As a potential franchisee, you will be keeping an eye on your spending, and that’s a habit worth continuing as a new franchisee. It pays to be cautious with your expenses and your budgeting for the early days in business.

Although you are buying into a business that has support and branding, there are no guarantees of success. You’ll be facing the same challenges that all small business owners deal with, including purchases, rent, wages, superannuation, tax, and insurance.

Check out these tips for the best ways to restrain your finances.

1. Watch the cash

Many profitable businesses have come undone through cash flow issues, so don’t assume that a good revenue gives you a pass to buy a luxury car. Any number of events – a sudden downturn in sales, unexpected costs, interest rate rise or personal health issues – can derail cash flow. 

2. Avoid spending temptation

Keep your expenses to a minimum, particularly when you are just starting out. If a business tool or new piece of equipment is not an absolute necessity, then consider it something to put on hold. Avoid impulse spending at all costs and just buy what you need.

3. Manage your inventory

Holding on to excess stock will absorb your working capital. Make your decisions based on sales data, not a wishlist. And remember that not every bulk purchase discount offer is a good deal for you – that way you’ll avoid getting caught up in spending that could leave you cash-strapped.

4. Remember your financial obligations

Whether you are the only person in your new business, or you have a team of 10, there are financial commitments you need to make. Forget these at your peril.

You’ll need to know when to pay your invoices, premises/vehicle/equipment leases, utility bills, franchise fees, loan repayments, insurance, wages, superannuation, tax, subscription charges.

Keep on top of all your payments so you don’t end up with nasty surprises and large debts.

5. Sustain your growth

Plan and manage your growth so it is sustainable. You will need to match your ambitions with sound operations. So before you invest in growth – whether that’s new equipment, more staff or a new location – ensure you understand how that investment will bring in revenue, and there is a structure to support it.

When the opportunity outruns your capacity to operate effectively, then it’s time to expand. 

6. Budget, forecast, plan

The business plan you have created for your new business needs to be a living document. Use all the systems on hand to monitor your revenue and your expenses, understand how it impacts your business and your cashflow, and as your business grows, update your business plan.

Remember it is easy to get caught up in the daily running of your business and forget about long-term planning. Budgeting, forecasting and planning will help you stay cash flow positive and drive the business forward.

7. Ask for help

If your financial management is becoming rocky, put up your hand and ask for help. Good franchisors will want to see you succeed in business. Franchisors with sophisticated systems will have early alarm bells ringing if they spot anomalies in the figures, so take advantage of the guidance they can provide.

Turn to a franchise-friendly accounting specialist to get expert advice.