The conference is over and you feel empowered to invest in that franchise that has the potential to change your life. Perhaps you already own a franchise and you want a refresher on what to do. Or maybe you are new to this, see the financial benefits and want to take the right steps. Either way you want to be sure that the momentum does not escape you.
Franchising for the first time can be a thrilling experience, especially when you initially decide to take that leap of faith and go for it. At Shelton & Power, we love seeing our clients’ excitement as we guide them through the process of opening up a franchise – it’s contagious! However, in the midst of all that anticipation, it can be easy for a new franchisee to overlook some highly important considerations.
We will help you walk through a 3 part series to Reflect, Research and then Reach out, to get to your ultimate Reward – business ownership.
First, REFLECT on yourself. Are you “ready” to franchise? Are you ready to make the necessary changes in your lifestyle in order to see this franchise succeed? What goals do you have, and how does opening a franchise meet those goals? And do I have the financial wherewithal to do this?
Most people are under the false impression that they have to be a millionaire with extensive formal education and sharp business acumen to open a franchise. They create this idea of what a franchisee looks like. Then, they compare themselves to this imaginary, young, savvy, wealthy entrepreneur, and suddenly they’re not so sure they’re qualified to take franchising on. The truth is that just about anyone can open a franchise. Everyone sees these new start-ups, run by the young college kids, and how wildly successful they seem to be. However, according to the U.S. Small Business Administration, as of 2012, 50.9% of all business owners were age 50 and over. In the same year, only 15.9% of business owners were under age 35. While 78.2% of small business owners were homeowners, only 39% of them had a bachelor’s degree. The bottom line is that there is no “franchisee” profile. Of course, a successful franchisee will be a driven, hardworking person with a certain mindset. However, there is no precise demographic you have to fit into before opening a franchise. Whether you are financially ready to franchise depends largely on your financial needs and goals. Whether you have enough business savvy to run a franchise depends on whether you have experience or a clear idea of what will be required of you in this venture. And whether you are willing to take the steps necessary to achieve your success.
All of these questions should be answered well before you find yourself panicking on opening day. In fact, all of these questions can be easily answered with the help of some key people.
The following are some steps you can take to organize your thoughts and put them into action.
Now that you have reflecting on yourself, and asked yourself the tough questions, next REFLECT on the Expo and on what you have learned from the connections made.
Were there a few franchises that caught your eye or did you find the one that you just have to be part of? Take some time to consider what is beyond the potential profit that is attractive. Does the franchise fit your brand? Is the franchise’s brand industry in line with your personal brand? I know, you just want to make money, but buying a franchise is takes tons of time and energy, take time to vision your quality of life and how the franchise fits into it.
Be sure to consider what is appealing about the franchise. Does the franchise have a similar value system? Ask yourself-why is that franchise appealing. How does that franchise fit into your life? Will the franchise agreement fit in line with your life plans? When will you retire?
When reflecting, take time to be thoughtful and realistic to ensure the franchise industry is a good fit for you.
The second step is to RESEARCH. You will want to first RESEARCH yourself.
Opening a franchise is a huge commitment. There’s no skirting around that fact. Nevertheless, some franchises are bigger commitments than others. A franchisee who opens a popular restaurant in the busiest part of town may have a greater time commitment than another who opens an auto shop in the suburbs. The owner of a franchised vitamin shop will have different requirements than the owner of a large hotel. Regardless, there is always a level of commitment required of the franchisee, and they must be aware of that before they open up for business. That restaurant owner may open his business and hire an experienced restaurant manager to run it for him. The auto shop owner may be the only mechanic in the shop during business hours. The level of commitment in each scenario is directly tied to how much time and effort the owner wants to put into their business venture. This is something you need to establish well before setting up shop. Luckily, most franchisors help determine this fit for you.
Some businesses just require more effort on behalf of the owner, and their success may be directly tied to that commitment. Other businesses are structured to essentially operate on their own with minimal oversight, or even ran as an absentee owner. A prospective franchisee needs to consult several individuals to determine whether they’re ready to make this commitment. First off, you should talk to other franchisees and business owners to find out how much time and effort they put into their respective operations. Then, you should talk to your family and consider whether the time is right for such a commitment.
What is your business plan? This may seem counterintuitive, as the point of buying a franchise is to use another business owner’s concept and product. However, think about you and your family’s personal business plan. As a franchise owner where do you see yourself in 90 days after you buy the franchise, 1 year after you launch your franchise, or after 5 years of doing business? Which family members will be working in the business? How much money do you have to net each month to make that happen? Planning allows you to set goals and organize your business future.
Next, RESEACH the industry.
Take time to RESEARCH and get to know the franchise you are considering. Are there books written about the company or even by the company’s founder? Check out what everyone is saying on social media about the franchise. Take time to seek articles about the consumers and the competition, be informed.
