"Financing a new Photography franchise" Tue Feb-27-07 08:46 AM by Mchedwards
I am looking for advice on financing a new franchise opportunity. I have been working part time out of my house as a photographer for the past 2 years. My wife and I work in the telecommunications industry as managers for the past 12 years but both have about had enough. Everything is being off shored and we need to make this transition before we become a statistic. I have loved photography since high school and felt it was the best path for a career change. We have invested $50,000 in equipment in the past 2 years and have outgrown our Garage Studio. Not to mention that I can not legally conduct my studio out of my house due to city ordinances as well as summer and winter are out of the question as the space is not climate controlled.
In my training/testing stage I followed the training of a nationally know Senior photographer, Ron Kramer (http://www.portranet.com/pnet-home.shtml). From him I have learned and continue to learn the art and business of fine portraiture. My next step was to follow the guidance of one of the best Children Photographers in the nation, Cindy Baxter (www.studiocportrait.com). Her story is very inspiring and her work is absolutely amazing. I stumbled across this franchise opportunity while conversing with Cindy where she told me about her plans to franchise her studio model and artwork concepts. This is just about ready to launch but I just happened to be involved with some of the planning stages as they were interested to hear my feedback. So as is, I very well may be the first studio to open up. No existing franchise information is available but Cindy?s team collectively has 55 years experience in the industry.
I will need to come up with approximately $150,000 for start-up and working capital. Our personal cash investment consists of the money already spent. The good news there is the money spent falls right in line with her studio concept. The same equipment, Lighting, props , backgrounds, etc... Of personal concern is not my credit but my debt to income ratio. We have approximately $40,000 of equity in our house but little else. The franchise will help with the SBA approval but I would like to hear the pros and cons of searching out investors for a portion or all of the financing. Or better yet, what path would be the most efficient? Would it be wise to spend my energy tracking down one form over another?
#1. "RE: Financing a new Photography franchise" In response to Reply # 0
The general rule with having investors is that you will lose more control over your business. Now with a franchise I don't know how much control you will have as it is. The "pro" is that you just may be able to find investors for your franchise. The "con" is that you may not. But you won't know until you actually start the process of looking for investors. Personally (since you need so much capital) I would look into finding as many funding entities and not just concentrating on investors - although in your specific case it would seem that investors would be the best way to go.
#2. "RE: Financing a new Photography franchise" In response to Reply # 1
Some options that may help you are to go to your City planners, and local redevelopment agencies in your area. Often times they will have retail/commercial properties that are vacant or "distressed" and will assist you in leasing or purchasing these properties at a drastically cut rate, sometimes they will give you a certain period of time like 6 months or more free rent in order to generate a taxable base from your business. Remember, it PAYS THEM in the form of sales &/or property taxes (or BOTH) for you to be in business so often times they are quite receptive to "unorthodox" options to make these properties to pay for themselves.
Remember, they will get license fees, taxes, rent, and draw more businesses into the area simply by assisting you to open your business. Also, you may find it difficult to get a large SBA loan, or large grant. I am finding smaller ones are easier to get. Your local Microenterprise Association/Initiative may be of help.
If you are going to try to raise capital on your own, you might check out a program that helped Bedzzz Inn to raise 92,000 dollars in 90 days. I am utilizing this program myself to help raise some of the capital I will require to open my custom guitar/amplifier shop as well as get some of my guitar innovations patented and to market. Try going to http://bedzzzinn.com/raisecapital-tc.html and check into the program.
#3. "RE: Financing a new Photography franchise" In response to Reply # 0 Fri Mar-30-07 05:45 AM by bizdev
Mike, this sounds like quite an exciting business venture! It looks like you're on the right path.
The $150,000 sounds reasonable for your start up costs. Have you completed your formal business plan? You must have that ready in order to start looking for funding sources (see below if you need help with the business plan).
If you go the SBA backed commercial loan route, you will need to contribute about 20% of your own cash. You will likely need to take out a home equity loan to cover your portion. Your experience in the industry and your existing photography business will go a long way to getting approved for the SBA loan.
Is it possible for one of you to hang on to your job for the first year or two? That way one of you is working the business full time and the other part-time, while still bringing in a steady paycheck. That strategy will help with securing the SBA loan too.
Franchises stand a better chance at success, though it doesn't necessarily guarantee success. This being a brand new franchise makes it that much more risky. I once walked away from a new business opportunity because it was so new and there were no tried and proven franchisees yet. That was just 3 yrs ago and the company now has grown tremendously.