7 Sound Financial Principles for Family Operated Franchises

April 6, 2011 - PRLog -- Establishing and operating a business can sometimes be a difficult task.  That challenge becomes even more difficult when family members become involved.  Setting clear expectations at home regarding the family finances can go a long way towards sustaining franchisee happiness.

Here are 7 Sound Financial Principles recommended by Joe Barbat, http://joebarbat.com, for your family to adopt as it grows with your franchise:

1. We will not invest more than $_____ of our cash/liquid capital.

2. We will not borrow more than $______ in additional funds to capitalize the business.

The new business owner needs to have enough money to cover household bills and run the business for 12 to 18 months. These questions will help determine how much you need:

3. To make sure we can still live comfortably while growing the business, we will cut our household budget to $ ____ per month for at least ____ months and be sure to never exceed that budget.

4. We will only buy a franchise that we have confidence can get big enough to feed itself, i.e., income (cash flow) will cover monthly business expenses (fixed and variable costs), no later than ___ months after signing the agreement.
Let your family know that you may not be able to draw a salary for one to two years.  Consider how household expenses will be covered during that time.

5. We will generate other income of $___ (amount needed to make up for loss of other income and savings budget) from ___ (spousal income, other household income or investments) independent of the new franchise business.

6. We will only seek a franchise for sale that we have confidence will be able to pay me a discretionary salary (enough to cover some or all of household expenses) without harming the business no later than ___ months after signing the agreement.

7. We will only pursue a franchise business opportunity that will allow us to have our initial investment back, i.e., pay off the start-up loan from business income, in ____ months/years.
About Joe Barbat

Joe Barbat, http://www.joebarbat.com, founded Wireless Toyz in 1995 and grew the company from a one kiosk service center to a multi-location franchise throughout the United States.  As an avid fan of all things Michigan, Joe enjoys snowmobiling, family, and recreational activities, as well as, testing the next hottest technology products to enter the wireless marketplace.  Honored by both Crain’s Detroit and Ernst & Young for community involvement and entrepreneurship, Joe Barbat has a passion for developing successful franchise businesses in the wireless retail industry.    

For more information on this topic and other like it, please visit: http://www.joebarbat.com.

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Entrepreneur Joe Barbat of Wireless Toyz has been referred to as one of the industry thought leaders in his effort to revolutionize the wireless retail industry.