Avoid the Number One Business Killer By Purchasing a Cash Flow Franchise
It pays to run a business with great cash flow. Why? Because poor cash management is the number one reason that small businesses fail. Now there are ways to manage cash flow in a business, but the easiest way is to own a business with great cash flow.
In this article, we discuss the importance of cash flow and name some of the best cash flow franchises you can own today.
What is cash flow, and why is it important?
As a business owner, you need to be able to pay your bills. That’s a given. Positive cash flow ─ when you have more money coming into your business than going out of it ─ allows you to do this.
Cash flow isn’t the same as profits. You can have positive cash flow, but not be making a bean. This is especially true if you are growing your business and investing in new equipment, hiring staff, etc.
What causes poor cash flow?
While all businesses can run into cash flow problems, startups and those run by inexperienced entrepreneurs are most prone. Leading reasons for this include:
Underestimating startup costs
Overestimating profitability in the early months
Not budgeting for cash flow
Low profit margins
Slow to receive payment for goods and services
Managing cash effectively mitigates many of these issues. Being conservative in your business planning (hoping for the best, planning for the worst) helps you prepare financially when starting your business. Or you could simply buy a franchise with great cash flow.
8 Exceptional Cash Flow Franchise Sectors
There are some great franchises to buy, even in a recession. Businesses that provide recurring income and that benefit from brand recognition. Remember, the faster you get to cash flow positive, the more likely it is that your business will be successful.
Here are eight sectors that benefit from great cash flow, and a few examples of franchise business opportunities in each.
Fast food retail businesses are renowned for their ability to generate cash flow. However, you will need reasonable initial capital to buy real estate and the equipment needed to operate your fast food establishment.
Well-known franchise brands include:
Health and fitness have been growing sectors of the economy for several decades, and while pandemic lockdowns reduced business for gyms, there has been a big bounce as the threat of Covid recedes. Businesses were also able to adapt and offer training routines that could be achieved at home.
Household names in fitness franchises include:
Beauty and wellness
No matter the economic environment, people desire to look and feel great. Beauty and wellness businesses are creative enterprises and seem able to find innovative ways to enhance their cash flow. This includes virtual consults, selling gift cards, and offering promotional sales.
You’ll find many beauty franchises deliver great cash flow, including:
Hand & Stone
Americans love their pets and often spend more money on them than they do on themselves. This makes pet franchises ─ such as doggy daycare, dog walking, and pet grooming ─ high cash flow businesses.
Here are four great pet care franchises that fall into the high cash flow category:
Pets Are Inn
Camp Bow Wow
Parents want the best for their children. This includes investing in education, and parents are willing to pay good money to help their children reach their academic potential. Education can be provided in physical locations, such as purpose-built learning establishments, in the home, or online. With tutoring paid for upfront, education franchises can deliver great cash flow to their owners.
Some of the best-known education franchise businesses include:
School of Rock
Building on the greater awareness of the need to lead healthy lives, and coupled with the cost of health care and aged-care facilities, home care franchises are another example of high cash flow businesses, and include:
Right at Home
Home Instead Senior Care
Griswold Home Care
Cleaning is big business, with no shortage of customers. Offices, retail stores, factories, and homes all benefit from being kept clean ─ and in many business settings, cleanliness is regulated.
Big brand names that operate franchise business models in this sector include:
Whether operating a real estate franchise as a real estate agent or property manager, this sector is well-known for its ability to generate positive cash flow:
Buy the best cash flow franchise for you
Cash flow businesses are all about generating positive cash flow. When considering which is best for you, it’s crucial to consider a wide range of factors. These include which type of business you are best suited to, your personal strengths, the location in which you will be operating, the training and support the franchisor gives, and, of course, your budget.
To select the best cash flow franchise to purchase, you’ll need to conduct comprehensive due diligence.
It is important for you to know what you want from your business before investing in any franchise. You should research extensively about the diverse types of franchises that are available and figure out which one would be best for you based on your needs and preferences.
Where do you start?
Either take a franchisee assessment or, if you prefer, book a free consultation to discuss your business goals and franchising objectives.