Do you want to franchise your business? Not sure how to start? Here is more in the series. We are exploring the world of franchising from the basics at the beginnings. For the first part in this series click here How do I franchise my Business?
Is My Business Ready to Franchise?
How do you know if your business is ready to franchise? There are a lot of different factors. It can depend on the type of business; the length of time you have been in business, your financial situation. In short there are many variables, but let’s see if we can answer a couple more of the basic questions.
Profitability of your business
We looked at the basic aspects of this in the last blog Basics 1. Obviously this is the most important factor. If you have looked at the profitability of your business and you are “on the money” then great! If, however it is not quite up to speed, have a serious think about getting independent advice and help.
- Get a business coach (please, hear me on this one – get one who has experience with small business.)
- Get advice from your Accountant. Your accountant should be able to help you analyse your figures.
- Best option if you are serious about franchising – get a franchise consultant.
When you go to see any professional for advice – listen to what they say, ask as many questions as you can. Remember YOU ARE PAYING FOR A SERVICE. If you feel that they do not understand your business or you feel they are not helping guide you in the right direction – GET A SECOND OPINION. Please do not be intimidated by business professionals – they are there to help you, if you feel they are not – find someone who can.
What makes you different from your competitors?
Another aspect to look at is, do you have an edge on your competitors? What you are looking for here is something that makes you stand out from the crowd. Better products? Faster service? Whatever it is, this may become an important selling point. This does not mean you have to be cheaper. Your edge might be that you give your staff better training so they are much more helpful to customers and you have a high rate of return custom. It could be that you have easy to understand services or a niche market that loves your products.
Now if you are scratching your head saying I don’t really know what would make us stand out from the crowd – ask your customers why do they come to you! That should give you a better understanding. Some businesses don’t have to have a huge competitive edge; they are just everyday businesses that people will frequent as long as the service is good. What you ask?? Here is an example, newsagents, people don’t shop around before they go there to buy (………usually!), so long as they are well stocked and offer good services people are less likely to go elsewhere. So in short, whatever your edge you must ALWAYS have good service.
A good way to find out where you sit in the market is to find out what your competitors are doing. Make sure you keep an attentive eye on your competitors to ensure you keep track of what is really
happening. I have found so many business owners have an awful habit of thinking they know what is going on without even checking. They have in their minds what happened last year, 5 years ago and
that doesn’t really matter much, it is what is happening now that counts more – check.
- What are they doing in the market?
- What is their portion of the market?
- Who are they targeting?
- How often do they change, add, alter etc. products/services?
- What is their advertising/promotion like?
You can always learn a lot by looking at your competitors advertising. Remember when you are franchising you need to be competitive not just in your city, town, suburb etc. but wherever you are looking to expand to.
Once you have established where you really fit in the market the next thing to do is to ensure that you keep moving forward and keep up to date with your particular market.
About the Author: Sara Howell is a no nonsense, straight talking Franchise Consultant & Small Business Specialist at Business Bubble. If you have any questions or just need some help – call 1300 293 239.
Do you want to franchise your business? Not sure how to start? Start here with these basic questions. It is not rocket science but so many budding franchisors make the same mistakes so in this series of franchise basics we will explore the basic do’s and don’ts of franchising start up. Hope you find them helpful
Questions to Answer First!
Franchising can be a great way to grow your business, lucrative if done well and can be costly if not. There are a number of questions you need to answer before you start to franchise your business. I have listed a few of the basics to get you started.
Do I have a profitable business?
Look at the profitability of your business. Do you have a “solid” business? Sounds very basic but it really is the first step. For example, if you run a home based business do you make enough to earn a reasonable amount for the hours you put in and cover your costs. Or if it is a retail/store front business, you make enough to pay yourself, all the bills, rent, staff, goods, insurance etc. If it is a mobile business you cover the cost of running a vehicle, insurance etc. and pay yourself. You get the picture right? It is not a good idea (and not very ethical) to sell a business to someone if you don’t make money yourself.
Have a reality check – would you want someone to sell you a product/service that may or may not work? I have seen franchisors start selling franchises before they have worked out the financials and it can end in a huge mess for all concerned. Just for the record, if you are not making money from your business and you really believe it could be a great business – get a business coach or franchise consultant to help you. With a bit of expert help and a few “tweaks” sometimes things can be easily fixed!
Do I really have a market for my products or service?
This is important. A rather basic example, you have a video store that makes money in an area where (there is a time warp) people still rent videos. Do you think that you could sell a business like yours anywhere else? Probably not! So the answer is research! Do you have competitors? What are they doing? How many are there? What are their prices compared to yours? Now I am not advocating matching or undercutting the competitors but you do need to know what they are selling comparable product/service for. Make sure there is room in the market for you and your potential franchisees. If you can’t do this yourself, get a geodemographic study done.
Conventional wisdom is solid long term businesses can find it easier to attract franchisees. However, you can have a “fad” franchise, you don’t have to have a product or service that will last forever but you do have to have something that will be sustainable (for at least the term of the franchise agreement) and hopefully with room for growth. The last comment will earn me howls of discontent from my peers – old school thinking is you have to be around forever to be a successful franchise, with the changing times that may not necessarily be a prerequisite – moving fast on your feet and an entrepreneurial spirit may be what is required now.
Would someone else be able to run my business?
Do you have a business that someone else could step into – with training of course. Would it be simple for them to pick up the idea and run with it? Is your business based on your personality? For example, you have a fabulous café in a town in which you grew up and where everyone knows you. Could someone else step into your business and have the same or similar results? Unlikely! Your franchisee will have to have the ability to make money based on your systems and processes – so, could they? Be honest, if they can, great, if they can’t, what could you put in place that would make it work?
Have a long look at the systems and processes you have in place. How do you do things? Could you show someone everything that needs to be done to run your business? Could this be done in a reasonable time? The key is to streamline everything so it is easy to learn, easy to remember and documented. This applies to every franchise system no matter the size or type. If you don’t know how to put the systems and processes in place get expert help. Sometime it is quicker and easier to get a franchise consultant, business coach or HR expert to do it.
You can franchise just about anything – if you do it properly! Build on a solid foundation. It can be a lot easier and more cost effective to set up properly before you start franchising your business than getting help fixing mistakes.
About the Author: Sara Howell is a no nonsense, straight talking Franchise Consultant & Small Business Specialist at Business Bubble. If you have any questions or just need help – call 1300 293 239.
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