How to Start a Business with a Franchise
If you’re considering starting a new business, the first decision you'll have to make is what type of company you want to own. Are you going to run a pet store? A print shop? An estate agent? A car dealership? A marketing consultancy? The list is endless and your options infinite. Most people enter into an industry either because they're passionate about it or because they're well-suited to the job. However, the reasons for starting a business don't particularly matter if you end up making the right choice.
Once you've decided what business you're going to start, it's time to think about the type of business model you want to employ. While many people opt for a traditional start-up, a growing number of savvy individuals who understand the benefits of operating under an established brand name are choosing to go with franchising. Here, we take a look at how to start a business using the franchise model, and why it may be beneficial to do so.
Different businesses – different requirements
Before we begin to look at the way in which you can utilise the franchise system to start a new business, it's important to recognise the fact that all businesses are different and, consequently, there is a whole raft of different ways to go about setting up a company. To demonstrate this, we're going to take a look at two different types of business, identify how the setup process will differ, and why it's not a good idea to generalise too much when it comes to these processes. First, we'll take a look at how you set up a small "brick and mortar" business and then we'll compare this to the process from a home-based business.
How to start a small business
The main difference between a "brick and mortar" business and a home-based company is that the first requires business premises. This simple fact affects the whole start-up process. For instance, prospective franchisees looking to start this type of business will have to save a great deal more to afford the initial franchise investment. They'll also need capital to cover the lease and fitting costs.
Second, they’ll need to find suitable premises and negotiate the lease with the landlord. In many cases, the franchisor will provide franchisees with assistance at this stage of the process. The premises need to be ideally suited to the type of business you're starting, and the financial cost must be factored into due diligence and financial projections.
Finally, a "brick and mortar" business depends on a completely different type of customer and needs to be advertised in a way that reflects this fact. While some companies will require a location that benefits from a large amount of foot traffic, others will offer products and services that customers are willing to travel for. Physical stores utilise digital marketing, but they're also likely to require a considerable amount of physical advertising, too.
How to start a business from home
A home-based business requires much lower amounts of working capital and a relatively small initial investment. However, its success depends on an incredibly different skill set, and franchisees will need to adapt their abilities to the demands of this type of business set-up. Self-motivation, preparation, and planning are essential. Many franchisors will give home-based franchisees the tools to succeed and then let them get on independently. That's not to say that they abandon the franchisee completely, just that they often provide less on-going support than traditional franchisors.
Franchisees will also be given a great deal more freedom to determine their working arrangements with a home-based franchise. You'll be able to choose between a part-time and full-time position and be able to dictate when and where you work. This is beneficial for those who don't want to work full-time or have other commitments to work their schedule around but does pose its own unique challenges. It also means that you're likely to earn considerably less than you would otherwise. Consequently, it's important that you ponder whether income or flexibility is a higher priority before you come to a final decision and sign a franchise agreement.
Five questions to ask when starting your own franchised business
Before you commit to a particular franchisor, there are a few things you need to think about and some questions you need to ask yourself. These questions constitute the start of the setup process and form the foundations upon which you'll build your business.
- What am I passionate about?
If you're not passionate about something, it's usually tough to excel at it. While passion for a product, service, or industry is by no means essential, it is incredibly beneficial.
- What am I qualified to do?
As well as being passionate about a business, it’s also useful if you’re well skilled and appropriately qualified for the job. Talk to the franchisor and discuss what their qualifications criteria is to find out if you're a suitable match.
- What work structure do I want?
Do you want a part-time or full-time role? Do you want to work from home, remotely, in an office, or with a van? Deciding what structure you want will help you narrow down the options.
- What do I want from the franchisor?
Different franchisors offer different levels of support. Try and think about what support you want and need, then look for a franchisor who can provide it.
- How much do I expect to earn?
Not all franchises are going to provide you with the income you need. Some will demand you work harder but will pay out more. Others will give you a comfortable personal income but nothing more. Ask yourself – “what do I need?”
Starting a franchise is a long and complicated process that requires candidates to show dedication and commitment. At first, you'll need to narrow down your options and consider what it is you want from your franchise. Only then can you start to build a profitable and sustainable business.
The Editorial Team, Point Franchise ©
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