How to Determine Which Franchise Business is Best for You
There is a certain draw, a certain magnetism towards being an entrepreneur. Sure, the potential profits can be amazing, there is barely a ceiling on how much money you can make, but there must be something else that makes a person work the insane hours required. It’s the freedom, the control. It’s the fact that all the profits you make, all the success you have, and it’s all yours. However, the risk is very high, as is the starting investment. This is where franchise businesses come in.
Instead of starting everything from scratch, you get the opportunity to run a local branch of a franchise you concluded a contract with. You, for a fee, obtain the right to a franchise, to run a branch with their products, brands, trademarks… With a franchise, you get to essentially be your own boss, all your achievements (and failures) will be yours and yours alone. However, the stating capital needed is much lower than what you need to get for your own business. Furthermore, you get a completely developed plan and marketing strategy pretty much handed to you.
Know that while franchising isn’t for everyone, for some it is the perfect opportunity to achieve their entrepreneurial dreams. However, giving it a shot requires some forethought (obviously). Below are some tips on how to figure out what kind of franchise is right for you.
Which Franchise Business is Best?
What is your initial budget?
The first thing you need to ask yourself is – what is your budget like? Franchise prices vary greatly, they can range from anything between ten thousand dollars, to a cool million. Weight in what your initial investment can be, as well as your expected profits, how soon you will break even, what’s your lifestyle like, and what your goals are.
Understand that the initial investment will depend on the line of work you have chosen. A restaurant will be much more expensive when compared to a B2B company. The equipment can be substantial, refrigerators, coolers, ovens, grills, all the cutlery. You will also need to set up the right décor. Utilities can be quite high, as can the cost of rent if you’re anywhere near a high-traffic location. On the other hand, a B2B consulting company that does all its work online can have its location set-up essentially wherever you want. The initial equipment, besides a few costly computers and software licences, is pretty minimal.
What role do you want to play?
Now, depending on how you want to spend your workday, you can choose to work as an operator, or an absentee owner. If you’re interested in getting right into it, going on the frontlines, then being an operator is an excellent choice. You will have direct insight into what’s going on at the company, will be able to control everything. It is the perfect choice for anybody who gravitates towards a hands-on approach.
On the other hand, absentee owners are more like pure investors. They hire the right staff, and are involved with some of the day-to-day grind, but they are mostly behind the scenes. They let the staff they hired to actually manage the whole enterprise. Now, of course, these choices depend on the franchise. Some places expect one type of work, others the other. Most often you will have free reign, but the actual type of business may require you to be at the office every day.
Do you have any experience (and in which area)?
Finally, you need to figure out where your interests are, in which area have you accumulated experience. There is no point in running a company branch whose line of work you despise. Go with your passion. Are you obsessed with cars? Maybe get the number from some car selling franchise. Do you love artisanal teas? Then calling up Chatime for franchise options is your best bet. How about fashion? Then contact a clothing brand. What you need is passion, and some kind of (formal or informal) education in that area. A couple of years in the business can come in handy as well.
And this isn’t just about passion, or pure knowledge, but about connections as well. If you want to get a franchise focused on the fast food industry, having some ties in that world will serve you well. Knowing the right distributors, maintenance workers, wholesalers and retailers will make your life much easier than just starting from scratch.
A franchise can be just as exciting and lucrative, if not more so, than regularly starting your own business. You still get a serious amount of control, and will have very high potential profits. Furthermore, a big chunk of the work, regarding marketing and planning, will be laid out in front of you. Just remember to figure out what you’re passionate about, and how much experience do you have. Be honest with how big your initial budget can be, and what kind of leadership role can you take on.