Mompreneurs: Obtaining Financing

Although the task of obtaining finance for your franchise business may seem rather daunting, it is possible! In fact, it may not be as hard as you think.

Today, there are more business financing opportunities for female entrepreneurs than ever! Unfortunately, mompreneurs still have slight a disadvantage in that they are all too often thought of by investors and lenders as less committed and less likely to stick to their business plan because of the pull of family. Yes, you may face a few obstacles, but even so, there are definitely options out there for financing your franchise business.

Funding Options

Firstly, to obtain financing, you need a business plan. Do not feel intimidated by the project. It is just a matter of charting out how much you expect to make and spend and detailing how you figured this out. It is best to be conservative and increase your expense calculations and decrease your projected revenues. Make sure you include how your franchise business will stand out from the rest as well as how you plan to beat your competition. Your business plan should also show your experience and your passion for the proposed franchise business.

Now you are ready to search for funding. There are basically 2 types of investments: debt and equity. With debt funding, someone loans you money and gets their money back plus interest. With equity funding, you sell part of your company in exchange for the investment. You need to be very careful with equity funding. The reason for this is that at first it may be very easy to give away a percentage of something that’s currently worth nothing. However, as soon as your franchise turns out to be worth a lot of money, that $10 000 investment you received was probably not worth 10 percent of your company. In one way or another, equity investors are a part of your company.

How to get your money

The first line of business financing is usually a personal loan. You might have to loan yourself the money. This can come in the form of line of credit on your house, your savings or even your retirement account. The benefit of a personal loan is that you retain total control of your business. However, there is still a big risk involved. You need to assess if you are willing to risk your family’s personal assets. If you yourself are not willing to take some risk, it will be hard to find a bank or investor to lend you any money.

Many mompreneurs choose to finance their franchise using their credit cards. They do this because it offers low-interest incentives. But while rates may start low, they inevitably creep up and spin out of control. If you do decide to do this, proceed with caution and be sure to move your money when interest rates increase. No matter how successful your franchise business may become, it will be very difficult to catch up if interest rates are exorbitant.

The next route many mompreneurs take is borrowing money from friends or family. If you decide to follow this option, be sure to do it legally and with the proper documentation. Make sure these people are able to afford the risk and assess whether or not they will need to be paid back right away and how you would feel if you could not re-pay the investment. Decide wisely. Make sure that the documentation includes all agreed upon items and signed by both parties. If anything goes wrong, at least you have the documentation to prove it.

If you still require more money to start your franchise business, it may be time to approach outside investors or banks. Consider obtaining professional advice about how and who to approach. In addition, take advantage of that strong relationship you have with your local banker. Local banks are often easier to get a loan from than large, commercial branches. Of course, you’ll have to make sure your credit history and credentials are all in top form.

You should also consider investigating government programs. There are a variety of loans you could consider. For example, the SBA has many special opportunities for women and minorities. What is more, you get an answer within 36 hours.

Remember, that in the eyes of a lender, you are simply a businessperson looking for financing. Therefore, make your presentations professional and do not show up with child in tow. You need to prove that you are serious about your business and that you can juggle work and family quite successfully.

No matter which route you take, take your business seriously. Decide wisely and assess everything. Be committed, passionate, and stay true to why you want to accomplish success in your franchise business. Your passion will show and may just bring fantastic results!

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