1) Conduct a Personal Analysis
Ask yourself the tough questions to determine your expectations from the business and whether you can be successful:
- How many hours will I have to work? Am I willing to put in the time required to start a business?
- What are my income expectations / requirements? Do I have the resources to cover personal expenses for six months?
- Do I see myself performing the required daily tasks? Do I see myself in the role of owning and operating this business?
- Will the franchise location be close enough to my home? What support do I needfrom my family?
Choose a franchise that fits your requirements. Just because you know someone who is successful in a franchise does not make that specific business right for you.
New business ideas are constantly developing, some based on sound and proven basics, some on social fads that change quickly. Coffee franchises are popular; however, in the current economic climate, that $5 cup of joe isn’t such a popular item. Consider your franchise carefully. Does it provide a product or service that people do not have the time, desire or means to provide for themselves? Also consider what that franchise offers you as a business owner. Newer franchise opportunities might offer financial incentives that more established ones do not. For example, Imprint In Time, LLC, will reimburse in full the franchise fee for its first five franchisees. Also, the royalties for those first five franchisees will be permanently waived when store No. 23 comes on line. It is better to do too much research rather than pay the consequences of not doing enough.
3) Know Your Location and Market
The franchisor will usually help with site selection, but you are responsible for determining whether a particular location is viable for your product or service. If there is existing competition in your area, determine any weaknesses that you can take advantage of. Competition is good ? as long as you can best the competitor. Visit the competition and ask lots of questions about services and pricing. Also, ask local businesses if they use the competitor’s services and why or why not. If a local competitor dominates the market, you may want to choose a different location. In addition, evaluate your franchisor’s marketing strategy, including how much money the business spends on advertising and promotion. The franchisor will usually provide a generic marketing plan guideline, so conduct your own market analysis and develop your own specific marketing plan.
4) Avoid Poor Financial Planning
The most common reason for failure of a new business is poor financial planning. Experienced franchisors know this and have financial guidelines that they require you to meet. This why a small percentage of franchised new businesses fail compared to 80 percent of non-franchised new businesses. A realistic business plan is your roadmap to success. Imprint In Time, LLC, offers a business plan to franchisees, the same one that grew the first successful location.
5) Take Advantage of Niche Loan Programs
Veterans have an advantage thanks to the Small Business Administration’s Patriot Express Loan Initiative, which features a fast turnaround time for loan approvals. Veterans can borrow up to $500,000, which can be used for most business purposes, including the purchase of franchises (http://www.sba.gov/patriotexpress).
6) Understand the FDD and the Franchise Agreement
The Federal Disclosure Document (FDD) is required by the government and provides prospective franchisees specific information about the franchise and the franchisor. TheFranchise Agreement is the document that defines the responsibilities of each party. You must read and understand each item. If areas are unclear, first ask the franchisor’s representatives to explain and then check the remainder of your concerns with your attorney. Do not tackle legal documents on your own. You can usually hire an attorney to read both documents and disclose any problematic areas for less than $500.
7) Hire a Good CPA or Accountant
One of the biggest mistakes is assuming you cannot afford a good accountant or CPA. A good accountant or CPA can save you thousands of dollars just by knowing the up-todate tax codes and IRS rules. Look for someone in a one- or two-person firm that you can contact by phone or email anytime. Ask for their advice and use it. Even if you are good with accounting software, you probably can’t keep up with changes in the tax codes.
Original post printed with permission from IMPRINT IN TIME, LLC.
Imprint In Time is a business marketing franchise providing signage, imprinted garments, graphics services, engraved products, reprographic services, blueprints and digital storage, promotional products, and document services. Founded by Rick Bowman and Brenda Bowman March 2005, Imprint In Time quickly proved itself to be a winner, consistently drawing business away from competing companies. After a year of working toward an efficient sign and imprint model, the founders of Imprint In Time launched franchise opportunities in June 2009. The company is headquartered in Jasper, Ga.