The franchise industry is highly competitive because franchising is the easiest way to expand a business and grow. However, not all franchises are successful. In fact, a majority of them fail within the first year and a few more collapse in the second. While franchising is a shortcut to growth, it’s not an easy road to take, and success isn’t guaranteed. As more and more people decide to seriously look into the idea of becoming franchisees, one of the key questions they ask is "What can I do to prepare myself, to get as ready as possible, to become a successful franchisee?
Here are some secrets that you need to know
1. Think like an owner, not a customer
It is very common to approach a franchise search based on those consumer experiences we have had at restaurants, retail stores and with service businesses. Inevitably, the sum of the consumer experiences we have had only touched a small fraction of the franchise industry and where we love to get dinner may not be where we would love to work.
2. Slow And Steady
Many franchises rush into the marketing and expand quickly and that doesn’t work well for them. While there’s nothing wrong with being ambitious, you need to proceed carefully and methodically in the first few years of your establishment. In fact, your marketing would experience a boost if you’re a rare commodity.
3. It’s All About Communication
It’s important to remember every franchise has a story. Every story starts with a great idea, and every great idea begins with a dream. What sets great franchises apart from a million other failed ideas is the ability to bring dreams into reality. So, when you’re communicating the brand message of a franchise, you are really telling the story of someone’s dream, and the truth is, everyone loves a story where dreams come true. Effective communication isn’t just found in a brochure or on signage. It’s everywhere your brand goes. From social media and your website to business cards, blog, mobile ads, and print, the story should be told consistently and effectively.
4. Lease, lease, lease
Most franchises provide detailed specifications on the type of commercial real estate required to launch the business, and many will assist with the search for an appropriate property.Leasing a commercial property is nearly always preferable to purchasing one. The capital required to purchase a property is better reserved to fund operating costs for the first few years. It's also preferable to sign short lease terms with options to extend rather than committing to a long lease term.
5. Consider alternative financing options
In the current economic climate, strict lending standards are making it harder than ever to get a commercial loan issued. When loan approval is a problem, it is worth considering your 401(k) or IRA as a resource for purchasing your business. These self-directed retirement structures do permit individuals to actively invest their retirement funds into a business without taking a taxable distribution or incurring early withdrawal penalties. Successful use of this financing method offers the chance for a greater potential return on your money than the original investments.
6. Follow the system you bought
Simple, right? Must be the most obvious and straight forward success strategy that some people decide not to follow! Why would you investigate a proven concept and buy it only to decide you know better than they do? If you want to invent a system, go invent one. Franchising is built around the idea of not reinventing the wheel, using a proven system, growing faster and better than experimenting in an independent startup can offer.
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