💰 How Much Money Do You Really Need to Start a Business? | The Real Franchise – Ep 59

Rhiannon Welcome back to another episode of The Real Franchise, a podcast that goes where others simply won’t, an unfiltered view of franchising, business mindset and everything that we stand for when it comes to supporting a community of small business owners. Join me, Rhiannon

CEO for James Home Services, and Justin, one of our owners, as we unpack it all with no topics off limits.

Justin, what is that topic today? What are we talking about? Introduce us.

Justin I thought it’d be great to talk about how much money do you need to start a business with us? And I guess it’s a it’s a big question. Like any business it’s, it’s really an important one to, to make sure you understand how much money do you need to start. And you might be sitting there listening to this going, well it’s a subscription.

It’s only a thousand bucks upfront. How easy is that? So why did we Rhiannon, why do we assess? Someone’s financial position before we approve someone to join a network?

Rhiannon Yeah. Good question. And I guess something that probably confronts people maybe, you know, information process is there is a point where you say to them, hey, just to let you know, if you do decide to keep progressing, we’ll get to a point where we will ask you for, statement of assets and liabilities and your personal budget so that we can assess your financial position.

Why do we assess financial position? Well, the very simple answer is we don’t want to put anybody in a position of financial hardship by approving them to join our network. And again, for anybody listening, you’re thinking it’s a subscription model. How, you know, how much money could we possibly need? And we’re going to get to all of that because we do have some benchmarks for, how much money we want someone to have.

And the reason is that even though you’re starting a business with a franchise and we’ve got the systems and we’ve got the marketing and we’ve done this literally hundreds of times before, and we know exactly how to get you started as fast as possible. You’re still not going to be earning $1,000, $2,000, $3,000 a week, every week from week one.

It’s still a business that you’re starting from scratch. So the core of why we assess your financial position is we want to make sure that while you’re building your business over those first few months, you’ve got enough cash to your name that you can still afford to live You can still keep that roof over your head, food on the table, your kids in school.

You can still make all of your daily living expenses and your life expenses without any financial pressure. So that’s why we assess. We assess so that we know that we’re not going to place you or your family under any kind of undue financial pressure. If we approve you to start a business with our network. So that’s why we do it.

I’m gonna throw back to you because this is straight back into your wheelhouse. How do we assess what is it that we look for? I touched on a couple of documents, but can you go into a little bit more detailed information?

Justin Absolutely. So the third step of our information process. So step one is meeting with myself or Bella and going through an information session. Step two is actually meeting our franchisees and talking to them. And then if you want to go further, step three is, we’ll send you an application and, and there are two spreadsheets in that application ones, as you mentioned, assets and liabilities.

The other ones a personal budget. And for some people that I’m working with, this is like the first time they’ve really sat down and we really get them people. It’s really important. This is I said this to a couple last night. This is we’re about making sure, as you said, ran and that your family, if you join, is not going to be put on to under undue unnecessary financial pressure.

And so it’s really important that people take the time to fill in the budget with everything. You know, so that you, as the new business owner, know very clearly what are these each week you’ve got to replace all that you need to survive. And then what we do is go, okay, but I have people say to me all the time, hey, yeah, no worries, I’ve got $1,000.

I can start with you. And it’s like, but wait a second, if we start you, there’s two weeks of training and you don’t earn a cent in those two weeks of training, then you start your business and hopefully there’s customers in, you know, with the Accelerate Startup program, you know, the people will have quotes, should have quotes, jobs and all that sort of stuff.

But what we look at is worst case scenario, we look at how long can you survive if you don’t get a single job, right? And because we’ve been doing this so long, like on average now we start people every week round the country. We know if you have X number of weeks up your sleeve, the risk of you not being successful, so long as you working your business and you end up working the system, that’s the big key.

But if you work in the business, we know if so long as you got X number of weeks up your sleeve, there is extremely minimal chance of failure. Yeah, right. And that’s what we’re about making sure. So it’s we don’t want this financial information. So. Oh yeah we know what where they’re at financially it’s about making sure that you as a new starter.

Can come into this with a clear mindset and know that you’ve got every chance of success. Like, as you and I both know, the biggest challenge for people when they start is what goes on between their, you know, in your mind. And if you come into this and you’ve got no money behind you whatsoever, right from day one, it’s just like this panic.

I need to get jobs. I didn’t get jobs that I, I didn’t get money, you know, and it’s it’s a downhill spiral. Whereas if you come in knowing. Okay. Yes. Then you know the James team have walked me through this, I know I don’t have, you know, I’ve got this covered. I can get in, build my business and I’m right.

