Without a doubt, the world is living through a challenging moment in real-time. The root cause of our shared anxiety is in direct proportion to the uncertainties we face as the global pandemic of COVID-19 continues. Will the infection rate slow down and case rates disappear? How long will this health crisis last? Will our families be okay? When we don’t have answers to the questions we seek, we often revert to safe harbor strategies.

At FranNet, we believe in sharing the latest updates that rely on accuracy and a balanced viewpoint for the consideration of our clients. In this blog edition, we’re going to touch upon down market strategies, funding options, and current consumer confidence in starting a business amidst our current uncertainty.

If you’re currently engaged in the investigative process of reviewing franchise concepts or have plans to continue your personal entrepreneurial journey, here are some facts you should know.

Financing & Funding

Arguably the greatest factor of going into business for yourself is the consideration of, “How will I pay for this?” Your FranNet representative is happy to take you through multiple funding options offered In Canada; here are the primary options:

  • Your own savings
  • Regular term loans through Canada’s major banks
  • The Canada Small Business Finance Program (CSBFP)
  • Business Development Bank of Canada (BDC)
  • Vehicle and equipment leasing
  • Home Equity Lines of Credit (HELOC)
  • Futurpreneur Canada: Programs are available for people aged 18 to 39
  • Borrowing from family members

The Bank of Canada cut the benchmark policy interest rate to 0.25% on March 27th, matching the record low set in April 2009. Rates are forecasted to remain very low for the foreseeable future, thus creating a very favourable lower cost of borrowing for starting a business within the next 12 to 24 months. Banks are still approving loans, although they expect applicants to have more thorough business plans than what was acceptable pre-COVID-19.

Business Outlook & Consumer Confidence

While no sector of the Canadian economy has remained untouched by the COVID-19 crisis, certain categories of business remain strong, regardless of economic cycle fluctuations; these types of businesses typically provide the new business owner substantially higher start-up stability. These categories of businesses also often enjoy the highest lending approval rates from lenders.

A recent survey conducted by a major franchise trade group revealed some surprising results on franchisee activity in the near term; Franchise Insights’ Buyer Sentiment Survey was conducted March 16-17, polling aspiring franchise owners as to their plans amidst this challenging backdrop. While this survey was predominantly US-focused, we are seeing similar levels of confidence with our Canadian clients. Here were some key responses:

  • Over 54% think that “now is a good time” to start a business. 59% of respondents expect to start a business within the next three months, and another 17% within four-to-six months
  • The majority of respondents (39%) believe that business conditions will improve in three months, while only 24.3% expect them to worsen
  • Only 18% of the respondents indicated plans to put their business start-up search on hold

Summation

We are living through a difficult time that, by all indications, may even get worse before it gets better. Without a doubt, deciding to make a franchise purchase and begin an entrepreneurial lifestyle is a life-changing event. The importance of maintaining a prudent approach to decision-making is something that FranNet will always recognize, support and champion. Conducting the right amount of due diligence on your journey cannot be overstated. But we wanted you to know that—even in the most trying of economic times—there may be situations that you can take advantage of to benefit the quest to become your own boss. Rest assured that FranNet is here to help guide you every step of the way.

Lastly, remember one thing. Optimism itself is an endearing quality. Time and time again throughout history, the right attitude has persisted in people’s endeavors—often leading to outcomes beyond our wildest imaginations. Let’s hope your shining moment is right around the corner as well.

If you would like to learn more, our team is standing by to answer all your questions and concerns. Please reach out and schedule a consultation with a FranNet representative that lives and works in your area