Thousands of businesses across the nation open and close their doors every day. Many businesses will succeed, but a large number will also fail by year 1. Franchising is a great way to start a new business. It gives your new company the power of a national brand, the past experience from other business owners and a successful system and way of doing business. With that being said, not all franchise systems out there are a good buy.
With more and more people buying into the franchising industry, in this article we are going to list some of the advantages of starting a new business by purchasing a franchise unit.
It’s often said that more than half of new businesses fail during the first year. According to the Small Business Association (SBA), this isn’t necessarily true. The SBA states that only 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10, as referred on the business website Investopedia.
Some studies show that franchises have a success rate of approximately 90 percent as compared to only about 15 percent for businesses that are started from the ground up, as referred on website Enterpreneur.
Even with all of this data and the success rate, not all franchise systems out there are good opportunities and good investments. When choosing a franchise, always look for the benefits that the brand and the system will bring to you and your new business. Always look for the amount of support and help you get from corporate and also from other franchisees within the system.
With that being said, here are some of the benefits of buying into a franchise system instead of starting your own business:
1) The power of a well recognized brand and a proven concept:
Many franchise systems out there have a national brand recognition. When you purchase a franchise location, you’re automatically part of the spotlight. Audio and visual ads, a social media presence and business reputation on sites such as Google, Facebook and Yelp are all things you should look into before making a decision to purchase a franchise. The broader the brand image, the more you will benefit from it.
2) The experience
When starting your own business, it’s a constant learning process. You will try many new methods and techniques before some of them work out. When starting as a franchise, other people will have done that work for you already. You tap into an endless source of knowledge that will ensure the success of your business. How many times did you think to yourself, I wish I knew this back then!
3) The system
Most franchise concepts out there will have a proven system that works. Always look for a franchise that gives you something that’s proprietary and that you couldn’t get on your own. Always look for a system that will empower you and your new business. Yes, brand, services and products are important, but making sure your new business has all the tools and help it needs to succeed is as important. It’s the main reason why you chose to purchase a franchise!
One of the main reasons you want to start your business by purchasing a franchise is the support and experience that comes with it. When choosing a franchise concept, pay close attention to the support level offered by corporate to its franchisees. Everything from online help and educational materials to phone and email support. Look for a franchise concept that has a high level of integration between franchisees and corporate, a place to share and get knowledge from and people you can ask questions.
Franchising can be expensive and not financially doable for most people starting a business today. The good news is that there are so many different franchise options out there, you are almost certain to find something that fits your budget. Try not to go over your budget when buying a franchise. Remember, you will need money to support yourself while the business is not profitable and your business will need a healthy cash flow. Try not to get too deep into financing either, unless you can find good rates. Remember, franchising is a team effort between you, the franchisor and the existing franchisees.
There will never be certainty when starting a new business, and starting a new franchise business is no different. A lot of hard work and dedication are key factors in your success. Try to find an industry that you are passionate about. Franchising can be a great opportunity for you and your family but only if done correctly.