If you’re interested in taking on a WOW franchise but you’re worried about how you would pay for the upfront costs, read on. I’ll explain the options, discuss pros and cons and help you decide if one of the options is right for you.
Starting any business is going to cost money – there are physical things you need to purchase, such as your equipment and maybe a vehicle, there are digital systems to organise and other items such as insurance to pay.
Not many people have access to the funds themselves, most will need to find a source of funding.
How Much Do You Need?
The first thing you need to determine is how much money you need for the upfront costs plus some working capital to tide you over until you’re taking customer payments.
Your upfront costs may include:
It’s really important to plan for all of the costs you will have between starting your business and being able to take an income. If you have left a paid job I would always advise adding your usual household contribution to your start up fund, that way you can still pay your bills until you have customer payments coming in.
There will also be ongoing costs which are paid in advance such as insurance, music licence and your first quarterly franchise rental payment. Add these to your funding amount too.
Once you’ve worked out how much you need, the next job is to decide how to find it.
Funding options
Funding options our franchisees have typically used include:
Funding option | Pros | Cons |
Personal Savings | Safest option | Slow to build |
Bank Loan | Fastest Option | Repayment pressure |
Government Start-up Loan | Lower interest rate & added support | Repayment pressure |
Family Support | Fast, and usually no interest | Potential for extra pressure or input |
Council Grant | No need to repay | Often only cover physical items e.g. equipment |
Many franchisees in South Wales have recently been successful in obtaining a government backed start up loan. The process is a little slower than applying for a loan from a bank, however the interest rate can be significantly lower, and they provide you with a coach to guide you through the process. They also provide extra support and business guidance through the first year to further ensure the success of your business.
To find out more about the scheme head to the Start Up Loans website.
Not all councils offer business grants, have a look at your local council website to find out if it could be an option for you.
Once you have decided how to fund your business you will need to add the repayments to your ongoing costs. Even if you are funding it through personal savings, or a loan from family members, I would always encourage you to pay it back month by month.
Mistakes to Avoid
Keen to create your own financial plan?
I have created programme specific finance spreadsheets which are free to download. Head to the Pricing page of the website for more detail information and access to the spreadsheets.
Key Takeaway
Plan your funding carefully. A well-structured start is far more important than rushing in under-prepared.
If you would like help to understand your funding options you can book a call with me. We can talk through what your needs are and what options may be available to you.
