Your first year as a franchisee is likely to be very exciting and daunting in equal measure. It can be tricky to adjust as life to a franchisee, particularly if you’ve never spent time as your own boss. Here are some of the challenges you can expect to face, and our best tips for overcoming them.
Starting a franchise is likely to be one of the most exciting milestones in your life. You’ve taken the plunge and decided to become your own boss; professional, financial and personal satisfaction await! But your first year in business can also be tricky. You’ll have to quickly adjust to your new role as business owner and boss, while navigating everything from tax to time management to budgeting.
However, there’s no need to worry. One of the biggest benefits of joining a franchise is that you’ll be supported every step of the way. You’ll also have a network of people around you who know exactly what you’re going through. To help make your first year in business that bit easier, we’ve put together a list of the main challenges you’re likely to be up against and our top tips for overcoming them.
1. An initial lack of funds
Transitioning from the predictable world of employment to the fluid world of business ownership can be a shock. One of the areas you’re most likely to struggle with during your first year is your finances. We’re not suggesting a franchise is a poor investment, but it’s likely to take a bit of time to build up a solid customer base and start generating a profit.
Before you take the plunge and actually start your franchise, it’s sensible to build up a buffer of savings to cover essential expenses. Lots of franchises also implement financial measures to take the pressure off, such as suspending usual marketing or management fees for your first few months or pausing your loan repayments until you’re turning a profit.
It’s also likely you’ll reach profitability far quicker than you would alone, as you’ll be operating under a recognisable brand within a proven business model. Even if you’ve got to tighten your belt a little for the first few months, it’s an issue you should soon overcome.
2. Time management
You’re going to be wearing a lot of hats during your first year as a franchisee. You’re the manager, accountant, sales assistant, marketing team and admin person for your business, and you’ll need to find the time to devote enough attention to each aspect. Feeling a little daunted? Don’t worry.
A huge perk of being a franchisee is that many franchises will take lots of tasks off your plate. Many franchise packages include admin, sales, marketing and accounting support, whether that’s in the form of helpful software or a team of support staff. And if not, your franchisor and fellow franchisees will have lots of useful advice on how to manage your time and power through your to-do list.
>> Read more:
- Franchising 101: The Official Franchise Start Up Checklist (Part 1)
- Franchising 101: The Official Franchise Start Up Checklist (Part 2)
- New Year, New Career: No Better Time Than Now to Start a Franchise Today
- Franchising 101: 8 Signs You're Ready to Start a Franchise
- Starting a New Business Doesn't Always Lead to Immediate Success: Here Are 5 Ways to Change That
- It's Never Too Late to Start a New Business
Making the decision to start your own business is incredibly exciting. But during the potentially tricky first year in business, you may find yourself thinking ‘what have I done?!’ The good news? Investing in a franchise will have given you a huge leg-up on your independent counterparts.
Research by Convergehub found that 95% of startups fail within the first five years, with more than 50% failing within 12 months of opening. But franchises are far less likely to meet this sad fate. The bfa has found that around 93% of franchises are still operating profitably after a year, and rates of commercial failure are extremely low.
If you find yourself having a bit of a confidence wobble, don’t keep it to yourself. Reach out to your franchisor, other franchisees or franchise support team, or speak to someone in the external entrepreneur community. Chances are, most business owners will have felt the way you do at one point during their journey. And by speaking to those within your network, you can pick up practical advice and encouragement that may ultimately turn you into an even better franchisee.
Whether you're a seasoned entrepreneur with several businesses or an ambitious entrepreneur on your first voyage, we can all agree that the first 365 days can be the most frightening.
—Jacob Warwick, CEO and Founder of ThinkWarwick Communications
>> Read more:
- 5 Advantages of Franchising for Young People
- 9 Things to Know Before Becoming a Franchisee
- Mythbusters: Common Misconceptions About What Makes a Successful Franchisee
- 5 Great Reasons to Become a Franchisee
- Franchising 101: Are You Ready to Become a Franchisee?
- Franchising 101: 6 Things to Know Before Becoming a Franchisee
4. Managing your finances
You’ve been in business for a number of months now, and your finances are looking a lot healthier thanks to a solid customer base. But keeping them compliant and well-managed? That’s another hurdle some new business owners struggle to clear.
If you’ve moved from employment to your role as a franchisee, you may be struggling to manage without a regular-as-clockwork income. For example, your business may generate £6,000 in revenue one month and make just £2,000 the next. It can be tricky to work out how much income you can afford to enjoy and how much you should be keeping back to keep your cash flow strong.
Another unexpected stumbling block for new franchisees is invoices. Some networks handle this side of the business for you, or give you access to software that can cut out the manual labour of invoicing clients. But if invoicing is something you’ve got to do yourself, it may be wise to speak to an accountant first. Check out The Benefits of Hiring An Accountant to find out why it’s a smart decision.
5. Tackling tax
It’s probably not your favourite topic, but all business owners should get to grips with their tax obligations as early as possible. Failing to do so can have serious consequences, so it’s in your best interests to bite the bullet and sort out your tax early.
Depending on the structure of your business, you may have to pay:
- Income tax
- Corporation tax
- National Insurance
- Capital gains tax
Again, if you’re not sure where you stand, it’s always best to speak to an accountant. It’s an investment you certainly won’t regret in the long term. Your franchisor will also understand your requirements, as they will have been in your shoes before and may still run their own unit.
Start a successful franchise
As you can see, there are a number of tricky parts of your first year as a franchisee. But with the support of your franchisor, fellow franchisees and skilled professionals, you should overcome them and be able to focus on enjoying the ride instead.
If you’re looking for more trustworthy advice and guidance, check out our catalogue of data-driven articles. And if you’re interested in starting your very own franchise, browse our directory to find the ideal opportunity for you.
Sophie Cole, Point Franchise ©