6 Tips For Running A Profitable Franchise
Investing in a franchise can be a fast-track way to working for yourself. With backing and support from a parent company alongside the facility to use tried and tested systems and established trademarks, it's not hard to understand why new franchises tend to have a much better success rate than conventional business startups.
That all said, buying a franchise is no guarantee of business success. Running a franchise successfully requires just as much hard work, commitment and determination - if not more - as a traditional independent business. Continuing to make wise decisions as you embark on your venture will increase the chances of earning a stable profit from your franchise. So, here are six tips for franchise success:
1. Write a business plan
While following the rules provided by the franchisor is important, it's also crucial that you have your own comprehensive business plan. You need a clear vision and methods to track the ongoing performance of your business operations. What's more, the only way you can attract investors to finance your franchise is if you have a clear business plan.
2. Select the right franchise
Franchisees whose interests and skills align with those of the parent brand are generally more successful than people just chasing the financial opportunity.
Select the right franchise carefully. Make sure it centres around a field you enjoy. For example, if you love working with children, look for childcare-related franchises. Meanwhile, if your passion is tech, look for an IT-centred franchise. Furthermore, to maximise your success probability rate, select a franchise that coincides with your skillset. Think about whether you prefer working alone, with a team of staff or on the front-end interacting with customers.
3. Utilise the franchise system
When you buy into a franchise, you need to be ready to adopt someone else's proven business model. The success of your franchise depends on your ability to execute tasks by-the-book following a trusted system as well as your commitment to the franchise agreement. Failure to commit wholeheartedly to the established franchise system will jeopardise your success and could potentially result in the termination of all agreements with the parent company and the loss of your business. Read all operation manuals thoroughly and take part in all training sessions offered by the franchisor. Doing so will ensure you understand the system and your agreement requirements.
4. Generate sufficient funding
Business finance company, Lend says “ lack of funds can spell the death of any business. Many people that are new to franchise opportunities underestimate start-up and operating costs. The truth is that it is rare for a franchise to generate a profit during the first year of operation.” They recommend, “it's important to have investment reverses that can cover your living expenses and help sustain your business during an emergency. When it comes to seeking funding, search for lenders that have specialist franchise teams.”
The value of available loans will generally depend on the franchise's age and the length of your agreement. To get funds from any lenders you'll be required to provide a detailed business plan that breakdowns all costs and gives viable profit projection models.
5. Maintain a good relationship with your franchisor
Maintaining a harmonious relationship with your franchisor is vital. Complete all reports requested on time, stay in regular contact and, when it comes to new directives, be sure to act promptly. Of course, communication is a two-way street and many franchisors are keen to hear ideas from franchisees. A well-cultivated relationship with the parent company can be invaluable -- it can open new doors and ensure your front on the line with your contract renewal date arrives.
6. Take full advantage of all support offered by the franchisor
It's important to take full advantage of all support provided by the parent company. Be sure to attend all conferences and training sessions, watch company instructional videos, take part in web training seminars, and sign up for franchise consultant mentoring programs. Also, be sure to connect with other franchise owners. Those people can provide valuable insights and their shared experiences and tips will only help your business thrive -- learn from their mistakes.