Owning a franchise is an interesting option for young entrepreneurs. You don’t have to start from the bottom and work your way up to the position you actually want. When you own a franchise, you start as an owner, just like if you open a business independently. However, franchising as a young entrepreneur does not only provide training to start a business. It provides a support system of tools and technology to run the enterprise successfully.
If you are entrepreneur-minded, a franchise offers not only a fast track to owning a business but also the possibility to build a multi-unit business. Young entrepreneurs are at a stage in life that invites a variety of considerations when it comes to evaluating a franchise. Here are some elements of franchising to consider.
Less overhead opportunities
When you are investing in a franchise for the first time, be aware of the overhead costs that come with the business model. Overhead costs – administrative costs, office equipment, licenses, and permits – are the costs needed to run a business, but they do not make a profit. When your overhead costs are low, a larger percentage of your costs go to providing products or services, which can be recovered through sales. When franchising as a young entrepreneur, look for a plan that will direct you to spend most of your time on salable aspects of the business.
Support system components
Each franchisor should provide both initial training and ongoing support to run the business.
Initial training will include teaching the complete management of the business, setting up your administrative procedures and marketing to start the business. Ongoing support should cover additional measures that contribute to business growth – human resource support, customer communication methods, technology upgrades, growth opportunities, bidding advice and networking.
Look for support systems that work for you as opposed to what you need to work for them. For example, if the franchise package includes a website, does the franchisor provide the content and manage the upgrades for you, or does it become your responsibility? The support system will help the franchisees succeed, not create more administrative work to manage the franchisees.
Talk to other franchisees
Many franchisors include the opportunity to talk to existing franchisees. But if that offer isn’t obvious when you research the opportunities, ask for it. Even better, ask them to talk to you in a similar way. This may include a young entrepreneur, a related background, similar advance concerns, etc. Each franchise has some great lessons or sharing tips that can be helpful.
When you own a franchise, you immediately become part of the company’s network of other franchises. While your focus may be on starting and running a business over time, you will appreciate the value of this experienced and exclusive professional network. Franchisees can be mentors and collaborate for new ideas. Similarly, if you struggle with a certain aspect of business growth, they are a source of experience.
If you want to sell franchises, franchises are also a key group, as there are plans to operate multiple multi-unit operators or more locations.
You are buying the franchise offer lifestyle
Each franchise offers the opportunity to own your own business, but they do it in different ways. As you explore options, think about the kind of life you want to make with this business. Do you want to work an 80-hour week, or a weekend off? Do you always want to be an employee, or do you want to manage others who work for you?
With 3,000 franchises in the United States, you can choose the lifestyle of your choice from the start. When your work contributes to the enjoyment of your life, your life will be much more productive. Save your judgment on a business until you know how it works and what it can produce for you – financially and otherwise. Research the big-picture elements of what a franchise can offer.
The subtlety of generating revenue
Obviously, you want to make money as a franchise owner. So, evaluate the financial part of the business model. This is extremely important.
Here are two key points to consider when examining revenue options as part of your voting rights:
1. Different income
Are business clients diverse? If the revenue includes both consumers and corporate customers, then you have a diversified clientele. If you can find your own clients and be a subcontractor for larger projects, you have a diversified clientele in the same industry. In addition, customer base If you are a parent of 6 to 9 year olds, you have a limited customer base. It goes without saying that a limited client is a negative criterion. But, as we have seen with epidemics, it can exacerbate your weakness financially.
2. Recurring revenue
If the franchise model includes customers who regularly order a product or book a service consistently, you will benefit from a recurring revenue stream. The effort you put into attracting customers is rewarded because they repeatedly order from you. The franchisor should be able to give you an idea of the percentage of revenue that franchisees earn from recurring bookings.
Franchise owners come from many backgrounds
Franchising is an inclusive entrepreneurial opportunity available to people from a variety of backgrounds and experiences. Some franchises started out of college. Many have left a high-paying career with the benefits of owning a 401k and a franchise and being in control of their lives. Others felt they were unemployed. A franchise has given them the opportunity to use their skills for their own financial benefit.
A franchise gives you an independent entrepreneurial experience without the risk of starting from scratch. In many ways, this includes the best part of business ownership.