Investing in a franchise with a proven-business model and track record is less risky when beginning an entrepreneurial venture. But with so many franchises vying for an entrepreneur's time and money, how does a first-time entrepreneur successfully determine which business is a good fit? Here are seven easy tips that will lead you to choose a concept that will best fit your needs.
1. Personal Fulfillment
You must ask yourself: Is the product or service something of which I would be proud? The concept doesn't necessarily have to be a lifetime passion of yours, but if you don't believe in the service or product you're selling, more than likely, you'll end up unhappy with your business. If you believe the product is beneficial to the consumer, the passion will grow from executing the model, meeting the customers' needs and seeing your team grow personally and financially.
2. Employee Satisfaction
In order for patrons to receive the kind of service that makes them loyal customers, the employees must also be loyal to the business. In choosing a franchise, make sure employee compensation, rewards and recognition align with the interests of the customer and the employee. Creating a positive environment where employees are satisfied with their jobs will lead to motivated workers who take a strong interest in helping the business achieve its purpose. Likewise, a healthy relationship between a franchisor and their franchisees helps to create a strong, growing system.
3. More Than 9 to 5
Oftentimes running a business requires you to work 24 hours a day, seven days a week. Are you ready to eat, sleep and live this business? Besides work and money, what are other priorities in your life? Think about what sacrifices you have to make and whether you can follow through with them. Some franchisors make an effort to create a business that focuses on a strong quality of life for their employees by keeping manageable working hours and offers the support necessary to make the business successful. Talking to existing franchisees within the system will help you get a true sense of what owning the franchise will be like and whether it's a right fit for you.
4. More Bang for Your Buck
Does the franchise provide your ideal income potential? There are several opportunities for first-time entrepreneurs to invest in a business. And it's very appealing to own your own business. Other ambitious franchisors may try to run a number of units that may allow for higher financial rewards. Overall, knowing exactly where you want your business will help you choose an opportunity that fits your monetary goals.
5. Investigate the Situation
Make sure to do research on your desired industry. What are the long-term growth prospects for the industry? Is there opportunity for growth? Also, keep in mind the current state of the economy; can your business model withstand a recession? These questions must be asked and addressed. In addition, you should take into consideration your expected retirement date. You want to make sure that the enterprise value of your business will allow you to sell it when necessary.
6. Break It Down
Ask the potential franchisor to detail their mission and how their business model is executed. While all companies have mission statements, very few seem to connect the execution of the business model to fulfill their objectives. Find out how franchises earn money or control aspects of their bottom line. Look at product sales, advertising programs and additional service fees for computer support, etc. You may discover that every single fee for service is completely legitimate and worthwhile, but make sure there are no surprises. One clue can also be the franchisor's success with the company-owned locations. While some franchise concepts are very successful even though the franchisor doesn't operate any locations, it can often be the case that the very best franchisors thrive at operations as well.
7. Proper TLC: All Business Concepts Evolve and Must Adapt to Marketplace Changes
How has this concept evolved over time and kept up with changes in consumer needs and desires? Does it provide you with continuing training and support to successfully operate your business at each stage of its development? While you must assume the responsibility for success, examine the tools the franchisor gives you to execute with excellence. For example, does the franchisor offer information systems that allow you to manage multiple locations if that is your desire?
There are pros and cons to every business model, but make sure you are aware of those before you become committed and invested as a franchisee. Keep in mind your desired personal goals and focus on these key areas before choosing a franchise. Few things are more exciting to the entrepreneur than successfully executing a strategy to build your own business, so choose wisely.
Ricky Brooks became an Express Oil Change franchisee in 1987. A lifelong entrepreneur, Brooks had enjoyed a successful career in the insurance and financial planning industries and had once been recognized as the youngest franchisee in the Sonic Drive-In chain at age 23. Brooks developed 14 Express Oil Change locations as one of the chain's largest franchisees. His operational efficiency, profitability and sales growth were used as a benchmark for franchised and corporate stores.
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