Is a Business Franchise for You?

by VENDIREX on 07/05/2015 - 03:04 pm |

Tag: Business Loans

As with any company that you establish yourself, a business franchise is going to require hard work and dedication in order to be successful. Just because you are buying into an existing brand, doesn’t mean that you aren’t in for a tough road for the first several months. If the type of business isn’t something you have experience with, it should at least be one of great interest to you. Staying motivated is essential for your stamina, and to be able to pass on inspiration to your employees.




You may assume that because the franchise already has several years under its belt that the bookkeeping is going to be a snap. Not so fast. No matter how organized and streamlined the record keeping appears to be, you should plan to either hire an accountant or at least a freelance bookkeeper to assist you, until you have fully absorbed all the mechanics of daily and monthly paperwork.


One of the biggest reasons a business fails in the first couple of years is inattention to records and cash flow, so learning the ropes and staying on top of your books is not something to put on the ‘back burner.’


Cash Flow


Expect to reinvest any profits back into your franchise for the first year or so, to create a path for its future success. Don’t plan on living off what is left over after expenses each month (cash flow); that will only dissolve your capital, and if there’s anything a new business needs it is money in the bank. If you are not otherwise financially well endowed, you may need to hold another job for the first couple of years; i.e. don’t quit your ‘day job.’


Following Directions


If you’re someone who likes to do everything your own way, a franchise might be a challenge as you are going to be following another company’s pro forma. For most, there are strict rules to make certain franchisees do not deviate from the recipes, products, and rules they have laid out for their brand.


On the other hand, consider why you are interested in their franchise, and remember they have already worked out all the kinks and problems. What you can contribute is your enthusiasm, great customer service and your knowledge of the local neighborhoods to choose a superior location; these factors will all allow you to put your entrepreneurial stamp on making this franchise achieve faster success.


Before You Invest


If you are buying an SME (small to medium enterprise) franchise, be sure to dig deep into the marketing regulations you will be held to. If you have a business or IT background or a knack for advertising, you’re going to have ideas about how the franchise can optimize its customer base. Again, if you don’t want to have to sit on your hands when it comes to specific areas of the business, be sure to read the small print.


Franchises can be amazing ventures full of promise, if you choose wisely and don’t assume the customers are just going to come out of the woodwork. Do your homework, and research the company thoroughly. After all, it’s a big investment, so don’t take anything for granted.


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