The pros and cons of a mobile vs a bricks and mortar franchise
At any given moment there are thousands of people across the world looking at buying a business and many of those will be looking at a franchise.
There are as many types of franchises as there are businesses.
The franchise model is usually a safer way of starting a business for the first timer as a franchise’s established brand and systems can help the many would-be entrepreneurs who would otherwise join the alarming number who fail at their first attempt in business. A major reason to acquire a franchise business is that it can give you the franchisor’s tried and tested knowledge on growing a business, and then you can use that knowledge in any future business venture, franchised or not.
Among the many essential things, you need to do before you buy your first franchise is to work out if you are most suited to a mobile, generally a service business model, or a bricks and mortar business model, generally selling a product. Ultimately this means you must decide if a ‘service’ franchise or ‘retail’ franchise is a better fit. It’s an important distinction in terms of both entry requirements and operational realities, and it’s a decision which can determine your ultimate effectiveness as a franchise operator.
Whichever model you choose, you are going to invest a sizeable amount of funds and lots of emotional and physical energy, so you need to do some thorough research.
The Mobile Business Model
So, first let’s look at some of the typical service businesses that operate successfully today. The good news here is that this sector has been growing rapidly since the turn of the century and it’s a trend that is tipped to continue. Popular examples include, various specialised cleaning businesses, car washing, mobile mechanics, pool maintenance, garden services, building trades, building maintenance, children’s tutoring, health services, home care, mortgage and finance broking, bookkeeping and real estate… and there are plenty more! So, you see that there are plenty to choose from!
Trade-based mobiles are typically ‘skills based’ and often best suit those with the ability, interest, and dedication to be active and ‘work with their hands.’ Not everyone can fit. And of course, you need to have or be eligible for the appropriate qualifications.
Because many mobile businesses do not require a showroom or factory unit their overheads are kept to a minimum. Always a bonus, especially when cash-flow is tight.
In these circumstances, often it’s easy to create a positive cash flow, especially when you have few, if any, employees.
And, working hours can be flexible – often by appointment only – so you’re not restricted by long retail hours. This can be a big plus for some lifestyles. But keep in mind, like most businesses, the more you work the more you earn.
With this is mind, consider that mobile service businesses generally can offer more economical start up and operating costs, and often they require few if any staff for their day-to-day operation. And of course, being home-based they may well offer a lot of flexibility. Looking to the future it’s worth noting that this also gives you the advantage of expanding to more areas at a minimal cost if you want.
Does this all sound too good to be true?
Because what suits one doesn’t necessarily suit another, the flip side of the benefits I’ve described is, depending on your ambition and resources, the points outlined above can each be viewed as disadvantages. Particularly in limiting your growth potential.
Is your family going to be happy about filling your home with stock, for example? You may also find you have more admin work than you would like. Without a showroom, maybe you must generate the sales. And if you’re not experienced in a role the hours you must spend calling on prospects can be disheartening and ultimately, if you don’t hit your sales budget, financially crippling.
Similarly, as a one-man band, if you are sick or not available to work maybe all the money flow will stop.
The Bricks and Mortar Business Model
Everyone is familiar with the typical retail or product businesses that fill every shopping mall and strip shopping area. Drive around an industrial area and you’ll see many more, often very profitable business-to-business outlets.
Between them they offer literally any product you can imagine.
Whilst these outlets can be a very good choice, and provide a good return on your investment, make sure you do your homework and take care with your decision.
It’s a busy marketplace in which there are often new entrants, many new businesses up for sale, and many vacant sites, all looking too tempting at first sight.
Don’t be fooled by attractive rent offers and incentives because you’ll be committed to a lease of several years which you’ll be liable for whether you make a profit or a loss!
In the case of many business types, despite receiving rental incentives, there’s a significant initial investment with fit-out and stock among your start-up costs. In many cases this can be half a million dollars or more!
To add to the mix, in most cases there will always be lots of competition. Often very strategic, with ruthless price-cutting and sales methods. So, it’s not a field for the novice.
However, for the wise and well-prepared, there can be significant profit and capital gain for when you come to sell.
So, as you can see, there have been many pros and cons you have considered. Assuming that by now you’ve made your choice between a mobile and a bricks and mortar franchise, let’s look closely at franchising.
The Next Step
Beware of snake oil salespersons.
Regrettably many business buyers fall in love with a business or whoever is selling it. Whether or not it really is the right business for them inadvertently becomes second in line. And be aware that sadly, not all businesses or franchises turn out the way everyone wanted, and for a whole number of reasons.
You can best avoid being one of these numbers by doing your research properly and choosing the ideal franchise for you. In this way you are optimising your chance of success so you can achieve your goals and no doubt create a business asset that you can one day sell at a handsome profit.
Learn about Franchising
You’ve thoroughly researched the marketplace and selected your franchise.
BUT, what do you really know about franchising?
Is your opinion accurate? Or is it based on rumour and urban myth?
Franchising really is a marvellous business model that has helped endless hundreds of thousands of franchisees become wealthy, but do not fall for the trap many do by thinking everything will be done for you, and that franchising suits everybody, because that just isn’t necessarily true.
Carefully ask yourself a whole range of questions and determine just what your skillsets are.
Consider your answers carefully and decide if franchising really is suited to your skill sets and personality.
Free Help – I’ll pause here for a moment to recommend you enlist the free help of Dr John P Hayes, one of the most authoritative people in the world when it comes to franchising. Go to surveymonkey.com/r/howtobuyafranchise and complete his free franchise-specific DiSC Profile.
You’ll receive some very valuable information from John that will help you considerably. This step alone could well save you your investment!
So, now’s the time to review your research results and, if you feel confident this franchise is the one for you…
Now call your chosen franchisor. Because if you’ve asked enough questions of the right people, and critically, of yourself, you have optimised your chance of success. Just like the many other happy and successful franchisees prospering in this exciting and dynamic world of franchising.
Brian Keen has been involved in the franchise industry for more than 30 years and, today, is the Founder of Franchise Simply. His on-the-ground business experience as a multi-unit franchisee, franchisor and consultant helping many of the big names create their own franchise systems and growth over the years has been fed into Franchise Simply, helping today’s SMEs grow their business by franchising.
For more information on Brian and Franchise Simply go to https://franchisesimply.com.au/ and he can be contacted on 1300 960 136