When considering a Franchise one of the areas not always fully appreciated is your own personal budget in the early stages. There are probably a few scenarios that relate to your circumstances for looking at a Franchise including…
Currently employed and receive a regular salary.
Taken redundancy so have a lump sum of money, but also were used to a regular income.
Returning to work after a career break, and supported by one main household income.
Whatever your situation it’s likely that you’ve been used to earning a regular amount that you know has always been paid on time, every week or month that you’ve relied on to support you and your family.
It’s important to look further than the initial investment so you can more accurately plan your finances. Other areas you must consider are:
The estimated time delay in making money.
What level of working capital you need and the approximate period to sustain things in the early phase of setting up the business.
What type of income will you be able to take from the business and from when?
Being informed about the finance involved upfront can help you make plans in your personal circumstances to carefully adapt in advance. If you’re used to a regular salary then it can be easy to assume you’ll receive the same. As with any business there will be fluctuations in income and this is why careful budgeting is essential to avoid cashflow problems in the future.
Why you must know, not guess!
To be able to realistically budget for the initial change in income that will happen when you first start your Franchise it’s best to get clear about your spending now. Go through all your bills, spending and monthly payments. This is a really good exercise that many have found eye opening to what they are really spending on all those ‘extras’ that can so easily add up.
It’s also a great opportunity to make sure you are on the best deals for energy, insurance, mortgage, etc. Some families have been more radical and decided that actually they don’t need 2 family cars or that their weekly shop would be better down online for home delivery to avoid any impulsive buys. With this kind of scrutiny it’s also possible to see the cost of regular trips to the shops or nights out which all adds up.
Of course this exercise is not about giving everything up and living a solitary life but it’s important to be very realistic about your spending now with a regular income so you know how to effectively adapt when your income changes.
Investing in a Franchise is not like starting your own business from scratch because you have a proven business model to follow with expected earnings potential. But being prepared in advance of the household income change in the beginning will really support you and your family as you get started.