A lot of people think they cannot open a franchise business because they don’t have the capital for the investment. At times, we are the ones stopping ourselves from achieving our goals. We dream and think about our futures, and then we begin to doubt our abilities to make our dreams come true. Yet, we get excited when we browse through different franchise opportunities available in the market.
What many people don’t know is that most franchisors provide funding to those looking to own a franchise. Besides, there are many traditional loan options that prospective franchisees can explore. There are also several others ways to get money for your initial franchise fees without dipping into your savings or paying higher interest rates or high fees than others. Here are five hidden money sources that you can consider to purchase your dream franchise.
1. Investments
If you are like most people, you may think that investment accounts should be reserved for retirement or emergencies. But what if removing some of it now could help you retire earlier and more comfortably? While withdrawing money from an investment account may come with some penalties, it could also fetch more money within a short time. Do your research and do your calculations. If, after an estimation of the franchise’s potential profits, you find that you will be able to recoup the cost of liquidating investments, you may be better off using your hard-earned investment money to buy a franchise than keeping it lying in an investment account.
2. Your House
A lot of American people own a house, and about 3 out of 5 of them are outright homeowners. Since your house is most probably the single largest investment you have, you can use it to get liquid capital for your business. By using your house or any other real estate property as collateral for lines of credit and second mortgages, you can have access to hidden money that’s already yours. You also pay lower interest rates than if you seek personal loans, and you may be eligible for tax deductions for the interest paid. Speak with your tax accountant to know how you can realize your dream of becoming your own boss using your house’s valuable equity.
3. Credit Cards
If used strategically, credit cards can offer you instant funds at incredibly low rates, even as low as 0 %, for a short period. Since some franchise fees don’t cost more than $10,000, you may be a credit card away from starting your entrepreneurial journey. And you may enjoy some tax benefits if you get the card in the name of the business. However, it’s important to do extensive research and go through the fine print to know when the interest starts accruing and whether the interest becomes retroactive at any point in time.
4. Sale of Assets
At times, we don’t remember how valuable our possessions are. Why don’t you just sell that old furniture nobody sits on or the rickety RV that has been parked for years? You probably have old bicycles, baseball cards, and fishing tools in the attic that you can sell to fund your franchise. When you start your new business, you may have no time to use all these things. And even when you finally get time, you will want to go for the latest designs. Why don’t you get rid of old stuff to build a new future for yourself?
5. Friends and Family
You may not like the idea of requesting money from your friends and family. But for some people, it is common and even expected that family members assist each other. No matter what your family culture is, find time to create a list of people who might be willing to lend you money at an interest rate that will benefit both of you. You and the money lender need to agree and benefit from the agreement. Make sure to write these down on paper, regardless of your relationship or trust in the other party. After all, this is business, and soon, the business will become yours.
You need an initial investment to become a franchise owner, but you may already have hidden sources to get the money to finance your business without realizing it. So, look around, make your findings, and begin to plan for your franchise’s launch date.
