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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 individuals discover the proper 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 offer individuals high quality recommendation primarily based on my expertise and their ability set, however I can not drive them to observe it. Under are a few of the most frequent 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 mistaken franchise for you
The franchise you select should really match you so as so that you can succeed as a franchisee. Your expertise, life-style and placement preferences, monetary state of affairs and persona are all issues you need to take into account earlier than shopping for a franchise. As an example, if you understand 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 foul match. Understanding 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 corporation.
2. Unwilling to decide to due diligence
Some individuals do not love to do the due diligence. They belief their instincts to make choices for them. Whereas trusting your intestine could sound romantic to some, it isn’t 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 exhausting work, not blindly following a “good feeling.” If you wish to see success, you must do your due diligence.
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3. Falling in love
Some individuals are inclined 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 need 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 essential 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, converse with present and former franchisees, and perceive the actual earnings and expense classes earlier than shopping for your corporation. It’s worthwhile to know the financials earlier than moving into the enterprise, in addition to the price it’ll take to attain the break-even level and generate optimistic money circulation. In truth, this matter is so essential we devoted all of chapter 12 to this in The Educated Franchisee. As soon as you understand this and your personal monetary sources, you reduce the danger of economic hardship.
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5. Having unrealistic expectations
Some people suppose the franchisor will do all of it for them—that someway a franchise is a silver bullet the place you’ll be able to work much less and make extra with no danger. In actuality, the primary yr in any enterprise is tough, franchise or not. Once 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’ll that will help you however, in the long run, it’s about you. You might be answerable for increase your corporation to change into worthwhile. You might be accountable for your personal success.
All profitable enterprise house owners be taught 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 type will you be?
