Has the thought of running your own business ever crossed your mind? At the same time, have the thoughts of the hurdles involved in creating a business from scratch shut down that dream? If you answered yes to both of those questions, owning a franchise business might be for you. This post is designed to help would-be franchisees evaluate their decision to jump in by answering five enlightening questions. It’s also here to equip those merchants who do decide to buy a business with advice and tips that help them do so in the smartest way possible.
1. Do you know what you want?
A quick Google search will reveal there are a lot of franchise opportunities out there—and we mean A LOT. That’s why it’s important for you to take some personal inventory before performing your search. Finding out more about what you’re actually looking for by filtering it through who you are can be an invaluable first exercise. Ask yourself some questions like “what are some of your dominant personality traits?” “Do you have any relevant special skills?” “Do you gravitate towards any particular line of business and why?” “What kind of experience do you have?”
Honest self assessment can go a long way in helping you match your search of possible franchise opportunities with who you are as a possible business owner.
2. Do you have control issues?
When it comes to buying a franchise, we’ve already established that some introspection is a good thing. This question digs a little deeper into one specific area. Becoming a franchisee, while it may seem like you’re owning your own business (and you are, for all intents and purposes), you’re going to be bound by a lot of rules and regulations that you HAVE to abide by. As a franchisee, your role will be to implement what the franchisor dictates: operating policies, store look and feel, products and services offered. All of that and more will be set in stone for you from day one. If you’re the free-wheeling type who has a hard time following the rules, then buying a franchise might not be for you.
3. What’s your tolerance for risk?
There’s a popular myth when it comes to franchises. It states that franchises are a much surer thing compared to starting up a small, privately owned business. Perpetuators of this myth claim that franchises only fail 5% of the time. Sadly, that number is low. The actual number is closer to 33% for franchises open for 2 years. And the number jumps up to 50% for franchises open for 5 years. So, ask yourself, are you prepared to embark on what’s essentially a 50/50 proposition? This is the reality of buying a franchise. It’s not for the squeamish or easily dissuaded or discouraged.
4. How’s your cash flow?
After you’ve identified the right franchise that meets your requirements for personality and risk tolerance, you have one more big question to answer—finances. Before anything happens, you have to prove a certain level of net worth before a franchisor will even consider you as a candidate. Once that’s established, you can begin to examine the long list of costs that will impact your cash flow. (And this isn’t even taking into account the obvious up-front expenses of franchise fees and equipment.) Marketing and advertising costs, grand opening fees, licensing, products and supplies, insurance, employee salaries…the list goes on and on. Take a good, hard look at your assets and liabilities before making your decision to buy a business. You can also refer to the Franchise Disclosure Document (FDD) to help you identify all of the cost concerns and legal considerations you’re going to need to take into account.
5. Say you get the franchise. Then what?
The ink is dry on the contract. What’s next? It’s time to figure out how to run your business as efficiently and effectively as possible. One of the biggest considerations in making that happen will be identifying the right point-of-sale system. And that’s where Clover can help. With a slew of productivity apps built into the devices, you’ll be able to hit the ground running with the same type of HR, operations, marketing, and analytical support that the “big boys” already rely on.
Don’t forget that Clover’s suite of devices also helps franchise businesses launch with world-class, fully-flexible payments, from mobile to tableside and beyond. Doing your due diligence with your POS system can save you tons of headaches in the future. It’ll also help free up your time to consider training for employees, enable your team to build rapport with customers and much more. It’s an investment that will pay for itself several times over within mere months.
Good luck with your assessment as you explore franchise opportunities and remember to refer to this business advice and tips in order to help you be successful.
Clover is sold by leading U.S. banks including Bank of America, BBVA, Citi, PNC, Sun Trust and Wells Fargo. You’ll also find Clover at our trusted partners including Ignite Payments, Restaurant Depot, and Sam’s Club. For more information, visit us at clover.com.
[image: The food Court was packed! By 8one6 on flickr]