You have done all the due diligence, read the market, considered statistics on success and are set to begin a franchise. However, before moving ahead, you need to source the right financing for your franchise to take off. Sourcing and matching it is easier said than done. Read on to know the secret of finding the right financing for your franchise.
Gauge your business needs
Prior to searching for a financer, it’s essential for you to gauge your specific needs. Get answers to these questions:
- What do you want from your financer and how do you plan to use the money?
- Do you want a lump sum amount or a Flexi loan limit?
- Are there any chances of sudden unplanned expenses cropping up?
- Does your financer provide flexible repayment options?
- Do you have collateral to offer in case asked for?
Know the options available
While earlier banks served as go-getters for funds, today you have more options at your disposal. Non-banking finance companies (NBFCs), angel investors, venture capitalists, crowdfunding, etc. can give you access to funds.
However, before zeroing in on any of these, it’s essential to know the terms and conditions governing lending from these institutions. Do extensive research on these alternate sources of lenders.
Compare the offerings
Comparing is an essential aspect of any financial exercise. While every financial institution will provide you with the required funds, it’s important to compare the offerings before signing on the dotted lines.
For example, some of the leading NBFCs offering business loans have a Flexi loan facility where you get a pre-defined loan limit from where you can withdraw funds as and when required. Interest is only charged on the amount used, unlike term loans from banks where interest is charged on the entire amount. Reading the fine print is crucial to finding the right match.
Perfect your pitch
Crafting a perfect pitch warrants time and thinking. Your pitch should be enticing to attract your financer. A clear business plan encompassing realistic financials and market research will help you get the right match. Go through your pitch several times to identify areas that need improvement, if any. Your pitch should answer these questions generally asked by lenders:
- Where do you see your franchise in the next 5-10 years?
- What’s your exit strategy?
- How do you intend to generate profits?
A solid pitch will make your financer share your vision.
Hard work coupled with the right financing channel goes a long way in ensuring success for your franchise.
Additional read: Best business ideas in India
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