During this edition of FranNet’s blog, we’re going to offer you four tips to get your financial house in order before you begin the franchise investigative process. The financial piece of franchising is both intricate and complex and not every entrepreneur enters the process the same way. Some may prepare to buy a franchise with a nest egg of money already salted away. Others enter the process looking for ways to secure financing. But regardless of how one decides to finance their franchise start-up fees, there are things that everyone should do to make sure their affairs are in order and ready for review. Here are four helpful tips to get you started down the right path…
Get Your Affairs in Order
Before you’re ready to discuss financing a franchise operation, you’ll need to gather some important paperwork relevant to your current financial situation. These recommended documents include your most recent annual tax return statements, mortgage and insurance records and other documentation related to any and all bank/investment and retirement income. Label them accordingly and keep them in an organized file. You can even take an extra step and display this information in a handy spreadsheet, listing both your income and liabilities. Be careful where you store this information and always be wary of potential identity theft.
Pay Off Debts, Refinance If Able
As you prepare to enter entrepreneurship, you may have already embarked upon an ambitious plan to retire debt and refinance existing loans. Ideally, you want to begin this step in your life free of revolving debt such as credit cards. One popular way of paying off multiple accounts is the “debt snowball” tactic. If you have the opportunity to refinance your mortgage and the economic indicators are in your favor, ask your mortgage loan officer for advice. You could end up saving thousands of dollars by freeing up dollars to then devote to your new business.
Get a Professional Checkup on Your Portfolio
Revisit your financial investment portfolio. If you don’t already employ the services of a certified financial planner, it may be worth the nominal fee to have a professional opinion on the risk level associated with your current holdings. Having a portfolio too concentrated on high-risk stocks may leave you vulnerable down the road at an inconvenient time. Make sure the financial planner is well aware of your desire to open your own business and make adjustments that will work within your upcoming lifestyle change. Going risk averse and allowing for long-term financial protection is the goal.
It would be an invaluable exercise to check your credit report for anything you may not be aware of. You should be able to rattle off your credit score without hesitation. The last thing you need is for a medical bill from five years ago to be dragging down your score, all because you forgot about it. It could end up costing you crucial points on your score and downgrade the amount of money you’re able to borrow. Finding out the current state of your credit report is easy and—best of all—it’s free for all consumers on an annual basis. Any of the big three credit reporting agencies: TransUnion, Experian, and Equifax, can provide you with a copy of your credit report. All you have to do is visit www.annualcreditreport.com and follow the directions.
While there are many considerations and actionable items for preparing to begin the franchise investigative process, nothing may be as important as having your financial house in order beforehand. It’s only then that you can begin to work on your business house!
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