Starting and running a business involves keeping a number of balls in the air at any given time, and, needless to say, an awful lot can go wrong.
In just over a year, the way we work and run our businesses has changed almost beyond recognition. As the world battled to slow the spread of COVID-19, bricks and mortar businesses were forced to close their doors and, sadly, for some, this turned out to be a permanent move.
In 2021, it’s easier than ever to start your own business, thanks to the technology available to us. While this is no doubt a good thing, it also means that competition is fiercer than ever, and the market can be brutal for those who fail to put in the legwork in terms of preparation and research.
Since the early 1990s, thousands upon thousands of startups have been launched, and, sadly, the average lifespan of these businesses is just 20 months – which seems like an awful lot of work for such a short term.
A bumpy road – There are several reasons why a new business might fail and, these can include:
Preparation – As the old saying goes, ‘failing to prepare is preparing to fail’. Often a business owner simply hasn’t put in the work to properly research their market and effectively gauge demand for their product or service.
Competition – Even when you’ve crossed all the T’s and dotted all the I’s when it comes to planning and research, there’s absolutely nothing to stop similar businesses to yours from setting up shop in the same area.
Poor quality product or service – Some businesses fail for one simple reason – their offering is below standard. In the age of the internet, it doesn’t take long for opinions to spread and, a few negative reviews or comments can often be the death knell for a business.
A lack of longevity is an extremely common cause of failure because the product or service simply doesn’t have legs.
When a business is hitching its wagon to a trend or fad, it stands a very low chance of long term survival.
When starting up a new, independent business, the road ahead can be full of potholes, and, unfortunately, many simply will not survive – as we’ve seen in the past 14 months or so.
Sewing the seeds of business
While this may all sound a little doom and gloom, there is, thankfully, a solution. Since the I.M. Singer company decided to invite third parties to sell its sewing machines in the mid-1800s, franchising has been big business.
Buying a franchise allows you to own and run your own business by tapping into an established brand and product offering. In the UK alone, there are around 48,000 franchise units and, even in the face of a global pandemic, this number continues to grow. While most people are aware of huge franchisors like McDonald’s and Starbucks, there are many, many others out there, covering a vast range of products and services.
In order to get their hands on a franchise business, the franchisee will usually be required to make an initial financial outlay. However, this will typically be lower than the costs involved in starting a business from scratch.
So, is a franchise a good business model?
Absolutely! There are many extremely compelling reasons to go down the franchise route rather than going it alone and, some of these are:
As I’ve mentioned, you can expect to make an initial financial investment when signing up for your franchise business; however, this will usually be considerably lower than setting up for yourself with premises, equipment and product sourcing costs.
While you may be convinced that your business idea is a winner, there’s always a high level of risk involved when introducing something new to the marketplace. As a race, we humans are creatures of habit, and we’ll often be cautious about trying new products and services.
This is where a franchise comes into its own as, with this model, you’re buying into a business that has already been road-tested and which has proven to be popular. For the franchisee, this means that you already have a customer base ready and waiting before you even open the doors to your business.
If you’re looking for a business that sells physical products, you can expect to spend a considerable amount of time and effort finding suppliers either for finished products or for materials. By its very nature, this can often be an incredibly long-winded process with many false starts and missed turns before you finally find a supplier who fits the bill.
The beauty of franchising is that all of this has already been done for you. Your franchisor will usually have an entire department dedicated to forging relationships with suppliers and negotiating and renewing contracts. For you, this means that you’re entering the business with a ready-made list of trusted, competitively priced suppliers.
Inspiration and motivation
So, you’ve spent years working for other people, you’ve gained some pretty great experience and life skills and, you’ve managed to put away a little cash so that you can spread your wings and branch out on your own – there’s just one problem; you have no idea what kind of business you’d like to have.
In an ideal world, we’d all have that lightbulb moment where a great business idea appears to us fully formed. In reality, coming up with a viable idea that hasn’t already been done to death isn’t all that easy, and this can mean that the idea of starting a business then stalls and dies.
Opening a franchise is the perfect solution for those struggling to find their own business model and, today, there’s enough choice available that you can still find something that you’re passionate about – even if it’s not your own idea.
Finalising the folding
If you’ve managed to squirrel away a little cash for your new business, then you’ve done incredibly well during a really tough time. If not, you’ll be looking to acquire funding to get you started and, a bank will most likely be your first port of call.
When it comes to authorising new business loans, a bank will focus on a number of factors and, the largest of these is the risk – what are the chances that your business will succeed and that the bank will get its money back?
It’s simply common sense that, when assessing risk, an established franchise business will score much higher than an individual with a laptop and an idea. Quite simply, your chances of being approved for a business loan for a franchise are significantly higher than if you’re starting out as a high-risk independent.
I’ve mentioned that the franchise industry has managed to survive the pandemic almost unscathed and, there’s a good reason for this. Historically, franchise businesses have fared incredibly well during times of recession when other businesses are falling by the wayside.
The majority of franchise businesses are successful because they deal in products and services which are considered essentials or day to day items, such as coffee or fast food. The secret sauce here is that these are items that people are unlikely to sacrifice even if they have to reign in their budgets in other areas. For this reason, a lot of franchise businesses are about as recession-proof as a business can be.
When setting up your own business, it will usually take a few years before you start to see a significant amount of success. Once this happens, you’ll need to look at funding options again if you want to expand your business. When you own a franchise business, it will usually take a year or less for you to start seeing some decent profits – particularly if you’ve chosen a popular brand.
Once you start enjoying a level of success, expansion couldn’t be easier – all you need to do is invest in another franchise. If you’ve done well with your first branch, the franchisor will almost certainly encourage you to expand – and will offer you unlimited support and, often, a great deal to help you to do so.
While franchising is not for everyone, it’s a fantastic way of owning your own business without the risk and headaches associated with conjuring a new business out of thin air.
To set yourself up for success, always make sure that you do plenty of research and be brutally honest with yourself regarding your strengths and weaknesses. Although you may eventually have staff running your franchise for you, you’ll be putting in some long hours, to begin with so, you must have the stamina and determination to get the job done and to get your new business off the ground.