Franchise Focus Business News…

How can you protect your business from floods? And what can you do to help your business get back on its feet after flooding? These are questions facing many small business owners across the UK this week after record rainfall has flooded many businesses across the UK.

Barclays Local Business have responded by setting up an emergency flooding financing program to help small  business owners get back up and running after the record breaking floods across the UK.

Steve Cooper, Managing Director, Barclays Local Business Banking:  “Events such as these can have a devastating effect on business continuity and at Barclays we are committed to helping our customers through these difficult times.”

“Our customers should contact their relationship manager as soon as they can to discuss how we might support them with concrete measures that meet their needs and help ease the pain a little.”

More Th>n Business have published a Flood Guidance article which is also worth having a look at. The article gives advice to SME’s on how best to anticipate and cope with flooding. The advice includes prevention tips including assessing the location of your business, setting a contingency plan in place, and reviewing the terms and conditions of your insurance.

Reviewing the terms and conditions of your insurance is extremely important, but you should also check with your franchisor to see if they have any advice or guidelines on how best to deal with flood damage. A good franchisor will believe that your success means their success and will guide you throw the depths (forgive the pun) of the flood and back on to dry land.

Best of luck and here’s hoping you manage to keep yourself and your business dry this winter!

In this week’s Franchise Update, we are bringing you news of this week’s World Trade Week, as well as new small business funding announced by the European Commission.

Click here to download this week’s Franchise Update, or watch in the player below:

World Trade Week will run in the UK from June 8th – 12th. As part of World Trade Week, there will be a number of free events organised in cities across the UK, providing businesses with invaluable information on the importance of world trade in creating jobs and business growth.

The European Commission has revealed plans to provide €19 billion of planned European Social Fund expenditure to provide micro-credits for those who would usually have difficulty accessing the necessary funds to set up a business or micro-enterprise.

Thanks for watching!

In line with the government promise made in the 2006 Budget, the Department for Business, Enterprise & Regulatory Reform have today announced the rearrangement of government funding and support for business start up, growth and redevelopment. The previous 3,000 grant schemes and publicly funded business services and support schemes have now been reduced to a more easy to manage number, starting with 30, with 9 more schemes joining today and two more in April. The schemes can be viewed at the new Business Solutions site and are easily accessed via the Business Link website.

This is the first time that all government business grants and support schemes have been collected under the one banner at the Business Link site, and is a great step towards the provision of accessible advice for budding entrepreneurs. Commenting on the launch of this redevelopment, John Wright, National Chairman of the Federation of Small Business welcomed the change, saying “Small businesses do not want to be swamped by a range of different schemes and proposals that take too long to understand, let alone take advantage of. The FSB welcomes this streamlined set of solutions for business which, we hope, will make it more straightforward for small firms to get the help they need to get started, grow and expand.”

The site provides detail for a variety of schemes including business start up loans, training schemes, business development grants. The site also provides a variety of additional advice services for business owners in a variety of areas such as tax, health and safety, and environment advice. So, if you are considering investing in a business opportunity then you should explore Business Solution’s website to see what kind of government support you can apply for.

During these tough economic times, securing finance for small businesses is becoming increasingly difficult. It is emerging however, that securing credit insurance coverage could prove more difficult that financing. Financial institutions have stated that they will be increasing their premiums to customers by up to 40% and that coverage of more risky industries such as retail and construction will be decreased.

In an article by The Sunday Times, Shaun Purrington from Atradius was quoted as saying “It is fair to say that compared with six months or one year ago small businesses will find it more difficult to get credit insurance. I’m afraid that the appetite of credit insurers to write new policies has declined.”

So what can you do? Well investing in a franchise means that your investment will not be perceived as risky as “going it alone”. In general, franchise businesses enjoy a higher success rate than independent business start ups and underwriters and lending specialists are aware of this. The 2008 NatWest/bfa survey found that “the number of franchise networks had grown year on year for the last 15 years and in 2007 saw its economic contribution grow at nearly five times that of the national GDP growth (15% economic growth in franchising against a 3.1 % GDP growth).” Also, many franchisors have developed relationships with financial institutions which can help individuals secure financing when investing in a franchise opportunity.

If you are considering starting your own business, then franchising is the way to go as it is proving to be the more secure option and while this recession continues – it may be one of the best ways of securing financing and insurance coverage.

When you consider buying into a franchise system, it’s a great way of ensuring that you are working with proven methods that will ensure success in your business. It helps you to avoid some risk that is associated with starting your business from scratch.

However, in order to buy into a franchise, it often requires a substantial investment. In order to invest in a franchise, you will often have to get financial assistance directly from the franchisor or from a bank that the franchisor may have a relationship with already.

Since franchising is a recognised industry, many of the high street banks have created franchising departments or teams to assist a potential franchisee or franchisors with the investment required to start up a franchise. These banks can be helpful in the process of setting up a franchise, as they will be sources of valuable information about financing a franchise.

Before you even start thinking about investing in a franchise opportunity, ask yourself two very important questions:

1. How much can I afford to invest in a franchise?
2. What return on investment do I need to cover business expenses as well as personal living expenses?

Keep in mind that the total cost of investing in a franchise includes fixed capital and working capital. This will be necessary as you get your business off to a start, and will determine how much you need to borrow in order to invest in the franchise.

There are two types of costs that you need to be aware of with a franchise:

1. Initial costs (that includes the franchise fee so you can trade under the brand, cost of setting up a location and/or getting a vehicle with livery)
2. Ongoing costs (day-to-day business expenses)

This will help determine what kind of financing you need. Generally, banks will lend franchisees up to 70% of the initial costs for a well-established franchise. That means you only need 30% to get started!

Newer franchises that are yet relatively unknown may not command such a loan, and banks may offer to lend a smaller percentage of those initial costs.

Remember, when you go in to discuss your loan, you will need to have a business plan on hand. Don’t be scared if you’re not familiar with how to create one of these! Franchisors often help you with creating a business plan, as they have experience in doing so.

Review Franchise Direct’s Financial Assistance directory for more resources on financing a franchise.