In our new economic reality, many people have become disillusioned with finding a job that they love. If you walk into most places of employment, you’ll find most employees look discouraged and despondent. If you get people to open up, you will find that they feel overworked, underpaid, and underappreciated.
According to a Gallup Poll survey in 2015, “Employee engagement entered a rather static state in 2015 and has not experienced large year-over-year improvements in Gallup’s 15-year history of measuring and tracking the metric. Employee engagement has consistently averaged less than 33%.” There is little in the news to suggest that much changed in 2016 to change this low amount of job satisfaction.
As a result of job dissatisfaction, many people want to start their own business, but they don’t have an idea on how to start. If you want to be your own boss because you have a strong inclination to be an entrepreneur, then you have to identify the business that is right for you.
Should You Buy a Franchise?
If you have no idea what business to open or even how to run a business, then you might want to consider buying a franchise.
Before we delve into what is necessary to be successful franchisee, let’s pause to take a brief look at the benefits of starting a franchise:
- You can go into business for yourself, but you won’t be by yourself.
- A franchise has a recognized brand-name, a market-tested product or service, and an established customer base.
- Intensive franchise training will give you an in-depth idea of exactly how to run the business.
- You will get plenty of support. This includes help with selecting your site, designing it, constructing it, arranging for additional financing, training new employees, and following a grand-opening playbook.
- You will get ongoing support as you operate your business. You will get training on how to advertise, operate your business, train your employees, and benefit from bulk purchasing.
- Once you have established your franchise business, you can hire the right managers to operate it for you. Your franchise can now become an excellent source of passive income. However, you don’t have to stop at just one unit. Most franchises allow successful franchisees to become multi-unit owners.
Do You Have the Right Stuff?
Here are 3 tips to make sure you have the right stuff to do well in the franchise industry.
1. Choose the right franchise.
With an overwhelming number of franchises available, how do you choose the right one? Here are some questions to ask to find the best franchise for you:
- Do I find the niche interesting? The niche you choose has to be something that you have an innate interest in. If you don’t like the niche or the nature of the work and only do it for the money, you will gradually resent going to work to build your business.
- Do I like the franchisor? Will the franchisor give me plenty of support as I learn the business? Is the contract fair and easy to understand? Do I have a good feeling about the business?
- Do sales at other location show consistent growth? How are other franchisees doing? Is their business growing at a rapid rate? It’s a good idea to talk with successful franchisees to understand the business a little better.
- Is there too much or too little competition for the same goods and services? When it comes to competition, you want to be in the Goldilocks zone—where there isn’t too little or too much competition, but just enough for you to flourish. This competition isn’t necessarily restricted to other franchisee owners, but also includes other businesses—independent stores and chains—that might carry a similar line of products and services.
- Will I get a favorable location? Assuming that you’ve found an established franchise in a field that you enjoy, the next thing to find out is if you can get a favorable location for your business. It doesn’t matter how wonderful the franchise you’ve picked if you build it in an area where you won’t get many customers interested in your products or services.
2. Financing the franchise.
On one hand, getting financing for the franchise is not as difficult as getting financed for an independent business because the lender can work with the franchise’s established numbers. On the other hand, many bankers are less open to lending to any small business and will want to make sure you are putting in at least 20% of your own money. If, for one reason or another, you can’t get a bank loan, you can still get help from government-sponsored programs from the SBA and from alternative lenders.
3. Hiring the right managers
If your long-term goal is to create a passive income, you will have to get good at evaluating new hires and picking good managers. This is not easy, but it’s essential to learn how to find and groom the right people.
While a franchise opportunity is a good one, not everyone is successful at it. Those who don’t succeed often blame the franchise or the franchise model. However, if they were honest with themselves they would have seen that they made some expensive mistakes along the way like not picking the right franchise, making financial blunders, or not hiring the right people.