Pension Led-Funding Franchise Case Study: Sevenoaks Sound & Vision
For James and Helen Gilbert the chance to take on a franchise for a leading UK audio visual brand seemed as tempting as the equipment on display.
J & H Ltd Bought The Goodwill From Sevenoaks Sound & Vision
“The business was a going concern, so there were no fit-out costs,” says Helen. “We took out a bank loan to cover the start-up costs.”
For the first two years business was good, then the market changed and turnover began to suffer.
“This business is all about being able to reinvent yourself, which puts pressure on cash flow. While franchisors will offer some degree of support, they have their own overall business to run, so you have to treat the franchise as your own business.”
James And Helen Also Felt Restricted By The Bank Loan
“It was onerous and demanding to service. We also wanted to pay off the goodwill element of the franchise so that we could make our cashflow more reflective of the business.
“Our financial advisor at the time had presented us with a number of options and we also explored pension-led funding.”
James and Helen weren’t concerned about the short-term implications for their pension investment.
“If we’d waited until the ‘bitter end’, given that the start date for my pension had moved from 55 to 65 over the last few years, we wouldn’t have been any better off,” Helen explains.
“At least, this way, we’re able to use the money to make our business better and therefore our lives better.
We will still also get pension growth in the long term as a result of funding our business through our pension scheme. Our pension-led funding adviser was very informative throughout and they made the process straightforward.”
Most importantly, James and Helen have removed the cashflow issues and are able to focus on growing the business.
"For Franchisees, This Is A Really Good Way Of Funding A Business"
“My view is, if you have a pension pot that’s not working hard enough for you, why not use it to make life easier?
You’re using it for your own business as opposed to keeping it somewhere which is feeding everyone else and not yourself.
I feel we put money into pensions but, when it comes to retiring, we are often very restricted in what we can do with the funds. In using it to finance the business, I believe the money I worked hard to put away is now working for my benefit – it certainly helps me sleep at night!”
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