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Up to date on Dec 19, 2023. Initially printed on Jun 15, 2016.
As a franchise coach, it is my job to assist folks discover the proper franchise match for his or her wants, and to assist them efficiently navigate your entire franchise shopping for and possession course of. Through the years, I’ve seen all of it—the great successes in addition to the horrible errors. As a coach, it is my job to provide folks high quality recommendation based mostly on my expertise and their ability set, however I can not pressure them to observe it. Under are a few of the most widespread 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 improper franchise for you
The franchise you select should really match 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 need to take into account earlier than shopping for a franchise. As an example, if you realize you’ll 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’ll 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 choices for them. Whereas trusting your intestine might sound romantic to some, it’s not a trait of profitable enterprise house owners. The important thing to being a profitable enterprise proprietor lies in making knowledgeable choices backed by analysis and laborious work, not blindly following a “good feeling.” If you wish to see success, it’s good to do your due diligence.
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3. Falling in love
Some folks are likely to fall in love with an concept 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 an alternative 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 information that might assist his want to enter this business, with out ever investigating the potential pitfalls. Once more, this isn’t a trait of profitable enterprise house owners.
4. Not constructing a strong P&L
It’s vitally vital to know the P&L—revenue and loss—associated to any enterprise you’re considering shopping for. You can’t shortcut this course of. Do your analysis, converse with present and former franchisees, and perceive the true earnings and expense classes earlier than shopping for your small business. You might want to know the financials earlier than stepping into the enterprise, in addition to the price it would take to attain the break-even level and generate optimistic money stream. Actually, this subject is so vital we devoted all of chapter 12 to this in The Educated Franchisee. As soon as you realize this and your individual monetary sources, you decrease the danger of economic hardship.
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5. Having unrealistic expectations
Some of us assume the franchisor will do all of it for them—that someway a franchise is a silver bullet the place you possibly can work much less and make extra with no threat. In actuality, the primary 12 months in any enterprise is tough, franchise or not. While you purchase a franchise, it’s virtually assured that you’ll work more durable and make much less throughout that first 12 months. The franchisor will do what they’ll that can assist you however, ultimately, it’s about you. You might be accountable for increase your small business to change into worthwhile. You might be answerable for your individual success.
All profitable enterprise house owners study from their errors, however the perfect at all times do their due diligence and keep away from many probably catastrophic errors within the first place. Which sort will you be?
