For many people, owning their own business is part of the American dream. Undaunted by the amount of time, energy and money it takes to start a business, they are determined to be their own boss and they take the plunge.
Sadly, for the overwhelming majority of those people, their dream will eventually become a nightmare as nine out of every 10 startup business in the United States fail.
The number one reason for these failures is the owners’ inability to recognize no-one wants their product. Just because they got addicted to eating guinea pig on their last trip to Peru doesn’t mean they should run out and open a restaurant specializing in the furry little critters when they get home.
For most of these people, a much safer route to their goal is to buy into an existing franchise with a solid track record. While owning and operating a franchise still comes with its own set of challenges, much of the risk has already been taken by the corporate office and the franchisees who helped build the enterprise.
Having a template, a recognized brand and support along the way is incredibly helpful. Throw in a good franchise management system or franchise software, and success is a real possibility, even if it is the owner’s first business venture.
Here are the top seven advantages that franchises offer new business owners:
- Established Record of Success
Part of establishing a business is finding out what works and what produces the best results. An existing franchise remains in business because it has already developed its method of success over time. This means that the new franchisee can jump right in and use the franchise’s proven procedures plus a solid franchise management system to find their own success.
- Customer-Recognized Branding
Another difficult part of starting a business is to create a brand that is recognized by customers. Branding includes a number of elements such as logos, signage, packaging and overall experience. The franchise has already established its branding so it will be recognized immediately by people around the country or even the world. This means the new franchisee does not have to worry about branding and already has a community of built-in customers.
- Support
There are so many aspects to running a successful business. If one takes the go-it-alone route, they are likely to encounter problems without having someone to turn to for the answers. However, when a person chooses to buy into a franchise, they benefit from a dedicated corporate staff that can provide needed support. Many good franchises have training programs and reference materials to get the new franchise up and running. Afterwards, there is ongoing operational support and marketing assistance to help the new franchisee in anything from franchise software and franchise management systems to attracting and growing loyal customers.
- Buying Power
The success of any business is largely dependent on two factors: The money coming in from sales and the money going out from purchases of supplies and inventory and so on. Larger, established businesses benefit from having more purchasing power which can cut costs for the new franchisee. More buying power means established suppliers and a better system to negotiate prices. This translates into lower costs on initial and regular supplies and a potential for greater profits.
- Ability to Compete with Big Businesses
The choice to start a business from scratch means the business owner usually starts out small. And, because smaller businesses purchase less, the cost for goods and services is typically going to be higher. There is also the challenge of carving out a recognizable brand and marketing the business to customers. These factors make it difficult for a small business to compete with big brands and national chains. On the other hand, when a person buys into a franchise, they can immediately compete with other big businesses in the area. Choosing the right franchise management system and financial reporting software can also boost the probability of success.
- Reduced Risk
New businesses have an alarming failure rate. In fact, studies show that as many as nine out of ten startups will fail. In comparison, buying into a franchise greatly improves odds of success. It is still up to the franchisee to work for success including implementing the right franchise management system to coordinate daily operations and finances. However, the proven methods and built-in customers of a franchise can greatly reduce the risk of failure.
- Innovative Technology
A final advantage of owning a franchise in today’s world is the growth of innovative technology made specifically for franchises. Franchise software can simplify the creation of financial reports including consolidated reports for those who own multiple franchises. Franchise management system software can also assist with analytics, CRM (customer relationship management), document management and more. These tools were not always available, but the growth of computing in today’s world has meant an impressive line of technology to help franchise owners.
SUMMARY: Like any business, owning a franchise still takes a lot of work. However, with a ready-made customer base, a recognized brand, and the right franchise management system and franchise software, buying into a franchise can be a short cut on the path to business success.