According to franchise banking experts, getting finance for your new business venture requires a serious commitment on the part of the applicant. Here are some of the tips that they give to prospective business owners:
- Never under estimate the required funding and always take into account that you will need at least six months working capital.
- The granting of funding largely depends on a sound business plan. The ideal business plan must show your understanding of the business and the skills to run and manage it. It should also contain a cash flow projection, with reference to how the business will generate enough cash to cover costs and service debt.
- Applicants who offer collateral stand a better chance of securing finance as it is a form of security for the bank and also shows commitment and willingness by the business owner to share the risk.
- The margins of the business should sustain it and finance further growth if required. The bank recommends that a business entity as a going concern should be earning 10% or more profits a year.
- You should be able to predict sales volumes, monthly expenses and the inputs required to meet the daily demand of customers.
- The ability to repay debt and other commitments must be taken into account for the financial planning.