Business guru Richard Pakey leads you through the quagmire of searching for the perfect franchise to suit your needs, talents, knowledge and financial constraints.
There are many reasons why purchasing a franchise is a great option for starting up in business. And I’ll try to explain why, in my September column for Elite Franchise. At present, there are only about 1,000 franchised businesses in the UK. This is great news for those seeking to break into this industry. Compared to many other countries, most notably the United States, the UK is certainly not saturated with franchised companies, which leaves plenty of room for new business owners.
If you are still keen to join, and there is no reason why you shouldn’t be, then why not investigate which sector or sectors interest you most. To do this, you will need to undertake some research. You will then need to break this figure down even more, by selecting which franchises are within your investment range. It’s never advisable to stretch yourself financially when starting up a new business.
Franchisors are always on the lookout for new business partners.
Ideally they will be searching for someone who’s the perfect fit for that sector, rather than simply an individual who has the ability to pay the monthly or annual fees. This means they should be completely transparent about the pros and cons of operating one of their franchises.
However, they probably won’t disclose sensitive commercial information all at once. You will first need to prove that you are deadly serious about purchasing one of their territories. There is an art to revealing sensitive data so that it doesn’t end up in the wrong hands. But if you ask the right questions, then the franchisor or their consultant, will happily discuss the role in detail.
It’s perfectly normal to experience a multitude of irrational thoughts…
…when deciding to start-up in business for the first time, including franchising. Yet, at no time, should you ever feel coerced into signing on the dotted line. Once all of your questions have been satisfactorily answered, you must decide which franchise is correct for you. You have now reached the point of no return, where commitment is required from both camps.
Don’t be scared to say ‘no’ to a franchisor or consultant, even after weeks of detailed discussion. You have to be certain that this role is right for you. But don’t be put off by the fear of taking on a franchise either, as every successful business owner has experienced this emotion too.
Never buy a franchise that you cannot commit to 100%.
Like any business, you will only get out of it, what you put in. Don’t assume that a franchise is a guaranteed ‘ready-made business in a box’ waiting to be opened and consumed. Even though you are purchasing a successful tried and tested system, it becomes your responsibility once you have completed your training. You still need to make it work efficiently.
You may still have to go into your community to promote your business or gather new sales. This is the most difficult part of any business – especially when starting out – and this much-needed ability to sell yourself and your company does not come easy to everyone. Some people will have to work harder at this role than others. It’s all about commitment. And you may need to hire a sales person to do some of this hard graft for you.
Funding your franchise should probably be the first thing you consider.
Yet many people put it close to the bottom of their ‘to-do list.’ Unless you have a bucket load of cash available to fund a business, it is imperative you know your financial limitations or restrictions.
The good news, however, is that there has never been a better time to approach potential lenders. Most high-street banks are nowadays geared-up to providing financial support for franchised businesses. More importantly, many franchisors already have agreements with banks for funding new business partners.
The UK Government has also joined the party, encouraging people to become self-employed. You can now apply for a Government-backed start-up loan of between £500 and £25,000. This is an unsecured personal loan, charged at a fixed interest rate of 6% per year. You can repay the loan over a period of one to five years, and there’s neither an application fee nor early repayment fee.
This enables you to effectively fund your venture on a pay-as-you-go basis, rather than having to secure capital upfront which may put a huge strain on the family finances. This is a great way to spread your risk – although it still needs to be paid back. There are other funding options available, but too many to mention in this short article. And before starting out in business, always make sure you receive advice from professionals and family members alike.
