Getting ready to buy a franchise is a very exciting time. Not only are you set to become the master of your own destiny, but you’re on the brink of calling the shots and owning your own business.
One of the most critical things you will do when you open a franchise is plan your budget. You will be tasked with setting up a budget to buy your franchise as well as a budget for the monthly running costs of your franchise. If you are going to be approaching a bank or investors for your startup capital, they will undoubtedly need a detailed budget before you are awarded the capital you need.
The first thing you need to do is create a budget for your startup costs. The initial costs involved in buying a franchise include buying a commercial property, equipment, and hiring employees. To save money, you can consider renting a space, buying second hand equipment and outsourcing certain aspects of your business to keep your payroll costs down. The initial amount of money you spend on inventory may also be more than you will need on a monthly basis.
When you build your franchise budget, you will need a good estimate of the monthly revenue, costs and fees that your business will cost. The franchise agreement will give you information such as projected profit margins and revenues, fixed costs as well as variable costs. This is where you can list everything for royalty fees and franchise payments. Some of the other costs that should be included in your monthly franchise budgets include your own salary, utilities, internet, software and marketing.