Housing Finance Explained

Housing Finance Explained

Don’t we all know that there are costs that come with owning a house! Especially, ongoing costs, that have paramount safety implications as well being able to ensure a reasonable level of comfort.

Let’s start with utilities. Most people in developed countries have never had to to walk miles to fetch buckets of water to bring back home (or should that be buy massive bottles of water, from retail stores like Lidl?). As wonderful a thing as water on tap is, it can only come at a price. When you move home, the first thing you need to do is ascertain the contact of an approved plumber as well as the water company (who are, of course, responsible, for keeping that water uncontaminated etc.!).

In this article’s country of origin, it seems to me that people prefer radiators over open fires with chimneys. Of course, in the modern day and age we are always comforted by the idea that there are alternatives to open combustion indoors; dangerous! Know whether your heating comes from gas or from electricity, keep your gas man or electrician on standby. The only real ones worth considering are registered ones (CIPHE / CORGI / APHC in the UK) who don’t try to fob you off with hidden costs and who do not always disappoint by not having the right equipment.

As far as electricity goes, there are usually additional charges involved if you intend to have a PC with Internet access – but this should be discussed with the individual retailer.

Everyone goes on about mobile phones these days but that does not mean that they have ceased to take their land lines and answering machines for granted. Always allow consideration for calls costs – but would you know whom to turn to if you got a bad reception or something like that? Who’s your phone engineer?

Other than that, homes tend to be the best source of work for DIY contractors – painters / decorators, plasterers, aerial engineers etc. etc.

Another aspect of the broad topic of housing finance is the housing market. Your real estate agent should help to provide you with good suggestions when you are seeking to avail yourself of a new domicile (but consider mortgages issues). Of course, banks are always willing to discuss the housing deals that they have on offer (but you should always read everything – including the small print – before you sign anything).

How to Get Started in Owning a Franchise

Get Started in Owning a Franchise

There’s lots of advantages to owning a franchise. You can operate under an established name, sell products people already want, have a pre-determined pricing structure, and it can be a valuable opportunity. Some may be more beneficial than others, and you’ll have to do your homework though! Is a franchise investment for you?

While it’s still no walk in the park; a franchise could be saving grace for anybody who wants some of the ‘work’ that owning a business involves done for them. This bonus comes at a heft cost, and there are lots of pros, and cons to the situation. Let’s examine each of them.

The number one pro to owning a franchise is of course operating under an established name. Let’s say somebody is driving down the road, and they see two resturants – Burger King, and Joe’s burger shack. People are more likely to stop at the place that they are familiar with (Unless of course they’re an avid BK hater).

There’s always the one extremist who’s totally against Mc Donalds, KFC, or any other chain. Whether it’s because they’re funded by the Church of Satan, they way they supposedly treat employees, ect. The people who appreciate a chain store more than outweighs those that do not; else this model would not exist.

You also can take into account that all your product sourcing, pricing, and materials are through the company. This means that you won’t have to barter with dealers, and go through the hassle of making sure you can turn a profit for the price you charge. The only problem with that is that the corporation can charge you anything that they want. You’re only allowed to by cups from them, buy computers from them, buy fries from them, ect.

There’s also a certain code of ethics you’re not allowed to change. Typically regarding wages, benefits, practices, how employees are handled, ect. For example somebody I know used to be a manager of Papa John’s. Per their chain’s rules they are not allowed to hire any drivers with traffic violations – No exceptions. Things like this will be beyond your control with a franchise; wherein if you owned your own business the law is made by you.

There can be other rules involved with you even purchasing a franchise though too. For example Chik Fil-a manually approves buyers, and if they deem that where you wish to put the franchise is unacceptable they’ll deny your claim. The fees for operating different entities varies a lot as well. It can be anywhere from $70k to upwards of $1 million dollars. The price tag is not for the faint of heart, but if you’ve got the cash it can be worthwhile to you.

Some people own several franchises whether they be the same store or different businesses, and make a pretty penny doing it. A franchise owner does not always manage the franchise either; meaning they don’t come to the store everyday, and do the dirty work. Many simply bank roll the operation, and collect the rewards – opting to pay somebody else to over see operations for them.

You also will not have to deal with the hassle of supplying benefits to your employees. Since you are owning a franchise any of that goes through the actual corporation, and they can take part directly. This goes for training as well – Your store will most likely recieve pre-made materials for your future employees.

