5 Things To Consider Before Leaving Your Job And Opening A Franchise
You’ve always wanted to run your own business, but haven’t come up with that killer idea yet. A friend suggests “How about a franchise?” and suddenly the chance of becoming an entrepreneur seems even more tempting, especially as a franchise would give you the support of a well-known brand to boost your venture. It’s time to look at franchise investment opportunities, and quit your day job.
However, before you tell the boss you’re striking out on your own, it may be time to press the pause button and take a closer look at the average franchise model. Is it what you really want to do? Do you have the capital to buy a franchise licence? Do you have enough working capital to keep you going until the profits start to come in? And most importantly, are you prepared to put in long hours (including weekends and bank holidays), push yourself harder than you’ve ever done before, and have the courage to make what is effectively the biggest business leap you’ve ever taken? Let’s have a look at some things to consider before you leave your job and sign up for that franchise agreement.
#1 - Are you sure? We mean, really sure?
Any business decision should be thought about carefully. You wouldn’t rush into another job without checking out whether you’re getting more money, what the hours are, what support you get from your boss, or what’s expected of you. The same principles apply to a franchise agreement too. Start off by doing your research and look at key points such as:
- The type of franchises on offer – What do you want your business to be? Are you a keen amateur chef looking for a food outlet on the high street? Or would you prefer to work from home? Are you in the gym six days a week and would like to turn your passion into a business? The type of franchise you choose is entirely up to you, so start off by seeing what’s on offer. A good starting point is the British Franchise Association, which publishes regularly updated lists of franchise investment opportunities up and down the country.
- Your skills set – Do you have experience of running your own business? Do you know what running a franchise model involves? If not then before you quit your job, you might want to sign up to some evening classes in business management to get a real understanding of what a franchise business entails.
- Is there a need in your area for another gym/restaurant/pizza outlet? – The idea may be first class, the brand may be consumer-friendly and trusted by customers, and you may be ready to open tomorrow morning. However, if your area is already swamped with competitors, you’re going to face a tough battle to get your franchise off the ground. Take a walk around your community and see if there’s really a demand for another outlet.
#2 – Do you have a family?
Running a franchise model is hard work. Expect to work long hours, say goodbye to weekends (at least in the beginning), and forget about bank holidays. In the beginning, quality time with the family may be in short supply, and just like any other business, you’re going to be putting in long hours. If you’re going to commit to running a franchise, you’ll need to talk it over with your family first, and explain to them the level of commitment involved. Make sure that your home life is rock-solid and that everyone’s happy about your decision.
#3 – How well do you handle stress?
Running a franchise puts a huge demand not just on your time, but on your ability to manage too. While you’ll have the support of your franchisor, the buck effectively stops with you. It’s your decisions that will determine the success of your business, and it’s up to you if you succeed. However, because your franchisor is still invested in the business model, you’ll need to keep them happy too. If they feel you’re polluting their brand through bad management or poor customer service, then you could be under even more pressure.
You’ll have plenty of financial considerations to consider too (more on that in a minute), from buying in supplies through to paying VAT.
There’s a good chance that any franchise investment opportunities you buy into will involve a loan of some sort, so be aware that there’ll be pressure to succeed from your lender, too.
#4 – Speaking of finances…
Having a monthly wage packet means you can plan ahead – pay your rent on time, put food on the table, and even put a little away for a holiday. Taking on a franchise means how much you take home at the end of the month is entirely dependent on the success of your business.
That means you’re going to need some serious working capital before you sign a franchise agreement. Your franchisor will expect you to put in around 30% of the initial capital personally (that’s excluding personal loans). As even the simplest franchise models and licences can run into thousands of pounds, you’re probably going to need to save up first. There are lenders who specialise in financing franchisees, although again you’re going to need to show that you have some pretty solid finances in place first (and a potentially profitable model) before they’ll look at your application for funding.
You’ll need both start-up and working capital to cover everything from licencing agreements, premises leases and rent, and supplies, right down to Post-It notes and wages. Sit down and do the maths first, and be realistic about the numbers.
#5 – A passion for success
You cannot go into a franchise agreement half-heartedly. You need to be truly passionate about succeeding, and enjoy what you do. It’s the same as any other job – to get the most from it you need to throw yourself wholeheartedly into making the business a real success. If you feel that after 12 months your enthusiasm may start to falter, then perhaps a franchise isn’t for you.
If, however, you feel you can overcome all of these, are prepared to work hard, and commit to making your franchise a success, then the rewards can be spectacular. With the support of your franchisor, a strong aptitude for business, some serious working capital, and a true understanding of the effort involved, your first franchise could be the start of your own business empire.
The Editorial Team, Point Franchise ©
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