If you’re thinking of purchasing a franchise, your process is going to differ greatly from those thinking of starting a business or purchasing an existing one. Franchise ownership brings with it a unique set of challenges, risks, and benefits that some do not completely grasp.
The first and most important question I ask anyone investing in a franchise is “have you done your homework?” The number of franchises available is endless, and what most don’t realize is a franchise is more than just your typical fast food restaurant or retail store. It is important to move past the bricks and mortar concept of a franchise and see the franchise world in its entirety. For example the professional services franchises industry, which handles white-collar jobs, like career coaching and banking services, is surging ahead of the typical retail franchises. Spurred by middle-management and upper-management individuals with expertise in a field, they are looking for some type of business opportunity and this type of franchise is an opportunity for individual professionals to be part of a larger brandwith access to many resources.
Choose your industry and do your research! As I said last week, knowledge is power. Every franchisor has different regulations and policies and as such, they cannot all be treated the same. You must dive into the nitty gritty details of each franchisor and decide which businesses truly meet your criteria. Make sure that your goals and values align with those of your franchisor.
Once you have narrowed down your options, determine if they are financially feasible. Franchises require an up front investment, so it is imperative, as is with any business, to ensure you have the capital necessary from the beginning. On the plus side, franchises are a known, fixed investment unlike start-ups or existing businesses where there can be daunting hidden costs.
Once you have purchased a franchise, enjoy the benefits! If you partnered with the right franchisor, you will receive ongoing support from the franchisor in terms of training, resources, marketing, and much more! With an established brand, your selling power is increased, your ramp up period is shorter, and your likelihood of success is greater.
Ultimately, you must find the franchisor that best suits your needs and ensure that your short and long term goals are consistent. If you can find your match, a franchise partnership may be right for you!
Continuing with the theme of last week’s blog, I’m going to dedicate the next three blog posts on each of the three types of business ownership I outlined last week: Starting Your Own Business, Buying an existing business and, Buying a franchise.
This week I will focus my blog on starting your own business from the ground up, and what that really means for the eager entrepreneur. As mentioned in last week’s post, this type of ownership comes with the highest level of risk and the steepest learning curve.
There are 101 things to consider before you get started. Entrepreneurs often underestimate the amount of time, effort, and capital that go into a start-up company. It is very important that one understands exactly what they’re getting in to.
The following are what I believe to be the 5 most important things to consider when starting your own business. Each of these should be at the forefront of your mind before any decisions are made.
A business’s success is dependent on a strong vision and solid business plan. A business owner must know exactly what their business and brand stand for, and where they would like to take it. Setting short and long-term goals (that are realistic and attainable, of course) is extremely important to track business progress and ensure success is measurable. If you lack a clear vision for your business, you may not be ready to start one.
As the saying goes, money makes the world go round. That could not be truer for someone starting a new business. New businesses require capital, and often lots of it. Be sure you work out just how much capital you will need to not only start your business, but also keep it going. Lack of funding is one of the most common reasons for business failure.
Think about who your potential customers are, and how you will turn them into real sales. Do you have a network of connections that could lead to prospective clients? If not, how will you build one? Are you prepared to do cold calling, pitches, and presentations? Unfortunately, the saying “if you build it, they will come” does not always apply in the business world!
You are starting the business, but you may not be the only person needed to run it. If you need staff, that changes your business plan and company dynamic instantly. Employees must be paid and managed, and that is a large responsibility for a business owner. If you find managing yourself hard enough, managing a team may not be possible.
Many small businesses start in the home. Think about how well you work with the distractions of a home office. Working from home does save the rent cost, but depending on the type of business, this could leave the wrong impression in the minds of your clients. What if you need staff, can they work from your home? Think about where your clients might be located, will you be close to their office? Where will you meet clients? If a client knows your office is in your home, then they may feel your prices should reflect this, as you carry low overhead costs.
If you have, or are considering, starting a business, have you tackled these important issues? Stay tuned to next week’s post for part 2 on purchasing an existing company! Let me know what you think in the comments!
As a follow up to last week’s blog where I outlined key questions to consider before starting a business, I’d like to go a step further into business ownership starting with the question what type of ownership is right for you? Most people think that starting a business from scratch is the only way to go, but other options like purchasing a franchise or an existing business are important to consider too.
With over 30 years of business experience and as the owner of my own franchise, The Alternative Board, York Region, I have seen business ownership from all angles. Business ownership is not for everyone, but if you have determined it is right for you, you should explore all your options.
The most important considerations are the level of risk, and the learning curve associated with each ownership option. I have outlined below 3 key points you that will help you decide what the right type of business is for you.
1. Starting Your Own Business
Starting your own business comes with the highest level of risk and the steepest learning curve. Most new business owners are excited and passionate about their venture, but often become overwhelmed with the amount of capital, stress, and the level of work required to get and maintain clients, as well as the continuous planning that is needed to grow the business.
2. Purchasing an Existing Company
Purchasing an existing business comes with varying degrees of risk and learning curve depending on the quality of the business you choose. With purchasing a business you really need to spend a lot of time on research and also be prepared to spend up to a year before you find a business you would like to buy. You will benefit from all the positive assets and processes of the business, but will inherit all the challenges the previous owners had.
3. Purchasing a Franchise
Owning a franchise comes with one of the lowest risk options and the shortest learning curve. You’ll need to do your homework to ensure you purchase a good franchise; one that provides all the upfront financial investment details, required training and necessary processes to successfully start and operate the franchise.
There is MUCH more to it than the few points I’ve touched upon, so stay tuned to my blog in the coming weeks for more on business ownership and the advantages and disadvantages associated with each option.