How to Save Money to Start Your Own Franchise Business
For those who are looking to pursue their dreams of starting a successful business, opening a franchise is one of the best ways to do so. More specifically, starting a janitorial business is a common path people choose as a means to easily secure a high volume of clients.
Although this can seem like a difficult process, it’s often not as hard as you might think. We've put together a short guide that details everything you need to know.
Let's explore what you should keep in mind.
How to Save Enough Money
As you might expect, the first step that you need to take before you open your own commercial cleaning franchise is saving up enough money to do so. This can help minimize the amount of money that you need to borrow, and in some cases can allow you to avoid financing altogether.
Let's take a look at a few of the most effective ways to help pad your savings account.
Eliminate Unnecessary Expenses
Eliminating unnecessary expenses is deceptively effective when it comes to saving money.
To elaborate, many people lose track of their ongoing monthly expenses. A subscription service that you haven't used in two years could still be a recurring charge on one of your credit cards.
It should come as no surprise that these amounts can quickly add up to a substantial sum. In some cases, you might be paying hundreds of dollars a month for different services that you get hardly any utility out of.
To get started, take a look at your billing statements for the past few months. If you notice any consistent charges that you don't recognize, chances are that you could eliminate these expenses and save the money instead.
Establish Additional Revenue Streams
This method is highly effective when combined with the one listed above. By establishing additional revenue streams, you can exponentially increase the amount of money that you are able to save each month.
And, you have plenty of flexibility when it comes to how you do so.
One of the most efficient ways is to pick up a part-time job if you have the time. There are plenty of businesses that could benefit from hiring someone who only works 5 to 15 hours per week.
You also have the opportunity to monetize an existing hobby that you enjoy. For example, someone who has an interest in thrifting and restoring old clothes could open an online store where they sell these products.
Keep this in mind when looking for ways to make a bit of extra cash.
Set a Proper Budget
Even after you establish additional revenue streams and eliminate unnecessary expenses, things can quickly go awry if you don't have a properly established budget. So, it's in your best interest to devote time to mapping out your financial obligations.
From here, you will have a solid understanding of how much money you need to allocate toward your living expenses, debt, etc. each month. In many cases, this serves as a powerful motivator to make as much money as possible since you will be able to save the extra income.
How to Finance Your Franchise
In the event that you are not able to save a sufficient amount to avoid financing, it's important that you understand your potential options. While there is nothing inherently wrong with borrowing money, you need to do so responsibly.
Let's take a look at the paths you can take.
Small Business Association (SBA) Loans
Small Business Association loans are some of the most common forms of financing that people pursue. This is because they have highly manageable repayment terms.
To clarify, SBA loans generally have extended repayment periods and low interest rates. This gives you plenty of leeway during the early months of your cleaning company franchise when you haven't hit peak performance yet.
Those who are looking to open their own franchise have a handful of options through this method, but the most suitable is likely to be an SBA (7a) loan. The repayment term ranges from 7 to 25 years and you can receive up to $5 million in funding.
Home Equity Loans
If you happen to own the home you live in or own another property, you could use any equity that you have established as collateral when borrowing.
To help clarify, let's assume that your home is worth $400,000 and you have made $100,000 worth of mortgage payments. This means that you have $100,000 in equity that you can use to leverage your potential financing options.
For those who wish to avoid spending all of their savings or taking out a large amount in loans, partnerships could be a viable alternative. In this scenario, you would work with someone who has sufficient funding in order to open up your franchise.
This is typically a family member, friend, or business associate. It's important to note, however, that establishing a partnership also means that this person has partial ownership of the franchise.
As a result, they are entitled to a percentage of the profits and also have decision-making capabilities.
Starting a Janitorial Business Can Seem Difficult
But the information listed above will ensure that the process goes far more smoothly than you expect. From here, you'll know exactly how to go about starting a janitorial business as soon as possible.
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