In today’s market, owning an established franchise is almost-always more lucrative than starting your own business. But while franchising sounds like an easy way to make money, it actually involves a lot of pre-planning and forward thinking, something that a lot of newbie franchise owners might downplay.
Yes, becoming a franchise owner can be very profitable, you need to be well-prepared for the rigors of running your business. Here are some things you should think about before running your own franchise:
What are My Initial Costs?
Just like starting your own business, you’ll need to figure out exactly how much capital you’ll need to get your franchise off the ground: this includes purchase costs, opening inventory, and initial operating costs, among other things. Your initial capital should be enough not only to break even, but to turn a healthy profit in the first few months.
That being said, however, don’t expect to make ROI (return of investment) in the first few months; rather, think about breaking even first and then re-investing your profits to expand your franchise.
What Do I Like?
Do you love coffee? Books? Cheesecakes? Whatever it is, finding a franchise that has products or services that you actually like will help in determining how you’ll approach a number of things about your business, from franchise development and expansion to everyday operations and staffing.
This isn’t to say that you shouldn’t own a franchise that you’re not passionate about, but it does go a long way to how you’ll treat your business in the future. You also don’t have to necessarily be good at what your franchise does; you don’t have to be an award-winning barista to make good coffee, but you do need to hire baristas that are at that level.
What Do I Need to Do to Make my Franchise Successful?
The million dollar question. Unfortunately, there is no one answer to this question as it depends entirely on the kind of franchise you’re running, where you’re operating from, what your goals are, and so many other factors. However, one of the best ways to run a successful franchise is figuring out what your competitors are doing right and emulating it. Look at other franchises and ask yourself:
- What were their KPI’s (key performance indices) and how did they reach them?
- What challenges did they face and how did they overcome it?
- Why did a certain franchise fail?
- How long before these franchises turned a profit? Were they able to grow their business?
Based on the answers you can glean from your fellow franchisees, you must now ask yourself: what can I do better? Yes, it’s always good to learn from mistakes (that’s how experience is built, after all!), but it’s even better to learn from the mistakes of others and not repeating it.
Owning a franchise is the first step: it needs to be followed with franchise development and, eventually, franchise expansion. Whether you’re happy with owning a franchise, or you want to start your own business in the future, is entirely up to you. Just make sure you’re able to learn, grow, and become better at running your business.