Add another layer to your #Business literacy. We at Serebral360° would love to know if the Forbes – Entrepreneurs article was helpful, leave a comment, like and share. Let’s dive in and discuss the information and put it to use to grow your business. #BusinessStrategy #ContentMarketing #WebDevelopment #BrandStrategy
Info@serebral360.com 762.333.1807 www.serebral360.com
Grap a copy of our Strategy Books 👉 CLICK HERE FOR VOL1 and 👉 CLICK HERE FOR VOL2
So. You’re the proud owner of a brand new franchise business. You did your research, explored all of the options, investigated the legals fully and you’re confident that the franchise you’ve chosen to invest in is the right one for you. You’re fully behind the product or service that you’re going to be delivering and you couldn’t be more excited about the road ahead……
But stop right there! Even though the success rate for a franchise business tends to be higher than a similar non-franchised business (by investing in a franchise a new franchisee is hopefully investing in an established brand with a proven business model), a still surprising proportion of franchise businesses do not survive their first year of trading. And why is that?
Here’s five common mistakes that new franchisees make in their first year of business that could have a detrimental impact on their business and tip the balance between success and failure
- Trying to do too much too soon
Owning a new business is like owning a new house or car….some could say even like owning a new pet! It’s incredibly exciting. At the start of the journey a new franchisee is full of energy and ideas. As a new member within an already established franchise team, they are likely to find themselves chatting to other franchisees who are much further down the line in their business journey, watching what other franchisees are doing within their businesses – launching new products, offers, initiatives – and feeling inspired (or compelled!) to do the same within their own business. This is where new franchisees often go wrong. The key to building a successful business is to fully master the core business, products/services first, to get to know the area and ideal customer before embarking on a plan to expand or diversify. A successful franchisee will be patient and try not to compare themselves to other franchisees – there are so many other factors at play that will mean that how one franchise branch expands or develops may not be an automatic recipe for success for another.
- Not accessing support from other franchisees
One of the biggest benefits undoubtedly of joining a franchise brand is becoming part of a wider team. Even though franchisees may be scattered far apart geographically, technology means that inter-team communication has never been easier. A strong franchise brand will not only provide support for franchisees from its Head Office team, but will also ensure that there are clear lines of communication between franchisees so that they can access peer to peer support. And this support can not only be of invaluable practical value, but also provide a much needed morale boost during the inevitable rollercoaster first year of business for a new franchisee. Those existing franchisees have been there and survived – they can tell the newcomers how to avoid the mistakes they might have made during the first year themselves. Time and time again within my own franchise brand, we see that the more successful franchisees long term are the ones that engage within the team support forums, receiving and dispensing advice from and to their fellow franchisees and taking on board the advice received.
This third point marries in with the first – another common side effect of the first flush of excitement of owning a business. And this is NOT just specific to franchise owners. It’s all too easy to for any new business owner to get sidetracked and bogged down in detail – choosing the color of a carpet or walls (if the franchise allows you to make such choices), selecting stationery or planning lavish launch parties with extensive guest lists. The bottom line however is that the new business needs to make sales in order to fund all of the niceties and trimmings and a new franchisee needs to keep their main focus on the core business activity. All of the fancy stuff can wait. A new franchisee’s mantra should be “Do I need to buy or do this NOW? Or can it wait?”
- Underestimating the amount of money needed
A good franchisor will of course have gone through all of the facts and figures with the franchisee pre-sale, the franchisee should of course have drawn up business plans and forecasts and have ensured that they have sufficient working capital in the bank to fund the initial launch and growth stages of the business until the sales start rolling in. However time and time again, new franchisees simply underestimate the amount of cash needed, are overly optimistic about the sales they will achieve in the first few months and run out of money before the business is fully established!
In investing in a franchise, a franchisee is buying into an established business with proven processes and procedures and a track record of success. However this does not mean that buying a franchise should be considered an easy option which involves less effort. Many new franchisees fail to recognize that launching a new franchise business still requires a huge investment of time and effort in the same way as launching any new business does – it’s not simply a matter of opening the doors and expecting the customers to roll in off the back of the brand’s overall reputation. Conversely (and again, this is not franchise-sector specific), it’s really important that a new franchisee ensures that they have a good time management plan. It can be all too easy in the early days of any new business to become all-consumed by the new venture and quickly burn out. For this reason, in my own brand, part of our training for our new franchisees is about setting personal boundaries to try and maintain an effective work-life balance which is essential to remaining fresh and focused. In addition, any new franchisee needs to ensure that they are building in time to work ON their new business and not just in it, to ensure that it keeps moving forward and growing.
The great news is however, that for anyone considering becoming a franchisee, investing in a franchise continues to be a recipe for long term business success for many. Here in the UK where I am based, the BFA and Natwest Bank have just released their 2018 report into the UK franchise landscape. According to the report statistics, failure rates for franchises remain very low, with fewer than 1% per year closing due to commercial failure. Franchisees surveyed for the report claimed profitability remains high at 93%, and over two-thirds of franchised units that have been running for five years or more report being either quite or highly profitable. Do the homework, choose wisely, plan and access the support and advice on offer and it should quickly be time to get out the party hats and bunting ready to celebrate a successful first year of trading and to look ahead to many more!
January 6, 2019 at 06:46AM
Forbes – Entrepreneurs