Becoming A Better Business Owner
One of the first questions most people ask me about owning a franchise is, “Will I make money?”
While it’s an important question to ask, it’s not the most important, in my opinion.
Many people think that owning a franchise is just another way to make money. You take a time-tested business model, drop it in a new location, and you get to watch the profits roll in.
But franchise owners walk away with a lot more than profits. They get hands-on experience learning what it actually takes to make a business work.
And, there’s a lot involved in being a franchisee.
As a franchise owner, you are required to follow company processes. You’re responsible for marketing and growing your business. You are responsible for hiring, training and even occasionally firing.
And, there’s so much more…
Systems Are Key
When you buy a franchise, you’re buying into a proven operating system. The advantage of buying a franchise is that you can take the time you’d spend building your systems to focus on developing your team.
Also, banks like to make loans to businesses with good, proven systems. So, they’ll often give a loan to a franchise rather than a start-up.
You learn what a successful business model looks like from the inside out.
You aren’t thrown into the business to fend for yourself as a franchisee. The franchisor is there as a partner and support system.
They provide you with an action plan so you have a proven step-by-step system to run your business from day one. Franchisors give this model to all their franchisees to provide them with the support they will need to ensure success.
As you work with these processes, you’ll learn more about what makes a business model great. You discover the kind of support you need and the questions you should be asking. You’ll also find out what your strengths and weaknesses are.
You will learn first-hand just how much time, planning, effort and money would be required if you want to open your own business from the ground up.
Cash Flow Management
There’s an old saying in business that “cash is king.” Cash flow is the blood that keeps the heart of the kingdom pumping.
Cash flow is one of the most critical components of success for a franchise – and every other business in the world.
Without cash, profits are meaningless. Many a profitable business on paper has ended up in bankruptcy because the amount of cash coming in doesn’t compare with the amount of cash going out.
Franchise owners that don’t exercise good cash management may not be able to make the investments needed to keep their doors open, or they may have to pay more to borrow money to function.
You need to know all your costs upfront. These include the initial investment, along with the cost of inventory and working capital.
You learn how to identify and create your break-even point and your profit margin. And, how to manage your losses.
Positive cash flow is required to generate profits. There has to be enough cash to pay employees and suppliers so that you can provide and produce services and goods.
The sale of those goods generates a profit. If you don’t have the money to produce the goods and services you are selling, you don’t end up with the profit, and you don’t stay in business for very long.
Flexibility, Adaptability, and Versatility
Franchise owners wear many different hats, especially the first 18-24 months in business.
You’re responsible for daily business operations, and you must also constantly market to build awareness of your brand. You’re responsible for training, ensuring compliance, purchasing, inventory control, production and quality control, scheduling and payroll. You become masterful at both employee and customer relations, for hiring and firing. And, there’s so much more…
Franchise ownership will stretch and grow you in ways you never dreamed of. You’ll get through the ups and downs of the early stages while becoming an experienced, well-rounded business owner.
Practical Business Management Experience
It’s tough to take on every aspect of running a business by yourself. You have to hire the right people – as a franchisee, you will need to work on your business, as well as in it.
The quality of the people you hire will largely determine the quality of the services and products you provide your customers. Ultimately affecting your profitability. It will also directly impact how well they can support you while you are building your business through the other channels available to you.
Franchisees often operate with small teams, so they need to have employees who they can depend on and trust. Your employees should help you carry some of the weight of the business. That way not everything is resting solely on your shoulders.
Good Support Systems Are Critical
When you become a franchise partner, you gain access to support systems that can make a huge difference to your success as a business owner. That support comes in two forms: the franchisor and your network of fellow franchisees.
Your franchisor will provide you with the tools and resources you’ll need to get set up. These will include: your business model, training, marketing and advertising tools and resources, ongoing support, and, in some cases, access to their rolodex of business connections and relationships.
You also have access to a network of fellow franchisees to communicate and collaborate with.
They can help you solve problems, especially if they’ve solved them before. And, more often than not, they provide a highly specialized mastermind environment for exploring new and creative ideas to help your business grow.
Some Final Thoughts…
Becoming a franchise owner gives you a first-hand perspective on business ownership. It’s not until you’re in the thick of it that you learn what it takes to be a successful business owner.
Whether you’re new to the world of entrepreneurship or not, you’ll gain a ton of knowledge working as a franchise partner. You get the experience of being a business owner without having to tackle everything by yourself.
Your experiences as a franchisee can’t be learned in a classroom. They can only be learned through the day-to-day hard work and dedication it takes to run a successful business. And, in the end, it’s worth every bit of the effort you put into it.
I’d love to hear from you…
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If you have any questions at all, please post them in the comments or send them to me at Todd@TheFranchiseConsultingCompany.com. I’m more than happy to help if I can.
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