Want to own your own business? Buying a franchise can provide you with some big advantages over going it alone
W
elcome to the new normal. The world has seen a lot of upheaval in the past few months and many people have started to look at making changes to their lives as a result. Spending more time at home, more time with loved ones, and less time stuck in traffic offered a glimpse of a different type of life – one where you can choose where you live and work, and be in control of your own time. Job security is also an issue for some. As a result, you may be considering the option of buying your own business. Owning your own business isn’t an instant route to riches, of course, but it does enable you to control your future in a way you can’t as an employee. Owning your own business can be risky, though. Starting a new business – or even taking over an existing one – is hard. You need a viable business model, a reputation and the right equipment and connections. You need finance and you need customers. You need to be good not just at doing whatever you do, whether that’s fixing windows or managing freight, but at running a business: marketing, managing cashflow, pricing and negotiating, to name a few key activities. Not many people have all those skills when they start, which is why many small businesses never get off the ground. If you’re used to having a team of specialists around you, being your own boss can also make you feel very isolated. Buying a franchise, on the other hand, means that you will be joining a new team where you will enjoy strength in numbers. Although you still own your own business, you’re also part of a much bigger operation. You’ll get the training, systems, marketing, help and support you need to have the best possible chance of success. You’ll have more options when it comes to funding, because banks know the value of good franchise models (see page 13). And when something goes wrong (as inevitably happens sometimes), you’ll have all sorts of help and support available – read the article on page 30 to see how franchisors rallied to help their franchisees when Covid-19 hit. Buying a franchise also means that you can take your existing experience and abilities and channel them into something new. It’s just a question of matching your skills, goals and attitude to the right opportunity.
Strength in training Over the years, we’ve talked to hundreds of people who have changed careers through buying a franchise: bankers who have bought cafés, IT experts who build kitchens, and retailers who took up lawnmowing. That’s reassuring, especially if you are currently facing redundancy (see page 25). In some cases, franchisees have gone from knowing almost nothing about their new industry to winning awards for their performance.
How is this possible? Well, franchisors select franchisees based on ability rather than experience, then train them in exactly what they need to know to run their own business. This training will vary according to the complexity of the franchisee’s role and the degree of familiarisation required with new equipment and/or systems. For example, a training programme designed to help you run a pizza franchise – where you will be producing product, recruiting, training and managing staff working shifts, running a retail and delivery operation, and complying with health & safety requirements – is going to be rather longer and more detailed than one aimed at a courier franchisee. But whatever the technical requirements, the training provided by any good franchise should also cover the administrative, financial and marketing tasks required to run a business profitably. It should provide the systems to help you do that, too: many franchises these days provide quite sophisticated tools to help you manage your time, boost your performance and compare your performance with other franchisees. All this provides a level of support that independent business owners can only dream of – and increases your odds of success.
Strength in opening Once you’ve completed your training, you’re theoretically ready to run your own business. In practice, there is another stage to go through – opening the business itself – which requires the detailed input and support of the franchisor. This can be divided into two types of assistance: business preparation and personal preparation. Business preparation In the case of a premises-based franchise, your new location has to be selected, designed, equipped and stocked to the franchisor’s specifications. For this reason, the franchisor will usually be heavily involved in the process. Assistance may cover the areas of: • Site selection
• Staff selection and training
• Lease negotiation
• POS and IT set-up
• Premises design and fit-out
• Opening promotion
• Initial stock ordering Where the franchise is a mobile or home-based one, preparation will usually include: • Vehicle leasing or purchase
• Initial stock & supplies
• Signwriting
• Office set-up
• Equipment
• Initial market promotion
• IT systems All this means that you can start your business confident that you’ll have everything you need, and will be free to focus on your customers. Personal preparation No matter how well a new franchisee performs in training and work experience, opening your own business is inevitably a nerve-wracking time. This is the business in which you have invested and on which you are going to be relying. Nerves are normal.
Stronger 6
Franchise New Zealand
Winter 2020
Year 29 Issue 02
