Top 5 Mistakes to Avoid as Franchise Owner
In 2008 I made the decision to buy my first oil change franchise in Calgary, Alberta. I was new to the industry so I had a lot to learn. Once we started to have success, our corporate office reached out because they wanted to see what we were doing. Eventually our locations became the training site for new franchisees.
Looking back I realized that if you want to be a successful franchise owner, there were 5 mistakes you should avoid.
1.Thinking Short Term
The franchise opportunity is not a get rich quick process. To be successful in the franchise industry it takes hard work and a positive outlook. The franchisee must look at the bigger picture and realize that the most important thing is not just money but a sustainable business that can last for many years.
There is a ramp up time to go from idea to building out the business. New franchisees should allow for time for the business to to make money. Leaving a 6-figure job and expecting your new business to replace that income will lead to disappointment.
- Poor Decision Making
The decision making is another key factor that can lead to the rise or fall of your franchise. It is very important to contact a franchise consultant so that you can succeed and have less failures along the way.
In order to have a successful franchise, it begins with choosing the right business model and the best franchise for YOU. A franchise coach or consultant should be able to assess your skills and talent to help you make the best decisions.
- Failure To Follow The System
The business plan and general business strategy is the key to the success of the franchise. Every business has a system and when you go against the system the business normally falls short. The business plan also outlines how the business will work and how it can combat the hurdles that it will face. In short, it is very critical to follow the business plan and the strategy in order to make sure the business meets its objectives and outperforms its expectations.
- Lack Of Financing
The main reason why businesses fail is due to lack of capital. It is crucial that franchises have enough money to operate and an excess amount of cash in case the business slows down at any point of the year.
Most franchises would rather run their business, than spend time on crunching the numbers or looking at balance sheets.
There must be a budget put in place so the business does not burn through cash and end up going bankrupt. As a franchisee it is also key to develop a strong relationship with the bank so whenever you need more capital it is an easy process to acquire more.
If you plan to have financial independence then this is one of the steps that you should take.
- Not Doing Proper Research
Most new franchisees get into franchising by searching the internet, looking at a location and buying a franchise. Sometimes help is given to them by the franchisor with training, signage, inventory and grand-opening events.
At the outset, this seems like enough. However new franchise owners should do their own research. More thorough research should be done at the front end of the franchise selection process.
- Talking to existing franchise owners
- Researching the industry you are getting into
- Understand your skills as it relates to the business you are buying
Franchising mistakes like these are a lot easier to avoid when you hire a franchising agency to help you launch your new franchise.
Starting a franchise requires a lot of different pieces of knowledge that you may not be an expert in. A franchise company like Bailey Brown- The Franchise Agency can help you.
Do you have questions about buying a franchise? Leave us a comment.