More often than not, Maid2Clean franchisees don’t require assistance with seed capital to finance their franchise purchase. This is most likely because Maid2clean is an under £10k investment. That said there are instances where prospect franchisees do ask about ways they can finance their investment or the working capital they will need to see their business reach break-even or longer.
There is no hard and fast rule for every franchise prospect looking to finance their venture I’m afraid.
Being the author of “Franchising on a shoe string,” I thought I’d share some low cost creative ways of financing your franchise with Maid2Clean. Even if you are looking at an alternative franchise business some of these ideas may be of benefit to you.
There are a number of ways you can finance a franchise. These are not as difficult as you might imagine particularly with a little discipline and time. The ideas are listed below.
- Ask for some of your future inheritance now.
- Borrow it from a relative
- Save by reducing your expenditure
- Sell things that are no longer any use to you.
- Wait until one of your investments matures
- Remove Funds from a poorly performing investment vehicle
- Rob your coin jars and bank accounts
- Work more hours than you do now
- Borrow the franchise fee by extending your mortgage with the bank
- Borrow the franchise fee from a bank
Let’s look at these individually.
Ask for some of your future inheritance now
Parents (bank of mum & dad) and relatives can be great sources of finance for setting up a Maid2Clean Franchise. In fact, if you were really fortunate, some parents would not expect to be paid back at all. When you ask them though, go prepared with your Maid2Clean business plan to demonstrate you have thought about this properly. Give them the same degree of respect that you would a Bank Manager.
Borrow it from a relative
In similar fashion, relatives may be a likely cheap source for financing your franchise business too. In certain instances, you may be lucky enough to strike a deal that involves little or no interest payments. This option largely will depend on how close you are tot the relative concerned. Use the business plan and cash flow illustration as a guide in terms of when you can expect to pay them back.
Save by reducing your expenditure
This may take a while but you could consider leaving the consumer train we have all been indoctrinated to believe as the ‘norm’ as best as you can. Governments don’t want you to do this as a growing economy is essential consumerism to keeping the financial system afloat.
From an early age, many of us have been programmed to be heavy consumers of the latest fads and gadgets that in reality turn out to be poor investments or worthless junk in a few months’ time. In fact many people sadly go into debt for such rubbish. I hope you are not one of them. Generally speaking, smart, business savvy people buy assets that may appreciate or keep their value. As you are looking at purchasing a franchise business I would consider this to be much smarter purchase than buying the consumer junk out there in the shopping malls. Such stuff is frequently worthless in a few months.
Another piece of advice that many people do not wish to hear is that if they could cut down on their outgoings they could save towards their franchise purchase. Most people could save money if they put their minds to it.
I’m not suggesting that you live as a monk but there must be ways you can spend less. Smokers, drinkers, clothes shoppers and regular diners at expensive restaurants can be cited as the tip of the iceberg as opportunities for cutting back. Applied properly tidy sums could be saved over a few months by simply changing your consumer lifestyle.
Sell things that are no longer any use to you.
There are probably few people in the UK or elsewhere that couldn’t release some capital by selling stuff that they no longer use. Look around your house and loft today and get it sold. E-bay may or may not be the right place to sell it. I bet there are a number of unwanted/unused items that you could sell if you put your mind to it and de-clutter at the same time.
Wait until one of your investments matures
Frequently franchise prospect may have business investments or shareholdings that could help to fund their franchise business purchase. It may take a while to wait for investments to mature but if that’s what you need to do then consider doing it. It may be that you consider putting a non-refundable deposit on the trading area you desire to take the territory off the market whilst this happens.
Remove Funds from a poorly performing investment vehicle
If you have ISAs or other poorly performing investments (measured when tax and inflation are added into the equation) you may consider cashing them in. A business venture should out-perform such mediocre investments in the long term.
Rob your coin jars and bank accounts
If you looked at your penny jars you might be pleasantly surprised in the value of the money in there. These are guaranteed to be worth less each year with inflation. Worth a look anyhow.
Similarly, many people have old bank accounts with monies earning derisory interest rates. In fact, they don’t realise that once you have factored in inflation and taxation they are losing money in real terms each year. If members of the public offered such a deal in the market place they would be thrown into jail. Consider a clear out of all underperforming counts.
Work more hours than you do now
Probably something you don’t wish to hear but putting in a few more hours/shifts at your present place of work can work wonders in enabling you to finance your franchise. Plan it, discuss with your boss and make it happen. If this is not possible take on a part time job to fund your franchise.
Borrow the franchise fee by extending your mortgage with the bank
One of the cheapest ways of financing your business if you draw a blank with the above ideas is to extend or put the finance into your mortgage. Banks like lending against bricks and mortar assets and you will note that the interest rate will be lower than taking out a business loan which is often viewed as being a riskier option.
Borrow the franchise fee from a bank
This is my least favourite option as it’s the most expensive consideration as you’ll be paying premium business interest rates for a while and I don’t need to tell you why that scenario is less than ideal. Banks will generally request you to fund 30% of the investment. They do this because their view is that if you cannot raise 30% of the capital required then why should they lend to you? Hard to argue with that one really.