Who is your competition? Research the competition in depth. Maybe they are a better option for you to join based upon your goals. Remember, if you know what your competition has on the horizon, you have a better perspective of what you will be up against. Will they launch a new product, do they have plans to grow in your area or are they considering a new media blitz campaign? Prepare yourself to successfully overcome your competition. This does not require you to break out spy gear or to sneak into any offices; this can be done at the comfort of your desk. Explore your competitor’s website, check out social media outlets for the competitor too. The more you know the better off you will be. Be informed!
When researching, take time to look at all sides of the franchise business, including the research of who is involved in supporting you within the franchise, to ensure that the business move is right for you. Personality conflicts can kill a business relationship just as quickly as low profits or lacking support. Know the individuals behind the brand and logo.
The last step is to REACH OUT to your experts.
First, REACH OUT to your personal experts, your family and friends. Start with your family. Sit down and have a heart to heart on what each family’s members goals are that are going to be involved within the franchise. Is it to be home every night? Be a manager? Or have the authority to hire lots of employees? Everyone sees being an owner differently, and that will play into what type of franchises you should be looking at. Also remember that each spouse can only take the job of one position, there cannot be two final decision-makers. If a husband and wife are both going to be involved in the business, you must decide what lane each of you want to be in, prior to choosing the franchise. If you both like marketing, then choose a franchise industry that will allow for outbound marketing and walk-in marketing type abilities, for an example.
REACH OUT to others for their expertise. Feel free to touch base with other franchisees. Learn from those in the business area you are considering. Even take notes from other business owners in other industries. Find out what made them successful and learn from their mistakes. Ask them specifically, a couple of questions: 1) If you could go back to your pre-franchise self, what advice would you give yourself to make being a franchisee a smoother transition? 2) Secondly, and most importantly, ask them if you had it to do over again, would you? But don’t forget the natural follow-up to that question, why or why not? Then listen! Even if they say, no, listen to the “why” for that no, why they would not do it again. Listening to the reasoning will help you decide if this franchise is for you. For example, if they say, I didn’t know I was going to have to do so much marketing for this franchise. Then you will know to put marketing through your personal filter and if you are not good at marketing then this franchise is not for you as well. Do not necessarily write off the entire industry, just his franchise system. Many franchises within each industry include marketing assistance, and some handle all aspects of marketing for you. However, if you are good at marketing then you can check mark off another item that makes this the right franchise for you.
Then reach out to professionals that can assist in your individual franchise’s success. Owning a franchise involves capital, paperwork and time. Be sure to reach out to others who can help increase your bottom line but also assist with protecting you from the risks involved. It is often said that one cannot buy house insurance once the house burns down. Proactively take the time to create the team of experts to help you. There may be some costs involved but you want to protect your house from catching fire.
Talk to a business advisor, whether that’s your lawyer, financial planner, or CPA. These advisors can help you evaluate where you’re currently at and the level of impact opening a franchise would have on your finances.
While meeting with each of our experts, the lawyer, financial planner, or CPA, you should develop a list of their personal goals as they apply to each of your experts. Do you want to retire by a certain age? Do you want to sell your franchise for a certain amount in a couple of years? Do you want to establish a strong business and leave it to your children? Goals are as unique as business owners.
Consider reaching out to a bookkeeper, financial planner or CPA. If you require a certain rate of return on your investment, a financial planner or CPA can run the numbers and see if the prospective business works. Once you open the business you will most likely want a bookkeeper so it is great to develop that relationship ahead of time and to ask their advice on accounting systems that they are familiar with, etc. Many franchise systems require that you use a particular program, for example QuickBooks, so you want to ensure that they have that skill set. Next reach out to your franchise attorney, and either a trust or tax attorney. If you want to incorporate a franchise into your estate planning, a lawyer can help you see the big picture with taxes, income, and how your family can be taken care of by the business in case anything were to happen to you. Also reach out to consultants. There are franchise consultants, big groups such as FranNet and independent consultants alike, all across the country that can assist you in selecting the right franchise system. Or possibly you could you use a consultant to help with a successful launch or even to ensure that your franchise is up and operating in business on time? Consider your production team by taking time to think about what you need now. Interview some professionals to ensure that they will be a good fit for your brand.
The bottom line is that professionals are necessary at this point. When reaching out to professionals take the time to understand how their business works and if their objectives support your business goals. Not all professionals are a perfect fit for you either. These can be complex issues that most business owners are not familiar with, and it is worth it to reach out to professionals for answers.
All of these key factors play a role in deciding whether to open a franchise. This decision is not one to be made lightly, and certainly not one to be made alone. Remember, there’s no “cookie cutter franchisee” that you have to be to open a franchise. If someone is interested in franchising, they should seek out advice from their family, other franchisees, lawyers, and financial planners well before they find themselves at opening day.
Owning a franchise is not a race. Take the time to reflect, research and reach out to others to ensure that you protect your investment and move towards your dreams.
Then REWARD yourself. Take the leap, and join the franchise system of your dreams. When you put in the due diligence, time and effort to find the right one; business ownership can be the most successful vehicle used for dream catching.
As mentioned in: Franchising USA Magazine