Not all new businesses come from nowhere, there are lots of opportunities for establishing a franchise – i.e. starting a business with an established model that’s tried and tested. From coffee to healthcare, language schools to fast food – there’s a huge number of opportunities out there, but is it right for you?
We’ll look at some of the pros and cons associated with owning a franchise…
When you open a franchise you’re opening a business that people are likely to already know at least a little about – and even if they don’t, there’s a huge amount of information they’ll be able to find if they search for the brand name.
This is especially true if you open one of the big names – such as KFC, McDonalds or Subway. In some instances there’s even a demand from the public for recognised brands like these. Even if you’re looking at a less well-known business, you’re following in the footsteps of people who’ve launched before you, so whatever size, the business already has a marketplace presence and people who know how to make it work.
If you’re starting out on your own, there’s nothing that will stop you opening within a mile of 4 similar types of business – a move which can be catastrophic when it comes to breaking into your market.
When you’re opening a franchise you’ll receive a lot of support from the franchisor around finding a suitable location. They’re going to be looking for an area in which there’s a market for their services and no competition that will finish the location before it’s started – while making sure that you’re not overlapping with another of their franchises.
This kind of support is great, because it helps you to succeed in the very best location by utilising tools and knowledge you may not have access too without the weight of a big business behind you.
Franchises can vary massively in cost – from a couple of thousand pounds for the smaller – to £500,000+ for some of the biggest names. Whatever the cost, there’s a chance that if you’re starting out, you might struggle to find finance that stretches to some of those bigger figures.
When you’re starting a franchise banks are far more likely to say yes than if you present your own business plan then ask for a quarter of a million pounds!
It’s fairly obvious when you think about it, you’re stepping into a tried and tested business that both you and the franchisor wants to succeed – so whether your business credentials are fantastic or slightly lagging behind, you’ve got the big advantage of having an international company behind you.
With a franchise you’re on a well-trodden path, there are systems that work elsewhere, support that’s provided and the blueprint for success available to you at all times.
Take one of the larger fast food retail franchises for example – you don’t think that they’ll package you off to your new restaurant - hoping for the best that you keep the place clean and don’t damage their reputation do you? Instead, they’ll provide you with the initial guidance you need to start thing moving in the right direction – then on-going support visits, inspections and standards checks to make sure you’re in line with the brand.
Whether it’s helplines, on-going training or even financial support – it’s in the best interest of the franchisor to provide you with support – because if you win, they win.
Cons of franchising
There’s no escaping it, owning a franchise is hard work – if it weren’t, the business wouldn’t be using a franchise model, they’d be employing someone who’d earn a lot less than you to apply those lower levels of effort.
Just because there’s a model to follow doesn’t mean it’s easy – it’s not uncommon for franchisors to expect you to be ‘at the coal face’ of the business for a significant period of time before you get comfy in your back-office seat. That means running the business while you learn every in and out that there is.
You’re going to need a good support structure to make sure long hours and some sleepless nights don’t wear you down…
How many McDonald’s restaurants have you been in where the manager or owner is experimenting with a new burger you haven’t seen anywhere else? A Body Shop that’s decorated totally differently to the rest? Or a Costa Coffee with a lime green logo?
The answer is a solid zero – because as a franchisee you’re not following your own daydreams and hunches, you’re following the multi-million pound established paths to success that the business demands.
While this is a huge bonus for marketplace recognition it does mean that your individual flair can be somewhat hindered. This might be a problem for you – it might not, but it’s one of the things people can sometimes feel constrained by when they’re not making the decisions…
There are a variety of costs associated with owning a franchise – and a lot of them need to be offset, at least in your mind, against the benefits of running a recognised business whose success might be (at least in part) due to its brand.
There’s an amount of money to pay upfront, sometimes it’s a few hundred pounds, sometimes it’s tens of thousands – all depending on the model the franchisor opts for. Materials and location outfitting costs can sometimes come from your pocket too – followed by a proportion of your takings to cover the ‘royalty’ fees that trading under their name entails.
You’ll often be expected to have an amount of money that’s readily available capital before you get started – i.e. money that’s not tied up in any other asset or awaiting approval from the bank.
While starting a franchise can look like the more cost-effective option in the short-term, it’s well worth sitting down with your accountant and looking at some projections.
When you are about to do business, you would think that everything will be fine because everything is under your control and you have people to work on it. The thing about that mindset is it isn’t practical enough to handle the challenge that a business will give you. You see, though you are your own boss that doesn’t mean that you should take things lightly because if you do then your business wouldn’t last through the long run. That is why so that you would be able to manage your business efficiently and effectively here are a couple of tips that you can apply to your business and yourself.
Learn to budget and save Lets say you provide CCNSG courses and training in Manchester! A tip to properly manage your business is for you to learn to budget and save. Remember that in business money has a cycle and if you disrupt that cycle because you are spending too much or you don’t know how to manage your finances then your business wouldn’t last long and could risk going bankrupt or if you're self employed this could result in you having to applying for a self-employed IVA should you need help managing your finances. That is why when you have made sales don’t spend it but invest it in your business so that your business will grow.
Don’t be too harsh on your workers Another tip would be for you to not be too harsh on your workers. Remember that your workers are still learning so it will be common that they will make mistakes. That is why rather than get mad at them, you being the owner and their boss, should educate them properly so that the next day when they work there will be fewer mistakes. Remember a happy worker is a happy business.
Be resourceful Being the owner of the business you should be resourceful. Remember that money only comes to your business when it is doing well but there will be days where it wouldn’t go the way you hoped it would be. That is why if you know that your business is struggling then you should be resourceful and learn to be hands on because a business can’t run without the boss. For example if you're paying a Freelance SEO consultant you may want to take the time and learn these skills yourself.
Have a keen eye for things? If you want to manage your business well, then you should have a keen eye because it can't be helped that sometimes there might be things you didn't notice and it can be crucial to your business or your employees haven’t been being honest and nice to your business. That is why as much as possible learn to have a keen eye for things so that you would know if things are going well or not.
Be updated on latest business news This can help you for when you are about to create an important business decision. You see when it comes to the business news you would know if the price of certain products has increased or decrease and through that information, you would know how to handle your finances in your business and create strategies and make good decisions in your business.
Take things at your own pace Though it would be nice to immediately turn your business into an empire within a span of a day,it would take more than that. That is why you should take things unto your own pace so that you would see how your business have grown and you would also know how to handle things when things in your business aren't going nicely.
Applying the following tips stated above can help you when you are about to start managing your own business. You see when you are into business then everything about it will be in your hands that are why you should make sure that you always know how your business is doing and know how to create strategies to keep it going so that it will last through the long run especially since you will have a lot of competition. That is why you shouldn't forget about these tips and you should learn to apply it because it can help you a lot.