We are currently experiencing a rapidly changing business environment which already has a staggering number of high profile casualties. Once great brands such as Toys R Us and Maplin have recently failed. Others like Mothercare, House of Fraser, Poundworld and New Look are using company voluntary arrangement insolvency laws to reduce their rent. Times are tough. That’s why franchising is the obvious choice for anyone intending to launch their own business. A tried and tested business formula is far safer than a new concept.
A common factor with failing businesses is that they don’t adapt quickly enough to changing market conditions, invest in vital areas or focus on ways to remain relevant and competitive. Frequently that happens because the owners and managers were focused on running the business rather than the wider issues of adapting to changing customer expectations and the opportunities that are always presenting themselves.
Another cause is the attitude of those responsible for the business. In difficult trading conditions the lot of the sole trader can be very demoralising. Problems mount up, good staff may ask for a pay rise, some leave and profitability declines. But the VAT still has to be paid, annual accounts still have to be filed on time, creditors still expect their accounts to be settled promptly. Meanwhile, debtors take longer to pay.
It takes a huge amount of courage and stamina to maintain the enthusiasm and energy that is someone starting a new business has. This attitude is especially critical in difficult trading conditions. This is where the experience of a battle-hardened professional will make the difference between success and failure. Which of course is where franchising comes into its own.
A well-established franchisor will have developed a successful business model and the systems and processes to replicate it. They will provide an existing network of reliable suppliers and the buying power to negotiate competitive prices. If retail premises are involved it will have a clearly defined template for what constitutes the correct location and the ability to command the lowest rent.
While no business is immune to economic conditions, the franchise industry as a whole is one of the sectors which has shown resilience and sustainability, even in a tough climate. The level of success depends on many factors, including the business model, demand for the service, strength of the brand, even down to whether it is home-based, which will help to keep running costs low.
As always, the first step to increasing your chances of being successful is to do your homework to help you choose the”right franchise and make sure you have the skills needed to survive and thrive in the turbulent times.