Going into the unknown and starting your own business is one of the most exciting things you can do. You are building your own destiny.
The fine line between success and failure makes creating a startup a high risk occupation. Franchises are a relatively safe alternative that still provide you with some of the entrepreneurial perks.
Here are some reasons why franchise businesses can overcome common issues that cause startups to fail:
- A big issue small businesses face is a lack of demand. The beauty of a franchise is that it’s a business model that works, with proven demand. As long as you get the location right, you have a better chance of succeeding.
- Another reason small businesses fail is a lack of sufficient capital. While franchises can be expensive to invest in, the franchise company will often help you develop cashflow projections and budgets. While the option is no cheaper than going it alone, you can budget better and manage expectations from your source of finance.
- A start up is very dependent on each employee in the team and recruiting the wrong employees is often a curtail mistake. Franchise companies will generally suggest what types of skills you should recruit for, have recruitment processes in place and be able to share best practice what channels will work best for hiring which staff.
- Finally, there are a whole list of reasons as to why a business gains a competitive advantage. Often it’s because a small business owner can’t compete in terms of buying power with the more established brands who can command lower prices from suppliers. This enables the big business to drop prices without losing margins making it hard for one-man-band to compete. But, as a franchise you will generally have excellent buying power allowing you to compete with the big boys on a level playing field.
Let’s be clear, a franchise business isn’t for everyone. If you enjoy the freedom of calling the shots on branding, product range and customer experience, you may be better off starting up on your own.
But if you want the challenge of being your own boss, with a proven recipe for success and reduced risk, a franchise might just be the winning formula.