EDITOR NOTE: This is a post from The Franchise King®, Joel Libava. Joel will be writing a blog post monthly for Franchise Direct.
If you're serious about becoming a franchise owner someday, and you're focused on lowering your financial risk, there’s something I want you to do.
Actually, it’s something that you have to do.
You need to figure out your finances before you search for a franchise to own.
There’s no reason for you to start exploring all the top franchises that are available on Franchise Direct until you know exactly where you stand financially.
I know; you’re very tempted to "look around to see what's out there," so you can start learning about the opportunities that are presently available in franchising. But, if you can, hold off for a bit; take some time to figure out your finances. You really need to do a financial assessment first so you can see how much money you have to work with. To get all excited about what you feel is an amazing franchise opportunity before you even know if you have enough money to invest in it-and become a franchisee, would be a massive waste of time and energy.
The only way to get to the heart of your finances is to do a net worth statement. It’s not difficult to do.
1. Get out some paper and a pen
2. Write down all of your financial liabilities
3. Write down all of your financial assets
4. Subtract all of your liabilities from all of your assets.
The difference between the two is your net worth.
A Starting Point
Now you have a starting point-at least financially, when you search for a franchise to own.
As you search around for franchise opportunities, you’re going to find that most of them clearly state the minimum financial requirements needed to qualify for their opportunity. And, since you know what your net worth is, you won’t have to guess to see if you qualify.
Most of the franchise opportunities being offered these days require a net worth of $250,000-$300,000. Some require a net worth of $1 million. And, don’t forget to read what they require for liquid cash. That’s important too.
(Assets that can be converted to cash quickly like non-IRA or 401 (k) stocks or bonds, or savings accounts are examples of liquid cash.)
You can learn more about franchise finances in this report.
Now, if you've already started your search for that perfect" franchise, but you've skipped the part that I just mentioned S T O P. It's time to wipe your slate clean, and start at the beginning. You'll really save yourself some grief. The decision to buy a franchise-to be your own boss, is a large enough one to move through the process slowly and steadily.