So you want to start your own business but don’t know where to start? Maybe you’re concerned about risk, lack experience in the specific business that caught your fancy or are nervous about blazing an entirely new trail. For the thousands of folks looking to gain control over their working lives each year, a franchise offers some compelling advantages. For one thing, instead of beginning your research by talking to people operating a similar business, you can learn the ins and outs from people in the very same business. A franchise operation offers a veritable network of support, plus a treasure trove of statistics and operating history is available to give you a leg up in the marketplace.
By contrast, when you start an independent business, you must invent your concept and innovate your own marketing, inventory and accounting controls and countless other procedures from scratch, some ahead of time, and, inevitably, some on the fly as you go along, which will likely significantly impact your bottom line as you get started and optimize your systems. For some, therein lies the excitement. These are the folks willing and able to accept far more uncertainty, but many others prefer a less bumpy path.
With a franchise, many of those risky variables disappear since the franchise company has already figured out a system that works. The tricky part comes in selecting a franchise that’s
right for you and has a good track record of success, which can be challenging in an arena in which about 800,000 franchise establishments operate in 75 different industries, generating a $2.1 trillion impact on the domestic economy, according to a 2007 study by the International Franchise Association.
Getting some assistance is as easy as locating a franchise coach who can help steer you toward reputable franchise companies. Of course, like everything else associated with your own
business, the responsibility lies with you to do your due diligence before signing your name to any dotted lines. We suggest you start with these five steps to narrow down your franchise search and maximize your success with your new business:
Conduct a Personal Inventory
Write a list of your professional and personal skills. Then write a wish list of the types of businesses you would like to operate and the types of skills necessary to run these businesses. See where they intersect.
Research Possible Franchises
Check the website of the International Franchise Association for a comprehensive listing of franchises that suit your personal profile. Consider consulting a franchise coach, who will already have vetted many franchise companies.
Zero in on a Few Franchises
Request a copy of the franchise disclosure document for your selected list of franchises and read through these for: the franchisor’s background, initial and ongoing costs, litigation history, plus information about the types of training and support they offer, as well as their method for advertising, including who pays.
Interview Existing Franchisees
Learn about the types of support offered by the franchise companies, how it helps them, and find out how much their businesses are earning to check if it matches information in company disclosure documents. Franchisee profits can vary widely due to geography as well as other factors. You want to find out what it takes to succeed with this franchise.
Interview Former Franchisees
Learn why things didn’t work out for them. You might get an earful about the franchise company’s shortcomings, or you might hear the franchisee wasn’t really cut out for this type of business.
The knowledge you gain by going through this research process is indispensable to you in whatever business you start. As you’ve likely heard before, success happens where opportunity meets preparation. And your research is critical to your preparation.
This guest post is by Dan Citrenbaum, a Franchise Coach and Entrepreneurial Consultant who helps people achieve their dreams as small business owners. Find Dan at www.EnterpreneurOption.com.
© Dan Citrenbaum 2014