Start your own?
Every year many people start a new business. Some are well thought out, researched and financed. Others are just an idea that someone gets and stumbles forward, calling it a business. Obviously, some businesses make more money than others. In general, the success of a business (provided it was a good idea to start with) is dependent on the owner’s commitment to stick to a proven plan.
Determine the business type
Each of us have unique interests and talents. Just because a person is, for example, a talented care giver, that does not make them a good business owner. As a matter of fact, it is very common that the person in love with elderly care will hate the operational side of the business.
What is the market potential?
Market potential is an area that trips up a lot of entrepreneurs. Too many use faulty logic in determining how big the market is and the potential for acquiring clients. A common mistake is to identify the number of potential customers in a potential sales/service area. Then for some reason they assume, not based on real life research, that X% will buy. Unfortunately, without the experience of like businesses in similar areas, it is just a guess. Unprepared entrepreneurs have no proven way to reach potential customers with effective marketing that fits within their budget. Making the forecasted sales numbers nothing but a dream.
Is a Franchise for you?
If you are the type of person that refused to follow the rules could not follow instructions in high school and have not really progressed… always having to be the rebel doing things your own way, a Franchise is probably not for you. Just imagine the chaos and damage that would happen to a brand if every owner of “Burger’s R Us” decided to change burgers to feature their own secret sauce or changed the French fries to deep fried beets?
Franchises are for people who understand the value of a system that has been proven successful at making money. People who will follow the proven steps to creating a prosperous business. A robust franchise program will include not only general operations training and an introduction to the brand, but also primers on advertising, employee development and supply chain management.
How much are the Franchise fees (and what do you get for them)?
For the moment let’s assume that you are leaning towards having a franchise system in place when you start your business rather than having to learn and document everything on your own. Like buying a business that someone else put their blood sweat and tears into, busing a franchise will require a substantial investment. Each brand has an entry fee. Some brands will assist in financing, others will help direct you to third party financing like Small Business Loans, VA loans etc. After you determine the initial entry cost, find out all the other ongoing fees you would be responsible for such as royalties, advertising fees, property leases and any inventory or equipment expenses.
Are other owners successful?
This is a very critical piece to making the decision to buy a franchise. Take the time to evaluate the success rate of the franchise owners who have purchased before you.
Ask for the franchise’s Franchise Disclosure Document (FDD), which all franchises must have by law. It includes useful data for analyzing the success of the franchise including annual revenues per location. If you are hesitant about the franchise, find and talk to both current and former franchise owners about their experiences and if they would recommend the business
Even when a franchise is well known, it’s still very important for potential buyers to research all aspects of the business. By determining what kind of business model and support the buyer wants and then using that information to determine the best fit, buyers better position themselves for success.