Working with lenders who focus on your industry and possess in-depth knowledge and extensive experience can help you improve profitability and maintain success.
Franchisees and franchisors looking to increase their revenue share a common interest—a desire to grow. Regardless of economic conditions, growth costs money. The question these days, "Is growth capital available?"
One key is finding a lender who remains an industry leader through the up-and-down cycles of the market, is flexible, and works with you and your specific needs. Working with lenders who focus on your industry and possess in-depth knowledge as well as extensive experience can help you improve profitability and maintain success. For those franchisees and franchisors looking to increase growth capital to expand, there are several ways to achieve your financing goals.
Trey Brown, senior managing director and commercial leader for GE Capital Solutions, Franchise Finance.
For the Franchisee
Prepare your business: Growing a business means many hours of dedicated research and hard work. The same can be said for finding a lender. Make sure your business is prepared for growth. Start with a good business plan and accurate revenue projections. These assist you in determining the right time to expand your business.
Practice transparency: It is critical to be honest, upfront, and timely with any information your lender requests. If your lender discovers a discrepancy after starting the approval process, your financing may be put in jeopardy.
Demonstrate flexibility: The lending industry is in a constant state of change, creating opportunities for viable alternatives to traditional financial arrangements.Ê The more willing a business owner is to explore alternatives, the more financing options are available. Work with your lender to identify financial structures to best develop current and future business growth.
Account for your success: Past successes are good predictors of future profitability. A best practice is to document examples of past successes, highlighting your achievements. Lenders look for businesses with strong growth potential. Highlighting successes is the best way to show you enjoy a track record of accomplishment.
Consult a knowledgeable financier: Identify a lender offering franchisees and franchisors in-depth knowledge, extensive experience, and a focus specific to your business. A lender with experience in your industry helps you improve profitability and maintain success.
For the Franchisor
Evaluate your assets: Taking stock of overall financial assets prepares your business for discussions with prospective lenders. Be ready to answer questions ranging from the smallest aspects of the business, to personal financial affairs, to big picture plans for growth. Identify a lender who will help your business grow, compete, and prosper.
Do your homework: Identify a lender who analyzes your specific business needs and looks at your plans for growth and development.Ê Extensive experience and knowledge of your industry is a must. A lender who communicates frequently can help you plan for the future or make a sudden change during a critical time because of an in-depth understanding of your company's specific needs for growth.
Present yourself as an investment: Does your company have the capability to expand its' number of units or the ability to increase revenues? Use this information to your advantage by supplying your lender a detailed plan for growth and a timeline for repayment.Forward thinking and organization increase your lender's confidence in the strength of your business.
Explore all options: There are myriad financing options available for businesses looking to expand. Financing growth is not a one-size-fits-all industry. It is critical to work with your lender and see what options best meet the specific needs of your business and your plans for growth.
Develop a relationship with your lender: Securing a loan to increase growth capital involves far more than receiving a check. Develop a strong, long-term relationship with your lender. Solid relationships create opportunities for future financing, helping your business capitalize on available opportunities down the road. Multiple deals with the same lender, or a lender willing to consolidate your existing debt, streamlines operations and improves back office efficiency.
It's important to think ahead when it comes to growing your business. There are great opportunities with knowledgeable, experienced lenders to help your business secure the growth capital necessary to succeed. Through proper planning and research, your business can find the right lender to spur growth for years to come.
