WHERE DO I START?
Franchise Accountants helps you with the pre-purchase inspection process you need before buying a franchise
If you’re new to buying a business, it can be a daunting process. Is it good value for money? What should you pay for it? How much money can you expect to earn? Will this franchise work for you and your family?
After all, it’s a big decision often involving borrowing money on the family home. ‘But you don’t know what you don’t know,’ says Philip Morrison of Franchise Accountants. ‘That’s why you have to get any business thoroughly checked out to make sure it suits your needs.’
Franchise Accountants are specialists in providing cost-effective and practical advice to franchisors and franchisees. Having analysed hundreds of franchises over the years, they bring a vast amount of knowledge to the table, including comparisons of what it is and isn’t reasonable to expect from any particular type of business. ‘Basically, as a client said to me just this week, we’re the guys you want on your side,’ says Philip.
The flowchart (right) identifies some of the most critical steps you need to take on the pathway to business ownership.
1. financial evaluation
You want to know whether the business stacks up as a financial proposition and whether it suits your own circumstances. What is it worth, what are the trends, how is it likely to perform and what should you pay for it?
2. franchise finance
How much will you need to borrow, and is this business likely to be able to service the debt? Everyone’s circumstances are different – see the article on What can you afford? at www.franchise.co.nz. You’ll need to put together a business plan showing how you are going to operate your business and including cashflow projections to support your loan application. ‘Knowing your numbers is critical, so use a franchise-experienced accountant,’ Philip suggests.
3. franchise legal advice
Legal matters can be complex, so use a franchise-experienced lawyer to review the franchise agreement. ‘We work with a number of specialists who can assist you with conveyancing and bank loan documents, personal guarantees or lease documents,’ says Philip. ‘Having advisors who communicate with each other saves you time and money.’
4. asset planning
When setting up a business, it’s essential both to protect your assets and to be tax efficient. Do you buy the business in your own name, a trust, a partnership, etc? It’s critical to get this right first time as changing it later is expensive. ‘Getting the right advice could save you thousands; trying to save money by using inexperienced people or doing it yourself could potentially mean you pay more tax than you need,’ Philip warns.
5. tax advice
Speaking of tax, knowing what expenses you can claim and what and when your tax obligations are payable, is another critical success factor. Relying on friends and family to guide you on tax advice is a bad idea; tax laws change and can be complex. You don’t need to be a tax lawyer but you do need to know the basics. See 7 tax tips for franchisees at www.franchise.co.nz/article/2333 and GST for beginners at www.franchise.co.nz/article/2099.
6. business software
Keeping good records is another essential so set up a good accounting and payroll system to operate your business from the start – an experienced accountant will help set it up so you can test your performance against the franchise benchmarks. Upskill yourself on doing your own book keeping. Having good records helps you make informed decisions in operating your business.
7. accounting services
Surveys show that 71 percent of business owners see their accountant as a trusted business advisor – not just at the start, but on an ongoing basis. ‘So choose wisely,’ Philip says. ‘Do they know what are the key success drivers in operating your franchise? Do they know tax law as it relates to franchises? What business advice apart from tax return service, do they offer? Do they charge by the minute, or do they offer fixed-price service plans? Ask for references from other franchisees – and take them up.’
Owning a successful franchise business starts with investing in a proper pre-purchase inspection. ‘You wouldn’t buy a house or a used car without getting it checked out, and buying a franchise isn’t a short-term thing so don’t take risks,’ says Philip. ‘Use a franchise-experienced accountant and get the advice you need to make an informed decision. Contact us when you’re ready to buy – not after!’
This advertorial is taken from Franchise New Zealand magazine Year 25 Issue 3
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This material is copyright © Franchise NZ Marketing Limited, Franchise New Zealand ™ magazine and Franchise New Zealand On Line . While it may be downloaded for personal use, no part may be reproduced in any form whatsoever without the specific written permission of the publisher.