep the adage, “if it sounds too good to be true – generally it is” in mind when investigating franchise opportunities.

Statistics often claim, quite rightly so, that when purchasing a franchise, you are more likely to find greater success than going into business as an independent. Whereas independent businesses have a 90% chance of failure in the first five years, franchise failure is under 10%. However, the buyer must remember that there are always risks involved, and that they can reduce them if proper homework is done.

Our advice to prospective franchisees is to make FASA their first port-of-call when shopping around for a franchise. At the very least they will know that FASA members subscribe to a stringent Code of Ethics that promotes ethical business format franchising practices.

Read More

The National Budget – Sowing a seed of renewal and growth

budget

Arriving in Parliament with a succulent plant, Finance Minister Tito Mboweni last week used it to emphasise that ‘it is time for us to sow a seed of renewal and growth… despite our best efforts, ravages and risks such as pests or rot could attack our green shoots, But we must persevere… prune and pluck away at the rot, until there is growth.’

Read More