If you decide you want out of this particular franchise you’re free to sell it at anytime most cases to another individual. Our local Dominoes pizza store trades owners probably a couple times a year – Mostly because they find out that particular chain has a very low profit margin, and expensive equipment.

Enterpeneur.com recently released their list of the top franchise opportunities for 2009! Start up costs in parenthesis.

  1. Subway ($78k -$238k)

Subway is a very popular sub chain. Growing in name for value, and health reasons. Personally I detest their food, but considering the low start up costs, and big profit potential I’d probably still own one of those if I were to go a franchise route.

  1. Mc Donalds ($950k – $1.8M)

The biggest burger chain in the world of course commands a high price. No doubt you’re paying for their big name, and not equipment charges. While this is pretty much guaranteed to turn a profit – It might be a while before you recoup your expenses on this one.

  1. Liberty Tax Service ( $53k – $66k)

Very cheap start up costs, but low profit potential in my opinion. More, and more people are getting their taxes done online, and with software these days (including me). It’s not hard to do them yourself, and I don’t think it will be much longer before people refuse to pay $70 to pay money to the government. There’s also a limited time frame to do business so the earnings seem small to me – Not something people would want every week like fast food.

  1. Sonic Drive-Thru ($1.2M – $3.2 M)

This franchise seems rather expensive considering their popularity, and their equipment costs. This resturant pretty much consists of a kitchen, and outside dining room!

  1. Intercontinental Hotels Groups (Varies)

In the right area a hotel could be a very good investment. I live in what may be the vacation capital of the United States – Everyone wants to come to sunny Florida, and they need a place to stay! The pricing is unlisted, and probably varies by location, and building size.

  1. Ace Hardware ($243k – $1m)

Ace Hardware is of course a hardware store – which again looks overpriced to me. They pale in comparison to competitiors like Home Depot, and Lowes who have a much bigger selection. The store layouts are basic, and unimpressive. I don’t see the huge profit potential from something so pricey, and yet so small.

  1. Pizza Hut ($638k – 2.9 M)

A popular pizza chain. The have the advantage sometimes of being both a sit down resturant, and a delivery service. Similar stores like dominoes, Hungry Howies, and Papa John’s do not offer a dining room. Again, a tad pricey for their offering I think. Perhaps to be more exclusive, but they may offer better profit margins than competitors.

  1. UPS Store ($171k – $280k)

This one looks like an opportunity to me – Owning an internationally recognized postal carrier outlet. Especially in a busy shopping center where people could do their shopping, and mail their packages all in one go. While I use USPS myself; I know somebody who mails packages at UPS about every week. The start up costs are much lower than some of the other options as well. Could be very busy during holidays too.

  1. Circle K ( $161k – $1.4m)

Circle K is a quickie mart type of store, but can also have gas pumps. Any place convienient to the main road that sells gas can make a pretty penny. I’m surprised this one is so cheap considering the prices to install pumps, maintain gas containers, ect. Though that will probably all come out of your pocket – Something to watch out for.

  1. Papa John’s Pizza ( $135k – $431k)

Cheaper than the other pizza place on the list, but probably not quite as popular. This one seems like a better value to own, but you’d have to do your market research before buying. Some of those marked as more expensive may be that way, because of their desirability. The profit margins they turn, the desire for their product, ect. Investing in a business peddling pricey products at this time may not be wise, but a company like Mc Donalds with it’s dollar menu should be seeing pricing booms.

Even if a family can’t afford to drop a good $100 at Outback for dinner they can afford to spend a few dollars at McDonalds instead. A recession puts a strain on every business, but some are doing better than others. You might look into lower cost resturants, or discount stores such as Dollar Tree too.

If you don’t have a load of cash sitting around it is possible to get financing for a franchise purchase – though this will be no easy feat. If you have less than perfect credit then you will have quite a time doing it. Below 700 probably will not net you a loan for an expensive business venture.

How to Finance a Business Purchase in Today’s Economy

Finance a Business Purchase in Today's Economy

You’ve come to the right place if you want to understand how to finance a business. Getting your business financed can be a piece of cake if you get a complete evaluation on all potential lenders, choose the right loan for you and discover how to structure your financing. Stay tuned to learn how you can make getting your business financed a breeze.

