The Barre Studio, Capitola was seeking approval for a $250,000 SBA 7(a) loan to start a barre fitness studio franchise. I was happy to provide the business plan consulting that helped secure the SBA loan, and strategize the launch of her own brand.
Check out the SBA 7(a) Loan requirements:
The owner was in a bit of a chicken and egg situation. She was actually trying to get approval to become a franchisee for a nationally recognized barre fitness chain. However, she needed to prove that she could get a bank loan before the franchisor would approve her for the new franchise location.
It was kind of like putting the cart before the horse. She needed a business plan in order to get approved for a bank loan before even knowing if she would be approved for the franchise. It made sense because the franchisor wanted to be certain they were approving a potential owner that would have the ability to open a franchise location in the first place. But, it was a tough spot to be in for a new business owner.
I was contracted to write her business plan for the $250,000 SBA 7(a) loan. However, she needed business plan consulting… not just a business plan writer. Together, we analyzed her potential market area, the demographics of that area, and really honed in on how many target customers she would be marketing to.
We also analyzed the Franchise Disclosure Documents, which included the financial numbers; taking into account the initial franchise fee, annual royalty fees and required local and national marketing fees imposed by the Franchisor Agreement.
During the whole process, the franchisor sent us the proposed sales area guarantee, which only included a 2-mile radius around her proposed location. This meant that the franchisor or another franchisee could open another franchise just 2 miles away! This was a red flag, so we decided to rethink the entire idea.
After reanalyzing the market and financials, we came to the conclusion it would be better to open a barre fitness studio independent of the franchisor. It would be a slightly bigger risk without the backing of a rapidly growing national brand name. However, all the money that would be paid to the franchisor would be better invested in a marketing campaign for a new brand.
We consulted with the bank, and they agreed to approve an SBA loan for a new barre studio brand. Although they were more comfortable with lending to a franchise model, they saw the value in starting a new brand as well.
The Barre Studio, Capitola is thriving today!
I seem to say this a lot to prospective clients, just remember… you can’t buy a business plan. The ideas in your head (your branding, your processes, etc.) are what make your business unique.
You can hire a business plan writer to compile a neatly-formatted and pretty document, but it takes in-depth business plan consulting to strategize the future of your business and really plan out the right business plan direction to help you secure funding.
I've written a few articles and developed some FREE materials to help you write a business plan that is unique and attractive to investors and banks.
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