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Up to date on Dec 19, 2023. Initially revealed on Jun 15, 2016.
As a franchise coach, it is my job to assist folks discover the right franchise match for his or her wants, and to assist them efficiently navigate the whole franchise shopping for and possession course of. Over time, I’ve seen all of it—the great successes in addition to the horrible errors. As a coach, it is my job to present folks high quality recommendation based mostly on my expertise and their talent set, however I can not pressure them to observe it. Beneath are a few of the most typical errors I see as a franchise coach, and how one can keep away from them when exploring franchise alternatives.
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1. Selecting the flawed franchise for you
The franchise you select should really suit you so as so that you can succeed as a franchisee. Your abilities, way of life and site preferences, monetary scenario and character are all issues you should take into account earlier than shopping for a franchise. As an example, if you realize you can be depressing in a location with chilly climate, do not buy a franchise up north. Or if the enterprise mannequin requires you to work nights and weekends, however you are trying to spend extra time with your loved ones, that is in all probability a nasty match. Realizing your self is not at all times so simple as that, however the higher the franchise match, the extra snug—and profitable—you can be operating your small business.
2. Unwilling to decide to due diligence
Some folks do not love to do the due diligence. They belief their instincts to make selections for them. Whereas trusting your intestine could sound romantic to some, it’s not a trait of profitable enterprise homeowners. The important thing to being a profitable enterprise proprietor lies in making knowledgeable selections backed by analysis and onerous work, not blindly following a “good feeling.” If you wish to see success, it is advisable to do your due diligence.
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3. Falling in love
Some folks are inclined to fall in love with an thought or an idea—then they do the due diligence that solely helps their preconceived concepts. They’re blinded by their bias and their analysis finally ends up being one-sided as a substitute of thorough and full. I as soon as labored with a person who was in love with the idea of photo voltaic and LED. It did not matter to him if the enterprise mannequin made sense. He was going to get into this space of enterprise regardless. Thus, he solely wished to see the details that may assist his need to enter this trade, with out ever investigating the potential pitfalls. Once more, this isn’t a trait of profitable enterprise homeowners.
4. Not constructing a stable P&L
It’s vitally necessary to know the P&L—revenue and loss—associated to any enterprise you might be considering shopping for. You can not shortcut this course of. Do your analysis, communicate with present and former franchisees, and perceive the actual revenue and expense classes earlier than shopping for your small business. It is advisable to know the financials earlier than stepping into the enterprise, in addition to the associated fee it’ll take to realize the break-even level and generate constructive money circulate. In reality, this subject is so necessary we devoted all of chapter 12 to this in The Educated Franchisee. As soon as you realize this and your individual monetary sources, you reduce the danger of monetary hardship.
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5. Having unrealistic expectations
Some of us suppose the franchisor will do all of it for them—that by some means a franchise is a silver bullet the place you may work much less and make extra with no threat. In actuality, the primary yr in any enterprise is difficult, franchise or not. Whenever you purchase a franchise, it’s virtually assured that you’ll work more durable and make much less throughout that first yr. The franchisor will do what they will that will help you however, in the long run, it’s about you. You might be in control of increase your small business to turn into worthwhile. You might be answerable for your individual success.
All profitable enterprise homeowners be taught from their errors, however the easiest at all times do their due diligence and keep away from many doubtlessly catastrophic errors within the first place. Which sort will you be?
