Research, Research, Research! Are You READY?
You are probably reading this magazine because you have already decided that your next business venture will be a franchise.
You have probably come to this decision after extensive research and investigation and are doubtless well on the way to making a final decision.
Just before you make that final ‘leap of faith’, take a second look and make sure that you have really examined all the key aspects of not only owning a franchise but becoming a business owner and possibly an employer. There still exists a common myth today that a franchise is a silver bullet to success – being awarded a franchise will automatically make you a successful business person. It is unlikely that you will be able to find a franchisor that will subscribe to that notion, as a franchise is as much hard work or smart work as any other business and there is no silver bullet to success – success comes through the application of your own resources.
Notwithstanding all your research and background checking, we suggest you take a second look at certain key areas before you make the all-important final decision.
The Franchise System
Every franchise is foremost a system that, in the main, has been tried and tested over time. These are features that probably attracted you to a particular franchise – plenty of history, plenty of background and plenty of experience. That having been said, a franchise is still primarily a system and one that needs to be followed not only from the point of view of maintaining good standing with the franchisor, but for the overall success of the business. In your second look approach, look again at your own personal resources and your background and make up. Are you an individual that can follow a system? Are you an individual that is comfortable working within the framework of a system developed by someone else?
Many people respond to these questions readily in the affirmative, however the reality is often not positive inasmuch as many individuals acquiring a franchise do their best to reinvent the system or even shortcut the system when they feel that they have better ideas than the experienced franchisor. If you see yourself as a true entrepreneur, then perhaps franchising is not for you as the majority of entrepreneurs like to reinvent the wheel on a regular basis. Franchising does not allow that opportunity, so you need to be absolutely certain that you have the background and personal make up that can work with a ready-made system.
When you started your search for a franchise financing was probably high on your list of ‘must do’ items. Although you may have adequate funds to meet the projections that you have developed or those provided to you by the franchisor, take a second look and double check the numbers. One of the common mistakes that would-be franchisees make is not having sufficient capital on hand notwithstanding their research.
Just because you’re buying a franchise which is tried and tested, it does not mean that there cannot be unexpected expenses from timeto time and, therefore, a contingency should always be built into your financial plan. Again, a franchise offers you a model and a timetable to ramp up and get the business open and operating. While that timetable is based on experience, it is not infallible and on occasions a business will take longer to start up than expected, so it is essential that you have the financial resources to handle any such delay in developing the cash flow.
The majority of franchises will require you to recruit individuals for various positions within the business. Sometimes these individuals will require special skills and knowledge and you should, therefore, take a second look at the availability of such individuals in your area and, perhaps if you have not already done so, you should test the market to see exactly what skill sets are available. As a business/franchise owner you will also need a varied skill set in terms of not only recruiting but managing and training others – make sure that there are adequate resources available, because if not then invariably the tasks will fall on the owner’s shoulders to complete, and one individual can only stretch their talents so far.
Plan for Success
Take a second look at your business and marketing plan and make sure that you have really planned for success and not just planned for existence. As we have mentioned the franchise is not a silver bullet to success, however a franchise can be an extremely valuable vehicle that can move you into the realm of a successful entrepreneur, usually in a shorter timeframe than if you are starting your own business from scratch.
Buying a franchise and entering the world of business ownership can be both exciting and at the same time maybe even a little scary – when you have done the research and got all the numbers together, then take a second look and double check that all the key elements are in place to ensure that your success is achievable.
David Banfield is the President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas.