Small Business Articles
Is A Small Business Franchise Opportunity Right For You?
May 12, 2008
Adapting to change is one of the most crucial characteristics of a lasting business. Look at broadcast and advertising; for nearly a century, radio and tv programs have benefited from huge advertising dollars financing their shows, but with the advent of internet distribution, many advertisers and broadcasters are scrambling to find the right way to move forward without losing money or alienating their fans. When medium to large firms face economic or market change, many have a hard time adapting and are forced to rebuild their business from the inside out, or slowly fade away.
Enter the small business. Small businesses are so nimble and adaptable to change that they not only weather the storm of industry change, but many actually rise to the top while the big guys are still trying to access the problem. Though small businesses are adaptable and nimble, many small business startups can be a bit of a challenge, especially if this is your first small business. This is where the small business franchise market comes into play. Small business franchises offer all of the advantages of the traditional small business, plus you're getting a proven business plan, a well-known brand, and all of the ongoing support, training and in many cases inventory to keep your business afloat and ready for anything. If you're considering taking the plunge and entering into your own small business, but don't know where to start, a small business franchise may be the perfect thing, but if you're not convinced, here's a few questions to ask yourself to see if a small business franchise opportunity is right for you.
Undercapitalization
One of the biggest obstacles a first time business owner faces is typically undercapitalization. While this is sometimes blamed on a poor economy or an underperforming market, the typical cause is usually poor planning. The best way to insulate your business from undercapitalization is to plan on having access to a sum of money equal to the projected expenses and revenue for the first year. For example, if your projected expenses for the first year total $75,000 and you expect to generate $100,000 in revenue, plan on having access to $175,000. Before heading out to start your new business, ask yourself if have enough money to avoid undercapitalization and if not, you may want to seek our more investors and more funding.
Under Funding?
The old adage of, "it takes money to make money" is definitely true in the world of small businesses. Many small businesses will require several sources of startup capital, particularly if this is your first small business. Many people assume that their own cash plus a bank loan will be the only way to start a small business, but this line of thinking edges out a great source of funding and can prove to be dangerous if things go wrong down the road. Forming a partnership or seeking out investors can be one of the best ways to raise the capital needed to start your business and keep it running successfully. A partnership will not only help to shoulder the burden of startup capital, but can also assist in running the business and will help cushion the blow if things should go wrong. With a small business franchise, you may find that it is much easier to round up investors because you will be able to show a strong business plan as well as be backed by the buying power a good name of a well-known, successful business. Asking yourself the question, "am I in over my head" is something nearly every small business owner will ponder at one point or another, but figuring this out before launching your company can set you up for success once you get your business up and running.
The Entrepreneurial Myth
A common misconception for the first-time business owner is what's known as the entrepreneurial myth. Basically what the myth consists of is people assuming that if you are an expert in a particular field that you will then be excellent at running a business in that field. The reason this is a myth is because this assumption overlooks the many skills needed to run any successful business such as leadership skills, management abilities and most importantly, the ability to cast a vision and inspire employees and investors to help carry it out. A franchise can help in part as many franchises will provide the franchisee with a business plan detailing the vision and mission for the company. Many franchisors also offer management and leadership training to prepare the franchisee to lead the company well. While these tools are helpful, the franchisee will still need to posses some entrepreneurial skills in order to successfully launch and lead a small business and so you may want to take a business aptitude test or ask some friends or potential investors if they believe that you have what it takes.
Keeping capital and funding in mind will help to insulate you and your business from the financial pitfalls that many business startups face, particularly within the first year of operation. Couple this smart financial planning with a good self-assessment and the recommendation of your peers and you're all but guaranteed a successful small business. While the aspect of starting a small business from scratch will be appealing to some entrepreneurs, keep in mind the strong advantages a small business franchise offers over a traditional startup. The franchise is often the best bet for small businesses and especially as a first business. To top it all off, many franchises can often be sold to another entrepreneur when you're ready to move on, so even if a franchise doesn't appeal to you as a long term solution, it's a great way to get your feet wet in the business world with minimal risk and the most support.
Adapting to change is one of the most crucial characteristics of a lasting business. Look at broadcast and advertising; for nearly a century, radio and tv programs have benefited from huge advertising dollars financing their shows, but with the advent of internet distribution, many advertisers and broadcasters are scrambling to find the right way to move forward without losing money or alienating their fans. When medium to large firms face economic or market change, many have a hard time adapting and are forced to rebuild their business from the inside out, or slowly fade away.
Enter the small business. Small businesses are so nimble and adaptable to change that they not only weather the storm of industry change, but many actually rise to the top while the big guys are still trying to access the problem. Though small businesses are adaptable and nimble, many small business startups can be a bit of a challenge, especially if this is your first small business. This is where the small business franchise market comes into play. Small business franchises offer all of the advantages of the traditional small business, plus you're getting a proven business plan, a well-known brand, and all of the ongoing support, training and in many cases inventory to keep your business afloat and ready for anything. If you're considering taking the plunge and entering into your own small business, but don't know where to start, a small business franchise may be the perfect thing, but if you're not convinced, here's a few questions to ask yourself to see if a small business franchise opportunity is right for you.
Undercapitalization
One of the biggest obstacles a first time business owner faces is typically undercapitalization. While this is sometimes blamed on a poor economy or an underperforming market, the typical cause is usually poor planning. The best way to insulate your business from undercapitalization is to plan on having access to a sum of money equal to the projected expenses and revenue for the first year. For example, if your projected expenses for the first year total $75,000 and you expect to generate $100,000 in revenue, plan on having access to $175,000. Before heading out to start your new business, ask yourself if have enough money to avoid undercapitalization and if not, you may want to seek our more investors and more funding.
Under Funding?
The old adage of, "it takes money to make money" is definitely true in the world of small businesses. Many small businesses will require several sources of startup capital, particularly if this is your first small business. Many people assume that their own cash plus a bank loan will be the only way to start a small business, but this line of thinking edges out a great source of funding and can prove to be dangerous if things go wrong down the road. Forming a partnership or seeking out investors can be one of the best ways to raise the capital needed to start your business and keep it running successfully. A partnership will not only help to shoulder the burden of startup capital, but can also assist in running the business and will help cushion the blow if things should go wrong. With a small business franchise, you may find that it is much easier to round up investors because you will be able to show a strong business plan as well as be backed by the buying power a good name of a well-known, successful business. Asking yourself the question, "am I in over my head" is something nearly every small business owner will ponder at one point or another, but figuring this out before launching your company can set you up for success once you get your business up and running.
The Entrepreneurial Myth
A common misconception for the first-time business owner is what's known as the entrepreneurial myth. Basically what the myth consists of is people assuming that if you are an expert in a particular field that you will then be excellent at running a business in that field. The reason this is a myth is because this assumption overlooks the many skills needed to run any successful business such as leadership skills, management abilities and most importantly, the ability to cast a vision and inspire employees and investors to help carry it out. A franchise can help in part as many franchises will provide the franchisee with a business plan detailing the vision and mission for the company. Many franchisors also offer management and leadership training to prepare the franchisee to lead the company well. While these tools are helpful, the franchisee will still need to posses some entrepreneurial skills in order to successfully launch and lead a small business and so you may want to take a business aptitude test or ask some friends or potential investors if they believe that you have what it takes.
Keeping capital and funding in mind will help to insulate you and your business from the financial pitfalls that many business startups face, particularly within the first year of operation. Couple this smart financial planning with a good self-assessment and the recommendation of your peers and you're all but guaranteed a successful small business. While the aspect of starting a small business from scratch will be appealing to some entrepreneurs, keep in mind the strong advantages a small business franchise offers over a traditional startup. The franchise is often the best bet for small businesses and especially as a first business. To top it all off, many franchises can often be sold to another entrepreneur when you're ready to move on, so even if a franchise doesn't appeal to you as a long term solution, it's a great way to get your feet wet in the business world with minimal risk and the most support.
