Congratulations, you've found a great dog walking franchise that you'd like to join! You've investigated everything and are ready to commit to it. Only one thing remains...
how to finance and pay for your new pet franchise?
Let's first clarify that this article will talk about how to pay for a lower-cost franchise such as a dog walking and/or pet sitting or a dog training business. What we're NOT talking about is a doggy daycare, pooper-scooper, or pet retail store where you'll typically have a higher investment to cover vehicles and/or physical property and inventory.
So for that amount of money, what's the best place to get your initial investment? Answer: Your own wallet.
Yep, that may not be the answer a lot of people want to hear, but your own funds are really the best place to find your start-up capital.
But what if you don't have it (or not all of it, anyway)? The next best place is...
Friends and Family.
With a loan from friends or family, you're probably going to get a better "deal" than you would from a lending institution. You should expect to still pay interest on your loan, but hopefully you'll get a better rate and more flexible repayment terms. Getting money from them (assuming they have it and want to lend it) is also going to be a lot easier than going through the whole application and interview process with a bank. On the downside, what happens if something goes wrong and you're having difficulty making payments? Are you willing to cloud your personal relationship with this person over money?
Next up... an Angel Investor.
An "angel investor" is generally a person (or group of people) who makes investments in start-up companies with hopes of getting a return when that business takes off. That return might be 15, 20, 25%, or more. Generally speaking, an angel investor is probably going to be looking at bigger companies than what you want to start, but it never hurts to ask around and see if you can find someone who's interested in helping you. Look for connections to these investors at the business department of local universities, at your local chamber of commerce, your local SCORE chapter, and through business networking groups.
How about a Home Equity Loan?
These loans are based on the the equity you have in your home. It's basically the difference between what you owe and what the house is worth. Rates are generally pretty good for this type of loan. It's also a very flexible option because you have more control about when and how much money you take out. The potential downside here is that you're putting your house on the line. Now, if we were talking about a doggy daycare franchise that was going to cost you $300,000 to start up, we would not recommend a home equity loan because it would probably be too much risk in losing your home. But, for a relatively small $10,000 - $20,000 loan, a home equity loan can be a good option for many people.
Banks, Credit Unions, and the SBA, Oh My!
Don't forget about banks, credit unions, and the Small Business Administration. Of these three, banks are typically thought of first, but may actually be your lowest chance for success. They're often the most stringent in their review process, can be very picky, and have the worst "deal" for you. Check out the SBA first. They have a variety of loans and grants that you might be able to use for your franchise. If nothing else, they have a ton of useful business information you can get for free. And, if you're not familiar with Credit Unions, this may be a good alternative for you as opposed to a bank. These are not-for-profit institutions that typically have a high focus on community development through business ventures. They want to see businesses succeed in the community and sometimes have very attractive loan programs.
Last, and probably least, Credit Cards.
Broadly speaking, we wouldn't endorse using credit cards to start up a business. But because a dog walking/sitting franchise can be a very low-risk business to start, we'll add them to this list. Don't put your franchise fee on a card that's costing you 24% interest because that's just dumb. But, if you just need a few thousand dollars for supplies, marketing, or something like that (and don't have a high interest rate!), that magic plastic card could get you through. Again, it's not our recommendation to use one, but in the right circumstance, it wouldn't be the end of the world to charge it.
Starting your new dog walking franchise can be a ton of fun. Don't let the lack of money hold you back because there ARE options out there to get funding. Your commitment, combined with the relatively low risk of this type of business, can lead to a quick repayment of the loan, not to mention a lifetime of doing what you love for a living.
If you have any questions on getting the money to start a franchise, just contact us.
