The business world can be a ruthless, cutthroat place for those not familiar with the inner workings and lacking industry experience. Having to set up a business from scratch with the required capital and infrastructure seems like the most challenging ordeal of the entire process, however, it is only the first step. Once you have set up the facilities required to run your business you might be under the impression that it will be a smooth road onward. However, what lies ahead is what can truly make or break the business: marketing the product.
Introducing a new product or service on the market is fraught with problems such as gaining a loyal customer base, firmly establishing the brand name, living up to personal and customer expectations, maintaining adequate working capital and most of all making sure that the sales target is being regularly met. One way to gain experience of a market and considerably reduce the difficulties faced – thereby securing the invested capital – is to invest in a franchise. A franchise is essentially a buying authorisation from a pre-existing company to run its commercial operations.
While opening up a franchise seems, and in some ways is, easier than starting up a new business, there are certain things that should be kept in mind in order to ensure the survival of the franchise along with a good return on investment.
- Evaluate Yourself As A Businessman/woman:
Conduct a thorough and honest evaluation of your skill set as well as where your interests lie. The questions you should be asking yourself are: What are my strengths and weaknesses? Which industries will my skill set benefit the most? Which industries am I interested in? Which combination of industry and skills will yield the highest ROI?
- Choose A Franchise That Accommodates Your Needs:
Having picked out the industry, you should now carefully select the right company. You have already narrowed down the industry, from here on you can easily search for the available franchises. The trick here is to pick the one that is most amenable to your needs and which has a similar vision as you would envision for your own company.
- Obtain The Right Information:
Gain as much information as you can about the business model of the parent company. Understanding it gives an insight into the vision of the company. You need to look at how the company is structured, how it functions with its franchises and what sort of place the company has in the market. If the company has a firm central structure, it will mean success for you in the future.
- Talk To Other Franchise Owners:
Approach franchise owners of franchises of the same company or other companies in the same industry to get their take on how viable the business is. The franchise owners of the same company can provide you with deeper insight into the sales and viability of the franchise, along with valuable information such as the relations with the parent company, the flexibility of internal policy etc.
- Franchise Business Plan:
Having decided which franchise to run, you should now formulate a business plan that details how you plan on incorporating your vision into the pre-set company policy. The business plan should provide the business model and structure of the franchise, as well as the financial aspects of the franchise, as it will be shown to potential investors.
- Invest Wisely:
You should evaluate your own personal portfolio thoroughly and decide how much you wish to spend in this endeavour. Starting up a business or taking up a franchise should not come entirely from your pocket, however, if you wish to contribute make sure that you have done your books properly!
- Get A Good Franchise Loan:
As mentioned, the capital raised to start the franchise should not come directly from you. During the research phase find out if the parent company has a policy of providing funds at all. The best way, however, is to have a solid franchise business plan and apply for a small business loan. You can either do it at a bank or through a business cash advance. If you have a good business plan, your research is meticulous and the franchise seems lucrative you will stand a good chance of receiving a loan. This is one of the reasons why you need to know how structurally and financially sound the parent company is as it will reflect upon the potential future success of the franchise. You yourself need to look good to your creditors through your business model. A small business loan or a business cash advance will provide the right amount of capital to purchase franchise rights and set up the required infrastructure.
Although the above points seem quite straightforward, they inherently are about good planning, which in the long run is what benefits a franchise and most importantly helps in obtaining sufficient starting capital. Having the sufficient funds also ensures the parent company and allows for a smoother functioning of the franchise.