In a previous post, we looked at seven mistakes often made when investigating a franchise. In the conclusion, we’ll look at four other mistakes you need to avoid when discovering franchise opportunities.
Mistake #8: Rushing Into The Process — Or Dawdling
Typically you should plan on investigating a business for 30 to 60 days, perhaps longer. Give yourself adequate time to complete all of the qualification/investigation steps. Set a goal and work on the process daily until it’s completed.
Include the following steps:
- Complete the requested forms for information about you (NOTE: this is the best way to receive the information about the company in return);
- Read company brochures, materials the uniform offering circular (UFOC);
- Continue to make a list of your questions as you investigate;
- Discuss your concerns and questions with the company representative and other consultants of your choosing;
- Research the market for the product or services within your area;
- Make arrangements to talk with other franchisees;
- Attend a Discovery Day,
- Determine the specific steps next for a mutual decision on your part and on the part of the franchisor.
- At the same time, don’t stretch out this process unnecessarily long! The company will likely think you are not a good investigator and perhaps not a good decision maker. They want you to be both. A “Stop and Go”…“Stop and Go again” investigation is not the best technique to employ.
SUGGESTION: Keep a steady pace to your investigation. And, stay in touch with the company representative to keep him/her informed of the status of your investigation. If you want to move forward to the next step, tell them! If you plan to terminate your investigation, tell them.
Mistake #9: Not Asking Yourself The Right Questions
Here are nine questions that you should ask yourself when iinvestigating a franchise:
- What am I looking for in a business? Why am I investigating owning a business?
- What expectations do I have for a business? For myself?
- Would I enjoy performing the activities and services conducted by the franchisees on a daily basis?
- Can I build equity by building this particular franchise?
- Can this franchise be built by two or more people or by a family?
- Is the income earning potential in the range I am seeking?
- What aspects of this business do I like? What aspects do I not like? (Use the Ben Franklin technique of evaluating.)
- Would this business give me not only the income I seek, but also the flexibility to enjoy the non-business components of my life, such as my family, hobbies, and other personal endeavors?
- How will I finance the purchase of this business? Do I need to borrow the investment? If so, do I know how to go about obtaining business start-up funds?
- Would I have fun building this franchise?
Study/observe the day-to-day, week-to-week activities of the existing SUCCESSFUL franchise owners and ask yourself, “Would I like to do that?”
Don’t just look at the income-producing potential, but certainly try to ascertain if you can make the level of income you are seeking.
SUGGESTION: Make sure there is a good fit between you and the business from a variety of perspectives. For many individuals, owning a franchise is the proverbial “golden opportunity.” It is exactly the right vehicle for them to achieve their dreams, goals, objectives, and ambition. To examine the match between you and a franchise: Assume nothing. Ask questions.
Mistake #10: Not Researching Your Funding Options
The world is full of money. There is no lack of investment funds in America, especially today. If you have the money necessary to build the franchise of your choice, GREAT! If you do not, do not despair. Instead, go find the funds. There are several sources to consider. Most people who buy franchises, borrow the money to do so.
Obviously banks are a major source of business loans. DO YOURSELF A FAVOR! Before racing down to your friendly, local banker and apply for a new business loan, talk with your franchise consultant or company representative. They can help guide you through the process of obtaining the necessary funds.
Most bankers are not, have not, and will not ever be a business owner. Further, most bankers simply do not understand franchising, and they all assume that most businesses fail. Learn more about financing a franchise before you saunter into your local bank branch office and naively demand a business loan.
Banks will typically require you to collateralize your loan, meaning they will want to “put up” enough assets, such as your home, to ensure the loan gets paid back. They also will check your credit rating.
The Small Business Administration (SBA) is a federal agency that guarantees business loans (up to 75%) and works closely with local banks. (NOTE: The SBA can be difficult to get through. Again, talk with your franchise consultant and possibly your banker before you get too excited about this source of loan guarantee.)
In some areas, states and local government agencies help finance new business start-ups. Many franchisees obtain loans for family and friends. Others seek out other sources.
SUGGESTION: Talk with your franchise consultant or company representative before talking with your banker. Consider ALL possible sources of financing for a franchise. Don’t overlook family and friends as potential investors or “silent partners”. Don’t quit early, just because you do not have the money in your possession today. Not everybody qualifies to obtain the amount of capital they need to start a given franchise. Sometimes an individual has to select another choice that they can afford.
Mistake #11: Getting SNIOP’d
The only “surefire” way of NOT achieving your objective (finding a franchise that meets your needs) is to stop investigating. Yes, its true that a particular company may not accept you, but if you really believe a particular franchise is “just right for you”, be persistent. Keep “going for it”. Even if a company turns down your initial application, find out what you need to do to be accepted. Typically you can make the necessary changes, if you want the business badly enough.
Also, don’t get SNIOP’ed, as Zig Ziglar would say. SNIOP stands for being “susceptible to the negative influence of other people”. Stand your ground. Do your OWN investigation. We all know a lot of people who indeed “stuck to their original mission”, built a successful business, and gained the respect of their family and friends who originally suggested that they not move forward. These persistent individuals are some very happy people.
SUGGESTION: Stay the course.
Is This Your Year To Begin A New Career?
Are you ready to investigate franchise opportunities avoiding these 11 often made mistakes? Are there other investigation mistakes you’ve made not on this list? Share below in the comments and contact us for more info on the Bin There Dump That franchise opportunity.