Top Things to consider before you opt for a franchise opportunity
Starting a new business can be a motivating idea, especially for first-time entrepreneurs or employed individuals who are tired of the 8 am-5 pm job. It’s encouraging to start a business when you think about the freedom of not working 8-9 hours a day in a confined office, not having to report to a boss and the possibility of endless profit. Entrepreneurship can also be a challenging game. Almost no college or university level education can prepare you for it. Most of the learning happens on the job. Starting a business is the right decision. However, it can also be stressful, challenging, and not as simple as it looks like. But where there is a will there’s a way and that’s where low investment franchises come into picture, let’s see how!
How to prepare your business plan?
The first thing you need to think about is what you will offer. What are you going to sell in your business? In general, you can choose to provide the following: service, merchandising, or manufacturing.
- Service – it can be restaurants, food kiosks, transportation, salon, spa, cab service, etc.
- Merchandising – also referred to as retail, wholesale, trading, or distribution. Buy-and-sell of goods. Examples are grocery and department stores, retail outlets, online resellers, etc.
- Manufacturing – combining raw materials, labor, and equipment use, then turn it into a saleable product. Examples are manufacturers of cars, gadgets, clothing, bags, daily essentials, etc.
Having a product or service to sell will not make you earn profits if you don’t have an ample amount of customers driven to you. You should focus on the target audience and identify their needs and behaviors. Once you’ve identified what to sell, who to sell it to, and where to sell it, now think about how you’ll form the business. When starting a business, plan the assets that you’ll need to operate. This may include the following: computers, equipment, furniture, vehicle, etc. Identify and list down all the expenses or spendings you need to operate the business, such as salary, rent, office supplies, utilities, etc.
You also need to identify the suppliers and their price, location, reliability, and operating hours. After considering all the capital and expense requirements, before you start operating, make sure you have the registrations needed to legalize your business. Rarely a business sells without a good marketing plan. Marketing is one of the key factors why businesses succeed and why it fails.
Running your own business under a Franchise
The franchisor is the parent business that allows franchisees to operate using the same products or services, trademarks, techniques, etc., in return for an agreed-upon fee. Franchising is the running of a business using some or all aspects of another successful business in partnership. In the past, businesses would provide the right to sell a product in a particular market, known as distribution deals or distributorship.
Things to consider before you opt for a franchise opportunity business model
Buying a franchise can be a great move for a would-be entrepreneur who doesn’t want to create a new business from scratch. If you’re thinking of becoming a franchisee, how should you prepare yourself?
- Study the field: Market research is always an essential component of starting a business. You need to give yourself a personality test that is it what you are good at and what will not get you bored off.
- Capital: Look beyond the minimum requirement for buying a franchise, usually listed as the franchise fee and equipment cost. Getting a franchise up and running can involve hefty marketing costs and the need to survive on break-even books or a period of net losses before your business catches on. Even if you’re franchising a well-known brand like 7-11, customers have to discover your new location.
- Dig for dirt: Search for all the negative things you will be facing after buying the franchisee. Just go for the people, or the businesses that Got flopped by using this franchise. Talk to at least 10. Ask about the pros, cons, and hidden costs. What did they learn that they didn’t glean from their research before they become franchisees? How long did it take them to become profitable? How much did they budget for their enterprise, and how much did they wind up spending? What was the toughest part of building the business? How supportive is headquarters?
- Read the entire Financial Disclosure Document (FDD): Don’t be intimidated. The FDD offers a gold mine of information, like bankruptcy filings by the franchisor, litigation involving the company and/or its executives, the type of training the franchisor offers franchisees, and costs that may not seem obvious, like opening day expenses when headquarters may want you to give away free stuff and do special promotions.
- Do a cost/benefit analysis: Make an old-fashioned pro v. con list. Draw a line down the center of a piece of paper, and on one side, write down the benefits you’re getting, like established brand, proven market, training, recipes if it’s a food franchise, staffing guidelines, store design. On the other side, list the costs and liabilities, including franchise fee, the money you’re required to pay for marketing, mark-ups on merchandise and ingredients the chain requires you to buy, the share of sales you must pay in royalties.
Why should you go for a franchise opportunity instead of starting your own business?
As a buyer, you have the option of purchasing an existing independent business or a franchise. Each has its strengths and weaknesses.
Franchises come with a set of rules that you must follow. The franchisor has taken the time to develop a business template, which is then rolled out from location to location. If you are looking to use your managerial skills and won’t feel cramped if you can’t put your own ideas into play, this may be the ideal form of business for you.
Franchising offers many advantages. The formula has been proven with a good franchise, and the system should have worked the kinks out. Potential customers will probably be familiar with the name or brand of the franchise.
Buying an independent business gives you the freedom to set your own rules. You set the company’s vision, control human resources, and get to choose which supplier you’re going to buy from. In an independent business, the decisions – and the success – of the business rest on your shoulders. There is room for creativity and innovation, but at the same time, your choices may destabilize the business. Unless you are buying a business with a strong, existing brand, you may not have the same recognition as a franchise. On the flip side, you won’t have to pay franchise fees and royalties.
Franchises offer franchisees a strategic identity that is not only effective but also has a great market impact. Hence, corporate brand identities have proven to be successful in the marketplace.
A successful brand is one that is easily identified by the public. Franchised businesses are having some of the most successful brand identities in the world. With an established brand, comes recognition assuring the customer’s experience and products in a different location. The consistency benefits almost all franchisees in the system, which act like an old friend who is counting on you to be there. Franchise cost for advertising, brand promotion, etc. It will automatically give you a good reputation and provide you operational support And training that can never go wrong!
Reach out to us or speak to our experts to know all the detailed insights about setting up your new business with a blast!