When you are just starting out in the business world, it can seem daunting at times. In order to be an entrepreneur and run your own business successfully; you need to have drive, determination, and vision. These will help you stay above water through the hard times.
But you also need a great concept and suitable infrastructure and capital to implement it, which are sometimes harder to come by. In their quest for success, many young entrepreneurs turn to the luring world of franchising. But is that the most appropriate course of action for you?
Reviewing the pros and cons of becoming involved in a franchise can help you decide if this is the way to go.
For the Young and the Restless
If you are suited for the entrepreneur lifestyle, you already know it deep inside. It can be stressful and risky; and there are people who are risk-averse and people who love grasping opportunities. They dream of making it big and making an impact all in one.
But loving risks does not mean that everything about your first steps needs to be risky. Many people in their twenties and thirties already know that they are entrepreneurs in the making. But they lack the necessary experience in order to start from scratch.
If you fall into that category, becoming part of a franchise is a great option to consider. It gives you a way in without requiring that you go through the painstaking process of learning how to run the business from the ground up.
Instead, you buy into an already set-up mechanism that is already tested and you know that it works – and how to make the most out of it.
By making your first move into the enterprise world through a franchise, you eliminate a lot of risks and allow yourself to acquire valuable experience that you will later be able to transpose into your own brand if you choose to.
Yet it still leaves you room to feel what it is like to be a businessman:
You will have to make strategic decisions about what makes you tick and inspires you, which franchise partnerships are best suited for you, where and when to open up and how to market your franchise business.
These are all executive decisions that rest on your shoulders even with a franchise, and will make you understand what it feels like to run your own business.
For people just out of school or those looking to make a much-needed career change, a franchise seems like a good choice.
Perhaps what you have studied was not relevant to business; and you need practical experience to make up for that before moving on to your own brand ideas. Perhaps you do not yet have that perfect idea in your mind that you are certain will make the masses go wild.
It is also a good test run for your own idea if you already have it:
By choosing a business franchise with similar elements; e.g. one that relies a lot on everyday interaction with suppliers or contractors, or a business model involving a large number of employees or international clients. You will be able to fine-tune the details of your own plan in a relatively controlled environment and learn from this experience.
Choosing the Perfect Fit
According to Forbes, the International Franchise Association reports an overall number of 800,000 franchise businesses in the US alone. The industry employs roughly 9.1 million people in total and its contribution to the country’s GDP stands at an astounding $552 billion.
To sum up, there are a lot of opportunities in franchising – and a lot of money to be made. Already established companies are usually on the lookout for franchising through young entrepreneurs. As they benefit from their enthusiasm and passion for hard work.
When choosing a business franchise to become a part of, it is important that you do your homework on your future partner: Make sure that they value what you have to bring to the table and that they understand and appreciate your motivation.
If you have identified a trustworthy partner you can work with, next (and perhaps most crucial) is the business idea. Make sure you find something that excites you and that the market needs. Just about anything can be franchised nowadays, from the most fundamental service-oriented businesses to highly creative areas.
Going for the restaurant business is always a good idea especially if you are passionate about food:
There will always be room for another Papa John’s or Subway, and Entrepreneur reports that their 2016 top 500 franchise list included 119 food-related businesses with over 200,000 locations.
If you want a business that is more than the initial product, try to identify niche markets: a custom bicycle shop or a hipster coffee shop that focuses on other products as well, selling their own branded t-shirts or coffee-making equipment, can give you insight in different business sectors all at once.
If you are more on the creative side, consider going into the movie or TV industry. And it doesn’t have to be focused on the initial product either. In fact, movie franchises nowadays branch out on all sorts of merchandise; from board games like Game of Thrones Monopoly or Cluedo and video games with a Ghostbusters or X-Files theme all the way to hoodies, mugs and kitchenware with a franchise’s brands, characters or themes. Which shows that franchising is more inclusive in its definition in 2018 than ever.
You could also choose a franchise that lets you showcase your unique skills: open a fancy barber shop or go into the gym business to combine your passion for fitness and entrepreneurship, all part of an already successful franchise.
Beware of the Drawbacks
Franchising has its pros, but you need to make an informed decision before you decide to branch out. One key piece of advice is to not let your initial enthusiasm get the better of you. Being cautious during the first phase while the papers are being drawn up. And while the deal is negotiated, is essential for a smooth application of your agreement.
While most big businesses have a standard procedure when franchising, make sure you get all the expert help you need. Be it from a lawyer, an accountant or a business consultant – to avoid gray areas.
This will allow you to strike the perfect balance between security and independence. As managing an already established brand often comes with many strings attached.
Consider also the way that you will raise the money you need:
Franchising can be as costly as starting your own business, if not more, as you will need to be up to par to the standards of every other branch out there.
That means that you may not be able to scale by expanding as your revenue starts to flow in – as you would if you were running your own business.
Yet remember that this means you are already involved in one of the most crucial aspects of being an entrepreneur: finding the initial capital and choosing how to invest it. Which, at the end of the day, is what entrepreneurship is very much about.
Being part of a franchise can make it easier to attract customers, but may also come with unwelcome restrictions.
So before you try it out, make sure that its pros and cons make it the right fit for you!