If you are thinking about starting a new business, chances are that you are at least considering the benefits of doing so with a franchise opportunity. While opening a business through a franchise doesn’t remove all of the risks new businesses face, it does offer new business owners distinct advantages like training and support, a proven business model, and much more. Still, there are important things to know about franchising before deciding which model suits you best. These five things can help you to know whether buying a franchise opportunity is the right choice for you.
Demand Franchise growth rates continue to rise each year, and the number of potential franchise opportunities along with it. There are over 300 franchise business lines in at least ten different business areas, from automotive and residential services to retail, food, and real estate. When considering a franchise, you and the franchisor will need to ensure that your desired location has enough demand to support your business. It is also important that you and the franchisor research the local market carefully, estimating the potential customer base and whether or not your business is a good fit for the needs of the population.
Competition Along with demand, the amount and type of competition you can expect to encounter is an important consideration when thinking of owning a franchise. It may not make sense to open another fast-food restaurant in an area already saturated with national chains. On the other hand, if your business has something different and unique to offer, you may be able to compete well with the area’s pre-existing businesses. For example, many cities have property management businesses, but Real Property Management’s differentiated service model has allowed our offices to thrive in a variety of competitive environments.
Cost It is important to know that buying a franchise is a significant financial investment. But unlike starting a business from scratch, there is no need to “learn through your wallet,” as they say. A franchisor can help you determine the costs required to get your business up and running. These may include things like the investment price for the franchise, a building or office space, supplies, employees, working capital, and opening inventory (if selling a product) – just to name a few. A reputable franchisor will help you determine how much working capital you’ll need so that you don’t run out of money just before your business starts to turn a profit. It’s also important to decide in advance how you will finance your business before you start shopping, because you might discover you really can’t afford some of those higher-priced franchise.
Training and Support No two franchisors are alike, and so doing some careful research early on in your decision-making process can help make your choice easier. One of the big advantages to a franchise is ongoing training and support from the franchise organization. The best franchise opportunities out there offer in-depth, comprehensive training for new franchise owners. These franchisors will also provide a wide range of support, from access to important services, professional marketing materials, and much more. To ensure that a franchisor actually delivers on their promises, talk to other franchisees. Ask them how much support they received, and whether or not their initial expectations continue to be met. Having strong support and a franchisor that is available and responsive can make owning a franchise business a little easier.
Exit Strategy It might seem strange to start planning for the end of your business before you’ve even begun, but as Stephen Covey is known for saying, it’s important to “start with the end in mind.” Before choosing to buy a franchise, you need to know what your exit strategy will look like. Are you planning to pass the business on to others, such as family members, becoming an absentee owner with a passive income stream, or selling it? Figuring out your end game in advance can help you choose a franchise opportunity that will best fit both your short- and long-term goals.
Buying a franchise can be a fulfilling and profitable way to start your own business, but only if you have a clear path of what you hope to accomplish. If you haven’t already taken a look at what a Real Property Management franchise has to offer, you might consider doing so.