Easy-to-follow steps to take when starting your own business
Owning one’s own business is the dream of every entrepreneur, but there’s more to it than just deciding to quit working for “The Man.” Owning a franchise allows aspiring business owners to become part of an established business with a strong brand while maintaining independence. Following some simple pieces of advice can help new franchisees avoid the pitfalls of starting a new business and get their franchises off to a successful start.
- Choose the right type of franchise. Every business owner has unique strengths and interests; be sure the franchise is something that caters to both. Some of the most common types of franchises include: restaurants (Subway, Wingstop, etc.); hair salons and spas (Sport Clips, Woodhouse Day Spa, etc.); and childcare or tutoring (Mathnasium, Kiddie Academy, etc.).
- Establish a budget. With any franchise there will be a franchising fee you need to pay upfront along with costs to get the business going. Honestly look at your financial situation and your assets to see what you can afford and the size of a business loan you might be able to receive. Speak with your bank or an accountant ahead of time to get a professional opinion.
- Decide if you want to form a corporation or LLC. There are numerous benefits to starting your franchise as either a corporation or an LLC, including tax benefits on business profits, protecting your personal assets from your business liabilities, and more. Also, franchisors, investors, and customers consider incorporated businesses more credible. LegalZoom and other similar sites offer advice on deciding whether forming an LLC or corporation is right for your business.
- Do your research. Learn how much you really need to invest in the franchises that are of interest. To get a good idea of which franchises are most likely to be successful and franchisee-friendly, take a look at Franchise Business Review’s list of the 200 Best Franchises to Buy in 2019 based on the satisfaction of more than 30,000 franchisees. When you’ve narrowed down the list, ask other franchisees of the same business about their experience to get some first-hand knowledge of what to expect.
- Write a business plan. A formal business plan will help you organize your thoughts and lay out your goals, plus you will need it when trying to obtain financing at the bank. If you’ve never written a business plan before, the US Small Business Administration (SBA) provides excellent advice for quickly creating one.
- Express your interest to the franchisor. You will need to submit an application and take part in an interview process. If there is mutual interest, the franchisor will help you find a place in your area that will allow your business to be the most successful. During your meeting, be sure to discuss the amount of training provided and the other benefits of being a franchisee.
- Seek financing. Starting a franchise isn’t cheap, and you will most likely need some financial assistance. First, check with the franchisor. Many companies have programs set up specifically for franchisees as they benefit from your success as well. Better yet, the franchisor knows exactly what you need and can arrange financing for unexpected costs, such as equipment and stocking items. Another option for financing a franchise is a commercial loan from your bank, which will depend on your creditworthiness. If the bank won’t give you a loan, you still might be eligible for an SBA loan.
- Hire a lawyer. If you don’t already have an attorney, be sure to get one before preparing to sign an agreement. Sites such as Upcounsel can help you find the best franchise attorneys in your area if you’re having a hard time finding one or getting a referral. Once you and your attorney approve the paperwork, sign it and prepare to get your business started.
- Make sure you are a compliant franchisee. Franchisors make sure their business is successful by maintaining standards. This means every franchisee has rules to follow that are in accordance with the franchise business model. Requirements range from operating hours, layout of the business, stock purchasing, and uniforms to promotional activities, franchisee conferences, and reporting. Get to know all the requirements before opening your doors to make sure you are in compliance right from the start.
- Launch your business. Now that your business is ready to open, you’ll need to launch it. Many franchisors assist in the launch, offering promotional materials, grand opening deals, and even a small advertising budget for new franchisees, but there is more you can do on your own. Reach out to local businesses in the area, leaving fliers or business cards to let them know about you. Tell friends and family to spread word-of-mouth about your new endeavor. Make the grand opening an event people won’t want to miss, possibly including items to be raffled off from your business and those of your colleagues.
- Renew your franchise agreement. After following these tips, surely your franchise will be an unbridled success that you will want to own for years to come. Typically, franchise agreements last between five to 10 years, so you will eventually need to renew to keep your business going.