The Millennial generation has been coined the most entrepreneurial generation to date; however, many are postponing business ownership for one reason – financing.
Starting a business from scratch is a challenging feat on its own, but for the one-third of adults under the age of 30 facing student loan debt, it can seem nearly impossible.
To help Millennial entrepreneurs navigate the financial side of business ownership, Tom Portesy, a 20 year veteran in the franchise industry and president of MFV Expositions, hosts of the upcoming Franchise Expo Houston that will take place at the George R. Brown Convention Center, October 4-5 where Millennial attendance is expected to reach an all-time high, can shed light on the top 5 things Millennials need to know about business funding.
- Learn the Basics
The first step to financing your businesses is understanding the financial basics of business and day-to-day operation. If you need to brush up on your knowledge, no problem. Take advantage of the vast free training and resources available online and in person. Turn to your local Chamber of Commerce or The U.S. Small Business Administration for information on virtually all aspects of creating and running a business.
This also means familiarizing yourself with the financial options available to you – SBA loans, microloans, traditional bank loans, venture capitalists and more. Begin researching the ins and outs of each of these and the pros and cons that come with them. A comprehensive understanding of these can help you secure the money you need to launch your business while taking on minimal debt.
- Figure out How to Qualify for an SBA Loan
SBA loan officers are there to help entrepreneurs and fuel small business growth. They want to find ways to provide you with the financial help you need. When applying, the focus will be on cash flow, credit ratings, capital and overall collateral. If some are strong than others, that’s okay. The weaker areas will simply be examined further to identify why that is the case.
If you don’t qualify for an SBA loan, that is not the end all be all. Especially for Millennials who may lack credit history and collateral, there are other options. This might include applying for a microloan. Micro-lenders offer smaller loans, require less documentation, and are more flexible with the criteria. These are great for startup entrepreneurs looking to gain momentum toward operating their business.
- Think Outside of the Box for Financing Alternatives
You’re a millennial, creativity is where you excel! There are numerous alternative opportunities to help rev up cash flow. One option might be turning to a crowdfunding site as a fun an effective way to start generating funds for your startup. Set your fundraising goal, tell your story, and start sharing the page with friends, family, community members and more.
You may also turn to credit cards to help cover some of your initial expenses. However, be cautious of high-interest rates and penalties. Do your due diligence to find a business card that offers rewards and incentives to best match your needs.
Grants are another creative alternative – and unlike loans, grants usually don’t have to be paid back. Start to explore what grants you could potentially apply for to help fund your business.
- Consider Franchising for Added Corporate Support
Franchising is one of the safest routes to business ownership, hands down. Choosing to launch a business is a complex financial decision, but buying into a franchise helps minimize guesswork. If you’re are willing to sacrifice a bit of creative freedom in order to follow a proven business model, franchising is a great option to explore. With so many industries to choose from within the franchising space, you’re sure to find a business and model that works with your skillset, lifestyle and finances.
Of the roughly 30.2 million small businesses in the Unites States, one out of every 12 is a franchise with one new franchise opening every 8 minutes each business day. And the industry continues to expand every year with more aspiring entrepreneurs linking up with franchisors. This is because franchised businesses seem to weather unemployment, recession and stock market fluctuations better compared to independently owned businesses.
Many Millennials are turning to franchising for an additional layer of support – investing in a proven business model, following a franchise playbook, and receiving resources and support from the franchisor. The International Franchise Association even launched a program called NextGen in Franchising to educate Millennials about the industry, and franchise consultants have begun launching social media campaigns to attract the emerging demographic. It is the perfect opportunity to be in business for yourself, but not by yourself.
If you’re looking to learn more about the franchising industry, best practices and for an opportunity to meet with brand executives, a trade show is a great place to start. They vary in size and cost, so make sure you do your homework up front in order to set up meetings, dinners and attend panel discussions. Make the most of your time by requesting an attendee list if the expo is willing to share. It’s also a great opportunity to chat with other franchise owners and learn about what brands they’ve chosen to invest in and their experience.
- Network – Learn for Those Who Have Done This Before
Surround yourself with successful business entrepreneurs who can shed light and offer best practices on the opportunities and challenges that come with operating a business. As a first-time entrepreneur, you need to learn these lessons first-hand from those who were boots on the ground. Leverage social networking sites like LinkedIn and Facebook to start growing your base. Find a mentor you can turn to, to help guide your decision making and offer direct feedback about your business goals and objectives. These relationships can be profoundly beneficial in reaching your goals of running a successful long-term business.
The idea of owning your own business sounds appealing to many, and for the millennial generation, the path of entrepreneurship continues to be a highly attractive option.
By Tom Portesy
Franchises across the U.S. produce over $750 billion in economic output (Statista). But how many lives does that impact? Consider how many McDonalds or 7-Eleven locations you drive past in a day. Over 8 million people are working in franchise establishments (Statista). Franchises are thriving, but what is the secret to their success? We've narrowed down 4 simple reasons:
1) Brand Recognition
Franchisees aren't building a business from the ground up. They are buying into a brand that has already done the legwork for them. Any other business may struggle to find their audience right away. With a franchise, there is an established audience. The brand already has a public image and support.
Franchisees benefit not only from brand recognition, but brand loyalty. This audience will not only have heard of the brand name, but have established a relationship with it. Opening a new franchise is starting a new business with customers that already love you.
2) Guidance from Experts
Franchising provides the opportunity for business ownership without a steep learning curve. Franchisors lay out a program to train franchisees for success from the start. Franchisees have a strong support system backing them anytime they need help.
3) Marketing Tools
Another advantage to an established brand is the marketing tools available to franchisees. Posters, brochures, ads, etc. are available for a franchisee's use. Initial branding for a new business can be a costly and uneasy process. Taking that off the table allows franchisees to focus on their strengths. Franchisees can put their valuable time and energy straight into their business.
4) Lower Costs
Franchisees will find that it's easier to break-even with a franchise. Because of the factors listed above, franchisees are on a speedier path to profit. A franchisors' industry connections are a great asset for getting ahead. A franchisor likely has a supplier network in place. Their negotiating power will often get franchisees better deals. Bulk purchases drive the cost down for all their franchisees.