sawyer heath: Bene Trends franchising present world Magazine, Financial ...

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20 (PRWEB) November 2012

more and more business owners are responsible for funding, looking to develop a strategy that can give them develop a number of units. The most common situation is the desire to grab three more than two to three years the window. Financial multi-unit development can be difficult in the past, but since the debt crisis of the 2008 Financing multi-unit strategy is more challenging than ever before. Although each situation and the needs of entrepreneurs are different, one thing is universal, like finance the funding of the first unit to affect your ability to future devices. In other words, if the financing of the first unit, without considering how it will affect your ability to obtain additional financing, it is basically no options to pay for the second and third pieces. In this sense, we find a few different scenarios and some possible strategies to successfully get the necessary financing is a complex franchisees.

scenarios and strategies

All capital funding strategy is needed, either fully fund the project without financing or capital of the loan (typically SBA loans). Let us know where you are going to start the money you need. Request quotes with friends and family is a popular strategy, but if you believe in what William Shakespeare wrote his Hamlet, neither a borrower or a lender, the loan often loses itself and friend, simply put, borrowing from friends and family can not always be the best option. Home Equity Loans were the traditional sources of funding for entrepreneurs, but since the real estate crash, home equity loans are not as popular as they once were, and are certainly more difficult to obtain. In many cases, the capital lost as lower home values. This leaves us with personal savings or by taking advantage of the 401 (k) assets in SBA financing.

If you are funded enough resources for the project, in whole or in enough capital for the loan, you are in good shape before. However, many business plans today most of their savings into retirement locked as IRAs and 401 (k) s, premature wearing heavy penalties and tax consequences. For example, if you have a $ 200k IRA or 401 (k), and to take an early withdrawal, you may have a penalty of 10% and up to 30% of ordinary income to pay taxes, leaving you with only $ 120k and $ 200k in the original. The last thing you want to do if you lose your business. 40% of working capital taxes and penalties on your savings Fortunately, with a popular strategy as 401 (k) takes (rollover business startup) is known, you can avoid it.

This program was developed many years ago, and you can use the funds for your retirement account, deferred tax and penalty free. Nearly 30 years Bene Trends PA is in Wales, this strategy was used to finance most of the brands in the franchising industry.

was in a recent 401 (k) rollover funds for more than 10% of franchises sold in the United States therefore be used when you need to use the savings that have qualified for the pension system, such as an IRA or (401 (k), this type of program that you leave with more capital, a multi-unit Goals Own goals will.

Now you know where you?re going to get the money that is what the best way to take in to this multi-unit financing strategy? Balancing the use of cash for financing critical if you are looking to a number of units are to be financed. Listed below are just some of the possible scenarios, but hopefully will give you some ideas about possible strategies.

fully fund the capital itself, the opening of one of its major reserves is present, and the goal is to open three stores in 24 months for the following reasons:

1? Make a 30% interest contribution to the total cost of the launch of the store # 1 and 70% funded by the SBA loan.

2? Nine months later, inject 30% of total costs for the store to start # 2 (# 1, if the business has become profitable, and you are close to or have exceeded the original projections) and financed 70% by the second SBA loan.

3? After 12-18 months, if store # 1 is completely viable and store # 2 is broken and makes the forecasts look for the extension of the loan shops # 1 and # 2 # 3 opens a store in 30% of the total cost of the project and the loan cash flow and asset store to ensure # 1 and # 2

this strategy, you can keep, to use more personal property and cash flow in the first two branches, to guarantee a third site. You can then commit cash collateral to the lender, additional collateral coverage store # 3, at the same time, you can keep on those assets and borrow against them need is to reduce the interest expenses. Moreover, you can keep 10% of the funds available for additional working capital or, if necessary, obtain a safety net during the ramp up and development.

store # 1 is easy and profitable store # 2 is broken and makes the projections:

1? Inject would finance 30% of the start-up costs for store # 3 and 70% by an additional SBA loan you (now injected with a total of 110% of the opening of the signal shop will be the ability to inject an additional 10% come from the cash store # 1 and # 2, and you would have to open 3 stores, not just one, which is earlier you originally able to self-fund were.) Suppose Nether transactions in financial difficulties and can be both a guarantee to the third place, it is still possible to get the funds for a third shop.

In almost all cases you should look for a maximum loan amount, you can save systems # 1 Normally, a new franchise, this means 70% of the available collateral. This allows you to keep your cash cash flow, if you need more working capital and make the maximum contribution to a different location. If enough time has elapsed (ie24 months) and the first two places are good to get a loan extension (up to 90% of the total project cost), it is possible to # 3 Save This is especially true if the cash flow from operations # 1 and # 2 can help to support the debt service shop # 3 If Stores # 1 and # 2 full debt service shop # 3 is possible for the 100% financing.

Each situation is unique and personal goals are often different as well. Some business owners need to be sure that they are provided in the plan is likely to work and maintain rest until as much volatility as possible is removed from the equation. Some entrepreneurs prefer other peoples money in advance to plan as much as possible and are willing to risk more uncertainty. Every business owner needs to understand the individual, and what others may not accept a with exactly the same economic conditions. The best advice is to give a reliable Finance Specialist to check on your accounts, give them a thorough understanding of your goals and allow them to give you the opportunity a personalized strategy for your business.

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