Our current economic situation leaves many people reluctant to spend any money. Many banks are hesitant to lend money in fear they will lose their investment or gain a business in foreclosure. Protect yourself and your business by requesting a background check before you decide on one particular lender. With many banks dropping like flies from day to day, it is important that you get the protection you need for your investment. Once you’ve mastered securing a stable and reliable lender for your new business, finding the right loan for you will be the icing on the cake.

Once I’ve made a list and checked it thoroughly to find a good lender, then what? How do I know what type of loan would be best for me and my business? Your loan should fit you like a well fitted glove. It’s important to choose a loan that won’t cause you to “live beyond your means”, your business will only last if you can afford it. Choosing the right loan is important, but a proper financing structure is the key part to the purchasing process.

I found the right lender and a loan that fits my requirements, what else do I need? What else would I need to do to make my business purchase? It is important to fully analyze your finances. You need to make sure that your finances are structured for success now and in the future. Understand that the research and planning you put in now will create the foundation for success for your business.

Did you realize all the thought and planning that goes into purchasing a business in today’s economy? Getting your business financed can be a piece of cake if you get a complete evaluation on all potential lenders, choose the right loan for you, and discover how to structure your financing. Now show the world that you aren’t going to let the current economic recession crush your dreams of owning your own business today.

 

How to Use a Commercial Factoring Company to Finance a Business

Finance a Business

Factoring is designed to increase cash flow when funds are limited and accounts receivable are high. It is short-term financing to solve short-term cash flow bottlenecks. The cash-poor company sells its accounts receivable at a discount to a commercial finance company known as a factor. Cash is made available to the entrepreneur as soon as proof of shipment is provided or on the average due date of the invoice. Most factoring arrangements are made for one year.

Factors make their money by acquiring a company’s invoices and collecting on them, charging the business a fee. Unlike banks, factors buy, pay for, and own the receivables outright. If your creditors don’t pay, the factor may incur a loss. Some factors require that the entrepreneur establish a reserve for bad debt of approximately 5% of the account. If the account is not collected within 120 days, the factor will draw against the reserve. If the receivables eventually are collected, the factor’s return on investment exceeds that of conventional lenders.

Many business owners use factoring when their banker turns down a loan request that they had tried to guarantee with their accounts receivable as collateral. Under factoring, accounts receivable are not used as collateral against a loan but instead are sold directly, at a discounted value, to a factoring company. For example, if the factoring company uses a one-time charge and discounts 6%, then for every $1,000 in receivables, the seller receives $940.

Some factors discount according to a schedule, paying a smaller percentage up front and then paying an additional percentage depending on whether the receivables are collected within 30, 60, or 90 days.

The factor takes over the entire collection procedure, including mailing the invoices and doing the bookkeeping. Each of your customers is notified that the account is owned by and payable to the factor.

If you are a new business and your accounts receivable are evaluated as marginal credit risks, you may not be able to find a factor that will accept your accounts receivable. Let’s face it: although they take greater risks and are more liberal lenders than commercial banks, factors need to be assured that your customers will pay their bills. They will execute substantial credit checks on each debtor and carefully analyze the quality and value of the invoice before buying it; they look to the strengtMof the receivables and creditworthiness of the invoices that you are selling them. Factors will also establish credit limits for each customer.

Factoring is not the cheapest way to obtain money, but it does quickly turn receivables into cash. The advantages of factoring are receiving a cash injection quickly, paying bills in a more timely manner, obtaining more credit, and fostering better growth than traditional borrowing. Also, the fee is an expense and offsets taxable income. Essentially, the entrepreneur is buying insurance against bad debt.

The chief disadvantage of factoring is the high cost of money relative to traditional borrowing. Also, to many entrepreneurs, factors receive outrageously high returns. A business concerned with cash flow but not with collection might want to pursue the less costly route of using accounts receivable as collateral for a commercial bank loan.

Overall, factoring can be compared with using a credit card for your business. Factors work best with businesses that have cash flow problems because of long delays between making and selling goods and then collecting cash. Start-up ventures, emerging businesses, and service companies are prime candidates for factoring. For recommendations and references about which factoring companies to use, talk to your trade associations, to members of the infrastructure, and to other entrepreneurs in your industry.