A fun series this month!
It’s been fun talking this month about the flip side of the coin with franchising, for there are so many successful home-grown businesses out there blossoming that are ready to spread their roots and share the success with others. Franchising your successful business is an excellent way to grow through the investment of others. The expanded brand recognition benefits everyone involved!
Every year, thousands of franchises are born from the root of a successful business built from scratch. To set yourself up for the best chance of franchising, here are five critical factors you must be secure with before you go down this gold-paved road.
Franchise yourself first
Not so much in the legal sense, but you need to prove that your successful business is repeatable. To determine that there is plenty of room in the market for more than one of you, open another location and duplicate your methods just as a franchisee would. This provides an opportunity to test your processes for consistency. It also allows you to identify any variables you need to address that you may not have otherwise recognized in your primary business. Proving that your business model is sustainable and profitable in multiple locations will inspire confidence in prospective franchisees.
A solid foundation for operations
Before you franchise, you should have documented procedures in place and also a comprehensive training program. Your competent staff will be your primary resources for helping to develop those procedures, sharing their triumphs and struggles through different methods. Your additional locations are the perfect testing grounds to prove your repeatability.
You will need working capital
Starting a franchise is more than a contract and sharing trade secrets. Many franchises have failed because they lacked the sufficient funds to push forward. To spin your successful business into a franchise, don’t be surprised if you spend a quarter to half a million dollars in the process. Fast-food franchises, although the most common, are the most complex and require a higher amount of capital. As you review the list of “needs” for launching your franchise, you’ll see the demand for your money grow at a rapid rate.
Benchmark yourself – know your competition
Benchmarking is comparing your business against your competition. How does your company excel against others in your industry? What do they do better (that you might improve)? What separates you from the others? You may already have a solid understanding in your current region. When you franchise, you have to broaden your scope and analyze all prospective demographic areas that you envision your franchise spreading in.
A new dimension in business and leadership skills
Going from running a small business to leading a franchise empire requires a different level of business and leadership skills. A small company turned franchise can easily be overwhelming if you are ill-prepared or trying to run your primary business and franchise operation in the same way. Now is the time to consult with someone about your new shift so you can be prepared to take on this unique challenge.
Finally, you need a consultant
A professional franchise consultant like Hundred Acre Consulting not only helps you through the steps of franchising your business but is also an ongoing resource for assisting others to join your franchise. Get some straight answers about your state of readiness for franchising your business. Contact us and let’s get started assessing what we need to do next.