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As you consider your franchise choice, you will have some flexibility in some things: locations, number of units, initial investment. These are all important aspects of how you will build a business and succeed. Training and initial collaboration with the franchisor are expected and will help a great deal. Your area franchisor is probably your best resource for starting off well. Still, beware of these four pitfalls as you begin your journey.
- Not Having Enough Funds. Your area franchisor will review your situation, but there will undoubtedly be cost overruns and delays that no one can foresee. Build-outs get stalled, new vendors are hesitant to extend you credit, and you will need at least six months of living and business expenses in hand. Arrange lines of credit and back-ups ahead of time—long before you find yourself up against the clock with no way to pay for the cost of doing business. From my experience, being undercapitalized is the most stressful part of business ownership. It will keep you up at night; so actively avoid it.
- Thinking You Can Outperform Your Competition. Of course, this is the desire—you’d love to see all your competitors’ customers migrate to you, but you are more likely to dilute their business and only get some. Be reasonable about your expectations. Successful competitors have all kinds of advantages: they’re already there, they know the industry, and they are probably successful for a variety of good business reasons. Just because they do well does not mean that you will. Do your homework, focus on quality, and try to out-smart the competition with a more recognizable name that a franchise offers: packages and deals that invite business, solid networking and referral programs, and an unparalleled location that drives new business to you (see #4 below).
- Not Recognizing It Takes Hard Work. Business ownership is hard. Really hard. It can have wonderful results, certainly, but the hard work comes first. You must market effectively, train consistently, and never stop selling. I can’t count how many times I’ve met a person with a business that sounded appealing to me, but they didn’t have a way for me to remember them. Even at a networking event poor promoters don’t bring cards. And even fewer follow up when someone expresses an interest in partnering together. Building a business means consistent promotion, long hours, and easy access. If you can’t be found, um, no one will find you.
- Pinching Pennies on Location. Frugality is good practice in some areas. A good business operator will watch every penny on labor and cost of goods. But if you are a retail store, your business location is also critical to success. Sure, you could pay less in a less desirable area, but that is a limitation. Who wants to shop in a less desirable area? There is more business upside in the optimal space, and your area franchisor will encourage this, too. You don’t want to be unrealistic about your overhead, but you always want to be accessible to your future customers. And it’s too late once you start—you will be locked into a lease for a long time, so be bold.
As you delve into a new franchise, avoid these pitfalls with prudent planning by partnering with a franchisor. There is no need to go it alone, and franchises have a proven history of achievement. As a new franchisee, you’ll avoid major errors and will soon write your own success story.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.