Your research has led you to the perfect frozen yogurt franchise. Now how are you going to pay for it? The first step to obtaining financing is creating a detailed business plan, and as we discussed in our last blog, your franchise documents provide much of the needed information. Once you complete your plan, there are several sources of capital for your new frozen yogurt shop:
- Yourself While you may not have enough cash to finance your dream solely by liquidating property and assets, you still may be able to fund your frozen yogurt business personally through two options:
- Home Equity Loan This option avoids a lot of the red tape that business loans generate. The best method is to use your home equity to set up a secured line of credit.
- Retirement Account Many retirement accounts (such as 401k) can be used to buy a franchise without penalty, but there are very specific requirements involved. Hire an expert familiar with IRS rules to make sure you follow the correct procedure.
- The Franchisor Some franchisors offer financing programs or have agreements in place with lenders, though their terms may not be the best. You may also be able to lease some of your equipment from the franchisor rather than having to buy it outright.
- Commercial Loans Banks generally will want you to secure the loan with real estate of some kind. If this is not an option for you, consider a commercial finance company. They advance funds based on a percentage of a firm’s assets, with cash turned over to the lender to pay down the loan when that business’ receivables are paid. They typically have higher fees and require stringent reporting of key aspects of your business’ operation.
- Small Business Administration (SBA) Loans The SBA does not actually loan money; instead it works with lenders to guarantee up to 85% of a business loan’s repayment. They have many resources that can help you, including a Franchise Registry of companies with a streamlined review process for SBA loans.
- Business Partner Joining with one or more partners can ease your financial burden, but this option is not without challenges. Will they be silent partners? What authority will they have regarding day-to-day management of your frozen yogurt franchise? Delineate the rights and responsibilities of each partner carefully, and hire an attorney to draw up very specific agreements.
- Friends and Family It may seem like a natural choice to turn to family and friends for help when opening your frozen yogurt store, but it is rarely a good idea. If you do go this route, draw up a formal contract! Specify the lender’s role (as with a business partner agreement), and never accept money from anyone who cannot afford to lose the entire sum.
Once you obtain financing, you need to watch expenses! Calypso is here to help by offering the most affordable POS system available. Our turn-key yogurt shop point of sale helps you to manage your highest business- payroll- with labor scheduling and an employees’ time clock to control in and out times. An available integrated DVS system protects your bottom line with solid surveillance of your establishment, assets and patrons. Calypso’s yogurt store POS even lets you search and review actual order data with video through any web browser, and monitor live video through your iPhone or Windows phone. Contact Calypso today at 800-771-7100.