To evaluate franchise opportunities, first evaluate yourself
If you’ve been drawn to this article expecting us to tell you what time of the year or day of the week is best to buy a franchise, then you will be disappointed.
If you are currently evaluating franchise opportunities and want to be certain that you are buying at the right time, then you must read on.
Many first-time franchisees make the mistake of jumping into a purchase after evaluating the franchise opportunity but not themselves. Yet your readiness to take on the challenge of being a franchisee is the most important piece of the puzzle.
In a nutshell, if you are ready for life as a franchisee, it is the right time to buy a franchise. Here are three questions you must ask when evaluating franchise opportunities.
1. Do I have the franchisee mindset?
Owning a business requires ingenuity, creativeness, dedication, attention to detail, interpersonal skills to manage people, and a load more besides. Starting a new business also requires you to have a risk-taking mentality.
As a franchise owner, the risk should be less. Much less. You are buying a proven business model, with a reputation that attracts customers. You should hit the ground running. But life as a franchisee also requires some specific mental aptitudes, including:
- The mindset to follow a pre-set operational model and business system
- Experience in management, or operations, or sales, or financials, or all of these
- The mentality to accept that you won’t always be able to take a set wage
With the right mindset, you can be extraordinarily successful as a franchisee.
2. Am I motivated to succeed in business?
Ask yourself why you are considering starting a business. Are you motivated to increase someone else’s wealth while building a business under their business name? Perhaps you’ve had enough of the corporate merry-go-round and lining someone else’s pocket. You may want more control over your future.
You may be bored with your current role, and looking for a new challenge. Perhaps you’ve got the money and if you don’t go into business now, you doubt you ever will.
Maybe you’ve always wanted to be a business owner, and the idea of being so within a proven business model makes more sense than trying to reinvent the wheel.
Whatever your motivation, it must be genuine. If you are considering buying a franchise to hide from previous failures, you’ve got the wrong motivation.
3. Do I have the finances in place?
You’ll need the finances to invest in a franchise. You’ll also need the financial muscle to weather the first few months – if they don’t go quite as planned. Yes, even a franchise business can suffer from low sales and revenues when they are starting up.
You may have received a lump sum from being laid off, or an inheritance, or be able to release money from a 401(K).
If you have the money to invest, it will be easier to turn that investment into a profit sooner – and those profits are likely to be more sustainable. With no interest payments to make, your bottom line will be stronger.
This isn’t to say that you can’t develop a healthy business by borrowing money to invest. Franchisees, entrepreneurs, and businesses do this every day of the week. One thing is certain, though. You’ll need to develop a detailed business plan that covers all financial possibilities.
Has COVID changed everything, though?
This is a question that we’ve been asked a lot recently. The answer is yes. Perhaps not in the way you might imagine, though.
Sure, the economy has been hit. Small businesses are finding it tough. Franchisees, though, have a distinct advantage over their independent small business peers.
As a franchisee you have the weight of a larger business behind you. They’ll help with marketing, training, and pricing. They’ll be able to leverage best business practices faster.
And there is one other benefit for would-be franchisees that franchisors are reluctant to publicize. Because of the economic downturn caused by COVID-19, business values are relatively low.
Uncertainty over economic restrictions and impact on revenues has dampened many franchisors’ expectations on price. As a medium- to long-term investment, you may never witness a better time to buy.
Are you ready to evaluate franchise opportunities?
If you have the franchisee mindset, are highly motivated to succeed, and have the finances to invest in a business, now could be the perfect time to buy a franchise. As a business investor, COVID-19 could (counterintuitively, perhaps) have opened a window of opportunity that could evaporate next year.
If you have answered the three questions above with ‘yes’, it is time to explore the franchise potential further. Contact us today, and book a free consultation with New Ground Consulting.