So the magic number that I get to share with people we should look at, you need to be able to cover your living expenses for at least three months as a bare minimum. You know, for the average people, if you’ve got massive costs, one big debt load, well, you know, you’re talking about building a new business, so you’d want to make sure you’ve got a bit more than that.

But for the average families and individuals, we would highly recommend at least three months as a minimum. So if you’re listening to this, yes, it don’t work out your budget. Work out what you need every week. If you weren’t working in your job, or what your household needs because, you know, you might have a partner that’s still working their income still going to be coming in.

Yeah, that’s right. That will be. Yeah. So, often times we have people join us whose partners cover all the living costs. Well, you know, how easy is that? But, if it’s just you. Yeah. Work out what your costs are, and you need to have at least three months. We would say to be wise to start. Yeah. Does that sort of answer that question?

Sorry.

Rhiannon Yeah, it totally does. It really does answer that question. I’ve really seen you know, my own experience in this network, individuals that come in, who already have a bit of a tight financial position, we’ve found in the past that their mind is distracted with that stress. Yes. And starting a business is, on its own, potentially one of the more stressful things you will do in your life.

So we don’t want to stack those two stresses on top of each other. All right. So it is really important that we make sure that you’ve got enough that you can carry your business. You can carry the stress, you can carry the hard work, you can carry the determination it’s going to require. You can carry that and you can focus on it.

If your mind’s off thinking about ten other things and worrying about you know, can you pay your rent? Can you pay your mortgage? Whatever. If you’re worried about all of that stuff, you’re not able to fully focus on what you need to be doing in your business. And whilst this also might sound like a bit of a stretch, customers can smell desperation.

Justin Yeah.

Rhiannon When you show up to a quote appointment, if you walk down the garden path going, I need this job. If I don’t get this job, I can’t make my rent this week. By the time they’ve opened their door, you are actually just reeking of desperation and they can smell it and they will either negotiate you to the floor on your price, or they will reed you as someone less professional, not put together, not reliable, not trustworthy, not credible with not having the authority necessary to do the job to a high standard, and they will find a way to back out of that potential work.

So in my experience, people who don’t have that added pressure of where’s the next dollar coming from? Immediately do better in business start up. So that’s why we do what we do.

Justin Yeah.

Rhiannon Obviously it’s 2026. Not everybody has 10 to 15 grand sitting in their back pocket. So what happens when we do all our sums? And the person that you’re talking to hasn’t got what they need? What’s the next step? Is there a next step or is that just it

Justin There’s definitely next step. And look, there’s many people that aren’t quite in that position. Right? I’ve got a gentleman I’m meeting with this afternoon that’s in that position. It’s not quite there. He doesn’t have three months. It’s close but doesn’t have three months. So it’s so then I literally work with people. We sit down and go, okay, so we go through the budget and how much can you be setting aside

So and we literally help people get a savings plan going. Or oftentimes people have got, you know, a tinny at the back or a motorbike that they, you know, I roll out every three months, you know, so many people have those sort of things. It’s like, well, if you really want to start, have you considered maybe selling that off and then so how much do you think the motor bike is going to be worth?

Or I can get nine grand for that no worries. Well, you put that in great. You know, that says you’ve got 30 weeks now that you can cover yourself. Let’s do this. You know, so it’s it’s working with people to either get a savings plan in place. Go to lady actually, yes. You know, I’m like, Bella and I the other day who she’s going to start with us in July.

Right. For this very reason. She’s got a very she set herself a very achievable, realistic savings plan on meeting with her every month. And she’s booked in to start with us in July. So it’s not a no no. It’s, No, not now for your benefit is not the right time. Let’s just wait a month or two to when you know the risk is as minimal as possible and these videos are all about transparency.

And one of the things I wanted to share, just to really fit transparency, this here, I think, is like we have an extremely since we released the Accelerate Startup program, almost every single business that we’ve started and which started, lots of them is still with us today. Since we released that program. This here is one of the key components of that program.

And it wasn’t in the old James, from getting this financial information and you were the one that pushed for getting this. And it has the the amount of people who haven’t made it has slowed dramatically, decreased like it is almost 100% success right now. And this is a big part of it, because, like you said, the mental challenge of starting a new business under financial pressure for a lot of people, once you go on the downward slide into that black hole, mentally, it is so hard to pull out of that.

