If you are looking for more flexibility, more empowerment and the chance to earn a lot more money, then transitioning from employee to starting a franchise can be a dream come true. However, the reality is that starting a franchise is hard work, and making it survive is even harder. In fact, 25 percent of all new businesses fail within the first year. That’s because there are a lot of obstacles that you will need to overcome and avoid.
Be sure to keep the five following first-year challenges for first-time franchisees in mind in order to keep your franchise — and your dream — alive.
Franchise Ownership: Learning The Business And Leading It
No matter how much you know about the industry or how much due diligence you perform, you will still have a lot to learn about how the franchise works. However, as the leader of the business, you will also have a lot on your plate, and so you will need to strike the right balance between learning all there is to know and accomplishing all you need to do.
To make this balancing act a little easier, you should leverage the experience and insight of fellow franchisees. They can tell you what works, what doesn’t, and how you can best spend your time in your first 365 days.
Financial Separation: Personal Vs. Business
As the head of your franchise, the wages that you take home will represent money that you take out of your business, so it’s essential that your salary provides enough to get by without forcing you to say a quick goodbye to your new venture.
Take the time to calculate a salary that works for you and your franchise by determining your monthly personal expenses and your franchise’s business expenses. Chances are, you will likely have to sink your salary expectations in order to keep your business afloat. In order to stretch your personal budget and keep as much money as you can in your business, you should consider cutting out certain luxuries (vacations, expensive meals, etc.).
If you have a family, you’ll want to make sure that they are as prepared for your new financial situation as you are, so take the time to let your family know about your franchise and how it will impact them.
Many first-time franchisees understand how to calculate startup costs. However, what they fail to realize is that the costs of running a business can actually exceed the costs of starting one.
In the first year, you will need to have enough money available to weather initial growing pains and establish your operations, your reputation and your customer base. You will also need to have the financial means necessary to take advantage of every opportunity to grow and expand. If you can’t afford to grow your business, you probably can’t afford to stay in business.
Franchisees that fail often suffer from a lack of direction. Fortunately, a thorough and comprehensive business plan can serve as a GPS for you and your new business.
Make sure to include five critical elements of a business plan — an executive summary; a business description; organization and management details; marketing and sales strategies; funding requests; and a promotion plan. If you need help putting your plan together, you can utilize free business plan tools to get you started.
Hiring The Right People
If you are like most aspiring franchisees, then you will have experience managing people. However, you probably don’t have experience hiring them.
Recruiting, screening, interviewing, selecting and, ultimately, hiring candidates is a time-consuming and complicated process. Follow our guide to hire the right people for your new franchise in order to put the best talent on your team.
Make Your First Year Your Best Year Yet
If you want to experience the benefits of franchise ownership, we are here to help you go from dreaming about making the chance to living your dream every day. Download our free E-Book, “Living The Dream: How To Transition From The Workforce To Your Own Franchise,” and find out how to avoid these common pitfalls and ensure you — and your new franchise — thrive for the first year and for many years to come.