Qualities of a business owner
If youíve always dreamed of starting your own business, youíll understand just how difficult it can be. There are often obstacles standing in the way Ė and overcoming them isnít always easy.
Franchising, however, is an exciting alternative. While the terms of your franchise contract may prevent you from having complete creative control over how the business grows, the franchise model offers entrepreneurs a way around many of the problems faced by other new businesses.
Here, we take a look at the qualities youíll need to be a great franchise owner, and how theyíll help you in your journey to profitability.
Youíll need to be:
1. A collaborator
Franchising is all about collaboration. Franchisees collaborate closely with their franchisor and network extensively with other franchisees. Conferences, workshops and seminars play an important role by providing business owners with the skills and tools required to succeed. In fact, collaboration is encouraged on every level. In some cases, franchises even use a mentor system to guide new franchisees through the initial set-up stages.
Outside of the franchising system, this is much harder to achieve. Entrepreneurs attempting to establish and expand their own business often find it difficult to collaborate with or learn from other business owners. To a large extent, this is a side effect of the fierce competition that exists between companies operating in the same sector. Business owners are understandably worried about giving competitors an edge by sharing their expertise and experience.
Conversely, franchisees are all in it together, and if they all work hard, theyíll boost the reputation of the brand and improve profitability across the board.
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2. Open and honest
As a franchisee, it can be incredibly difficult to find people who are as passionate about a project as you are. Fortunately, all good franchisors take a keen interest in how their franchises are performing and whether theyíre experiencing any serious problems. As the franchisor-franchisee relationship is mutually beneficial, both parties are interested in making it work. No one party has a greater responsibility, and both understand that their profit margin is dependent on working closely together.
This does mean, however, that you must be prepared to be honest with your franchisor. Youíll need to hand over financial accounts and documents detailing other performance figures. Hiding issues or negative statistics will only damage your relationship with the franchisor and exacerbate problems in the long run.
For this reason, you need to feel you can trust business partners before you sign a franchise agreement. Make sure you meet with them and discuss the opportunity before you officially become a franchisee. If you get the sense that you wouldnít be able to collaborate with or confide in them, you should seriously think about whether the franchise is right for you.
When youíre researching franchises, itís also important to consider how the franchisor will support you as your business grows and expands. Talking to existing franchisees is an excellent way to determine the extent to which the franchisor will support you. Most of the time, franchisees will give you an honest appraisal of how the franchise helped them build their business, and this gives you a better chance of choosing the right franchise for you.
All businessowners, whether theyíre franchisees or not, should aspire to expand and go on to bigger and better things. But the franchise model is particularly bound to the idea of growth. Franchising is a tried and tested method specifically designed to facilitate the expansion of a business. Itís often used to allow a fledgling business to expand aggressively into new areas before others take advantage of gaps in the market.
Franchisors are also keen for individual franchisees to develop and manage additional franchise units. This is because existing franchisees have already gained the experience necessary to set up a new branch. Therefore, the franchisor wonít have to spend time and money training a new franchisee and then painstakingly guiding them through the set-up process.
This means there's a clear opportunity for entrepreneurs who are ambitious and hardworking. Youíll get the most out of the venture if youíre always aiming for the top and working with the intention of growing the business in any way you can. This may simply be by boosting your customer base, or it may be by opening five new franchise units in five years. Whichever route you follow, you will need to be ambitious in some way if you want to be successful. If you are, youíll be able to build a legacy and expand your business quickly and efficiently with the franchise model.
4. Able to share risk and accountability
When you start an independent business from scratch, you understand that you take sole responsibility for its success or failure. When you open a franchise unit, the situation is slightly different. Although the franchisee is ultimately responsible for the success or failure of the unit, the franchisor has an enormous responsibility too. Youíll need to be prepared to put your trust in the franchisor, as theyíll have a huge impact on the performance of your business.
Even the franchisors who offer the most affordable investment opportunities understand that their business will not survive if they donít invest in their franchisees. Thatís why they should provide you with the necessary tools and skills to succeed. When you choose which franchise youíd like to join, make sure the franchisor offers a good amount of training and support. This is particularly important if you are new to the sector or havenít been a business owner before, as your success will rely on a bank of knowledge and skills, which should be provided by the franchise.
If attempts to open new franchise units repeatedly fail, the franchisorís profits will fall and they'll find it much more difficult to attract new franchisees, so itís in their best interests that you achieve profitability too. Therefore, both parties share the risk involved in opening a new business and both are invested in its success. This acceptance of shared risk ensures that both the franchisee and franchisor are pulling in the same direction and have the same goal. However, you will need to be comfortable with this element of shared responsibility.
5. Organised and business-oriented
These qualities will serve you well throughout your franchising journey, but theyíll be particularly useful in the opening phase. One of the most significant obstacles faced by new franchisees is finding the required funding to get their business off the ground. In the current economic climate, banks are hesitant to lend money, and increasing numbers of business owners are looking for alternative sources of investment. Sometimes, this includes borrowing from friends and family, and devoting a huge amount of time and effort into drumming up support.
In the franchise world, it's far easier to find financing. Many of the larger national banks have dedicated franchising investment funds and are far more comfortable lending to a new business owner that's backed by an experienced and already successful organisation. In some cases, itís possible to borrow between 50 and 70 percent of the investment capital from a lender. Most British Franchising Association (BFA) accredited franchises are supported by major lenders, and new franchisees will find it far easier to secure funding if they sign up with one of these franchises.
However, securing funding still requires a significant amount of time and dedication. Lenders arenít just going to offer you the money when they see you intend to open a franchise location; youíll have to put in the work. This means demonstrating that your business has a good chance of being stable and profitable.
To do this, youíll have to write a business plan. Take the time to set out your goals for the business and how you plan to achieve them. You should include market analysis, financial forecasts, your management structure and details about your business premises and future marketing activity. Your franchisor should provide you with statistics you can base your research on. However, youíll need to be organised and business-oriented to look at your business objectively and create a plan that will impress lenders. By thinking ahead and being realistic, youíll be able to get your unit off to the best start.
The principal advantage of the franchising system is that new business owners are supported by a large-scale organisation that has plenty of resources, experience and expertise at its disposal. This allows it to equip new franchisees with the tools they need, ensure applicants have easy access to financing and increase their potential for growth.
The beauty of the franchise structure is that franchisors are invested in the success of their franchisees and are just as keen to make new units work as they are. Franchising is a system thatís designed to encourage growth and expansion, and franchisors work hard to remove obstacles that may stunt growth or prevent their franchisees from succeeding. For this reason, itís an incredibly appealing prospect for any entrepreneur with the right qualities to launch a business.
Alice Tuffery, Point Franchise ©
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