Franchises are a great way to minimize the risk involved in starting a small business. They allow entrepreneurs to sell a product that has instant recognition, as well as a business model already set in place. The following are some important steps to take before beginning a franchise business.
- Why do you want to own a business?
- How many hours per week do you want to work?
- What are your strengths?
- What do you like to do?
- How much franchise financing will you need?
- What returns will you need from your investment?
- Where do you want to live?
- How close would you like your business to be to your home?
Once you know the answers to these questions, it will be easier to evaluate franchises and know which one will be the best match for you.
Unless your assets include a mountain of cash, it’s important to investigate your financing options as soon as you can. Banks aren’t as readily willing to loan money as they used to be, so increasing the amount of possible financing sources is important. Online resources such as Boefly provide an excellent way to improve your chances of securing franchise financing by connecting you with multiple potential lenders at once
Find a master list of franchise opportunities. The most comprehensive of these is the Entrepreneur Franchise 500, published every January. Start by looking at industry categories. Which of these groups meet the priorities you established when you did your self-evaluation?
Once you have narrowed it down to a few industries, examine each business individually. Ask yourself, “Do I think this franchise opportunity will flourish no matter what state the economy is in?” If the answer to this question is no, eliminate that choice from your list. You want to end up with a business that has the very best chance of being successful.
Identify Individual Possibilities and Request Information
Once you have settled on a few recession-resistant industries, it’s time to start looking at individual companies within each group. Select a few companies that will allow you to live the life you want to live, while also bringing in the money you need. Contact each company to gather information. Request their Franchisor Disclosure Document (FDD), and inquire if they help with franchise financing. Research them with the Better Business Bureau. Call individual franchisees and ask them to share their experiences with you.
- What do they think of the company?
- What is it like to own this business?
- How realistic are the franchisor’s projected start-up costs? How effective are the marketing materials they provide?
Once you’ve gone through all these steps, you will certainly have a good idea of the direction you want to take. Make your final decision with confidence. You’ve earned it.