How to Start a New Business on a Shoe-String Budget
You donít need a six-figure budget to start a business or even to start a franchise. There are plenty of low-cost franchise opportunities out there that promise fantastic returns. In this article, weíre going to outline how you can start a new business on even the smallest budgets and achieve financial freedom.
One of the most common concerns among those wondering how to start a new business is that their budget is just too small. Maybe youíve found yourself suddenly unemployed and want to become your own boss instead, but have had no time to save. Or, perhaps your monthly bills make it virtually impossible to save much, leaving you stuck in a job you donít love.
The good news? Many franchise opportunities cost less than youíd think. Plus, virtually all franchises offer funding options to help you start your franchising journey sooner. However, there are still plenty of potential issues to think about. Here are five tips if youíre starting a franchise on a shoe-string budget.
1. Set a realistic budget
Before you start your search, you need to sit down and look at your finances properly. Work out how much youíve saved and how much you can realistically afford to pay towards any kind of business loan. Donít set your sights on restaurant franchises with six or seven figure investment costs, as itís just not feasible if your savings are barely into four figures.
Thereís nothing stopping you from making your expensive franchise dream a reality in the future, so donít get disheartened. Many low-cost franchises are a great stepping stone to bigger franchise goals, but they also have potential to be very financially rewarding in their own right. But more on that later Ö
>> Read more:
- Franchising 101: The Official Franchise Start Up Checklist (Part 1)
- Franchising 101: The Official Franchise Start Up Checklist (Part 2)
- New Year, New Career: No Better Time Than Now to Start a Franchise Today
- Franchising 101: 8 Signs You're Ready to Start a Franchise
- Starting a New Business Doesn't Always Lead to Immediate Success: Here Are 5 Ways to Change That
- It's Never Too Late to Start a New Business
If youíve got a partner or have other adults that financially depend on you, youíll need to include them in your budget planning. Set out how much of the household expenses your partner will need to shoulder as you set up your franchise ¬¬Ė you canít just expect them to cover all the bills and sacrifice luxuries without consulting with them first. Once youíve convinced them that your franchising dream could lead to greater things, youíll have a clear financial plan and you can move on to the exciting part.
2. Explore alternative funding methods
Most well-established franchises have links with UK banks, which can make it easier for you to apply for a business loan. However, your personal circumstances could mean getting approved for that loan is tricky or downright impossible. Young people looking to start a franchise might be turned down for their age, or because they havenít built a good credit score yet. And if youíve not made the best financial decisions in the past, a poor credit score or a previous bankruptcy will make banks hesitant to lend you the money you need.
Thereís no need to despair, though. You can fund a franchise a number of other ways. Weíve highlighted lots of great funding options in our previous article ĎTrying to Finance a Franchise Without Money?í, and there are grants and schemes across the UK dedicated to helping would-be entrepreneurs.
Alternatively, you might have a family member or friend who can help you cover the start-up costs of your chosen franchise. If you go down that route, make sure you enlist the help of a solicitor and draw up official terms of repayment to protect both of you. And you might even find that one of your relatives or friends is keen to start a franchise with you, potentially making higher-cost opportunities more realistic.
If youíre starting an independent business, look into crowdfunding and peer lending services. People or companies can buy into your business and help you raise vital capital to get your business off the ground. Often, all youíll need is a great idea and a solid business plan to attract the attention of investors keen to nurture new companies into life.
3. Look into part-time franchises
Leaving a secure job for the sometimes unpredictable world of self-employment can feel particularly daunting if moneyís already tight. But you donít have to take an all-or-nothing approach to starting a franchise. A great way to get your foot in the door of franchising, or to try out the concept and see if you like it, is to invest in a part-time franchise. Often, theyíll have a much lower franchise fee and can be run easily alongside another part-time or even full-time job.
Most part-time franchises are highly scalable, so you can choose to increase your workload in line with your commitments. If and when you decide to go full-time with your franchise, you will have built up a solid client base and wonít have such a financial shock during the transition from employment. Even if your franchise only requires a few hours of your time, it could still have pretty impressive financial potential. A low investment cost isnít an indicator of a franchiseís quality, and you could generate a full-time income working just a few hours a week.
Even if you canít find a part-time franchise that feels like your dream opportunity, you can use it to get you out of the world of employment. You can take charge of your career and become your own boss while still working and saving towards your ultimate franchise investment or business goal.
4. Find a franchise without premises
The most expensive franchises tend to be those with fixed premises, like takeaway franchises and hair salon franchises. Budget-friendly franchises that can be run from home, or that only require a vehicle that can take you from client to client, are ideal if youíre looking for something low cost. Many home-based franchises have significantly lower fees, as there are no large overheads, like rent and energy bills, or massive one-off costs like construction.
Van-based franchises can also be very affordable, particularly if you already own a suitable vehicle. Even if you donít have one or canít afford to buy a van outright, many franchises will factor the cost of a specialist van into the franchise fee, meaning you can pay it off over time. Once again, you wonít have to worry about ongoing costs (other than fuel), which can make this kind of franchise highly affordable.
5. Set a realistic timeline for success
While itís entirely possible to build a successful franchise or business on a tiny budget, it might not be a quick process. Of course, some franchises can offer great returns on your investment within just a few months, and with minimal effort. But thatís not what you should expect when you set out on your franchising journey.
If you have a goal of matching your full-time income as a franchisee or business owner, but can only afford to run your business part-time, it will take you longer to hit your target. Try not to compare yourself to other franchisees or entrepreneurs. Itís likely theyíve been lucky enough to invest full-time hours and more funds into their opportunity, which is why they could be seeing results much quicker than you. Youíll reach your goals if you stay determined, focused and have patience that your humble franchise or business will one day blossom.
>> Read more:
- Franchising 101: The Complete Guide to Franchise Costs in the UK
- Franchising 101: 6 Top Contributors of Franchise Failure
- Franchising 101: How to Buy a Franchise Business in 10 Steps
- Franchising 101: The Official Franchise Start Up Checklist (Part 1)
- Franchising 101: Top 5 Qualities of a Franchisee
- Franchising 101: 6 Tips for Building Customer Loyalty Through Marketing
- Franchising 101: The Pros and Cons of Franchising Your Business
Do you get what you pay for?
Itís a myth that, in the world of franchising, you get what you pay for with a franchise opportunity. Some franchises are just inherently affordable, as all you need is your brain and a laptop to work from. Others are also expensive by their nature, or have built up a massive reputation that can command huge franchise fees. But as you can see, it is possible to start a franchise on a shoe-string budget. Browse our low-cost franchises or UK franchise directory to find the ideal opportunity for you.
Sophie Cole, Point Franchise ©
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