And this just removes that, you know? Yes, it’s still there in every one of our minds when you say anyone starts a business, oh, what if, now I haven’t got many jobs this week, but knowing you’ve got that up your back pocket, we just see people take off, you know? I know Danny won’t mind me sharing this because, because he’s up about this on his Facebook page.

And I did this recording with him yesterday, and he’s just started with us and he’s had an awesome first week, like, done exceptionally well financially. But even for him, it was like, oh, just. And I was just so stressed because I’ve got gaps in my calendar. It’s like it’s week one, like, man, and you’re probably more than you were getting in your job in your first week.

Rhiannon Like I said, you knocked it out of the park, didn’t he? And I, he’s probably shared with you, last night in in his episode with the real franchise that this week was week two, and he’s more than doubled what he did in week one. Yeah.

Justin Yeah. Exactly. So you know, people people would say, oh, well, why did you make him have 12 weeks? You know he achieved it in the first week. Well that’s what we want to see with everyone. Yeah. But that doesn’t happen with everyone. And for others it’s it’s been a bit of a slog for 4 or 5, six weeks.

And then things take off. Right. And if they didn’t have 4 or 5, six weeks up there in their pocket, plus the two weeks for training, what would have happened?

Rhiannon Yeah, that’s right. There’s another number that we, that we create very early on. And then our business coaches use that number very much to guide the growth and develop a business owner. So we call it our breakeven. Normally in business a breakeven is what does the business need to turn over in order to cover its own costs.

But what we treat as the breakeven is what is the business costs, what are the franchise fees, and what are your lifestyle expenses that aren’t already being covered by another income in your household? And so we’ve got this amount that we come up with a dollar figure. And by the way, your business coach comes up with that number before you’re sitting in your training with them.

They know when you sit opposite them, they know what your breakeven is. Which means how much does this business need to be making every week in order for you to have all the costs in your world covered? That is our sweet spot. We want to get you there as fast as possible. And because we capture this information from you about personal budget and assets and liabilities, we know what your breakeven is and we know how quickly we need you to get there in order to feel okay about this, in order to be able to take a breath and go, okay, I’m going to be fine financially.

And so our business coaches use that. We share that number with you. We talk to you about what it means, and we make sure that the plan we have for how quickly you’re growing your business aligns with getting you to your breakeven before you run out of cash. And so for some people that have got, you know, 50 weeks, 100 weeks, 200 weeks, indefinite, that before they run out of cash, the breakeven is more about how soon can we get your business truly profitable.

But for people who are a little bit tighter and they’re using the business as a vehicle to create financial freedom for themselves, perhaps for the first time, then that breakeven becomes, how much do we have to get your business turning over in order for you to get into that space of, okay, I’m going to be okay. I’m not using money every week now.

So I think that it’s one of the things that we’ve introduced that makes our approach to coaching and training far more strategic and personalized than it probably. I don’t know any other networks that do what I do this particular task. So I think that it’s a really great thing that we do it and we pay attention to it.

The only other thing I want to add is that we don’t make judgment about your financial position. You know, we see everything. We see people who are really comfortable financially and we see people who have been through it all and who are really trying to rebuild their lives. And, you know, they are seeing this business opportunity as their vehicle to rebuilding a life that they want to create for themselves.

We don’t judge. Everybody has their own story. Everybody’s come from something. Everybody’s fighting a battle that we know nothing about. Our role isn’t to judge. Our role is simply to assess whether we think that we can get you to your breakeven fast enough before you run out of money.

Justin Yep. Very good. Yep. And we do that very successfully. But we do.

Rhiannon We really do. I think one of the stats now, we’ve started more than 50 business owners in the last 18 months since we launched Accelerated Startup Program. And to date, we’ve only had one of those business owners exit our network. And that was, extenuating health circumstances that led to that. So that that is a stat that we are both.

I know I could speak for both of us in saying that we are both incredibly proud of. And so our our business coaches, they love nothing more than when their business owners succeed. So it’s something to be really proud of.

Justin Yeah.

Rhiannon Yeah. Perfect. Let’s leave this episode right here. I hope you found it interesting. If you have if you’ve been listening and you’ve been thinking to yourself, I’m not sure if I’ve got enough right chat. Anyway, let us work through the process with you, because even if you don’t, we can help you with a plan. If this is something you really want, don’t let what’s sitting in your account right now stop you from taking the first step.

Because there’s always a solution, there’s always the next step. And we are here to guide if this is something you truly want for yourself. So with that, I hope that there’s been some value in this episode for you, and I hope that you join us for the next episode of The Real Franchise.