If you’re dipping your toes into the franchise world for the first time, it’s unlikely you’ll immediately know what to do. There are a number of things you should be aware of – from how to continuously generate leads and maintain a healthy cash flow to avoiding common mistakes.
Here, we offer our tips to prepare the franchise beginner for anything they may face.
Know what you’re signing up for
Not all franchise opportunities are born equal. They will vary by industry, and by franchisor, so it’s best to do your research beforehand. Ask for the parent company’s track record, and have a look at how well your chosen location is working in that industry too. It’s worth seeing how competitive the market is also.
Consider other factors like the franchisor’s involvement. How much assistance will they provide? Perhaps they aren’t offering enough training and support for you to feel confident that you can make a success of the franchise. Or maybe they’re too hands-on, which might not be ideal if you’re seeking more autonomy.
You can discuss these things with the franchisor prior to applying to make certain the opportunity is right for you. It’s important to be able to truly see yourself running the franchise for years to come, and determine whether you have enough passion and diligence to drive the business forward.
Ensure you’re clued up on finances
If you feel you know enough about the franchise to fill out the application form, have a strategy for how you are going to acquire the necessary finance. This will show great planning skills, one of the key qualities that franchisors look for.
There are a variety of ways to source your working capital – these include banks that the franchisor can likely put you in contact with, government grants, insurance companies and building societies.
Once you’ve obtained your investment, you can’t afford to neglect the financial side of your new business. You’ll need to know the break-even point and when you can expect to reach it. Take the necessary steps to achieve this return and keep a positive cash flow. If you hit any struggles along the way, it can be an idea to see if your suppliers have any credit lines – and you can always seek the advice of fellow franchisees or the franchisor.
When the profits do start rolling in, don’t make the mistake of thinking money is no longer an object. Sudden costs or changes in the market can hit any business, so avoid spending when it’s unnecessary. Having a contingency fund in place, just in case, is always a good idea.
Take advantage of opportunities
Finances will be easier if you always have your eye on new opportunities. Any networking events should be capitalised on. You can have a look online to find ones local to your area. But make sure that they are relevant before you spend your time or money.
Handing your business cards to the right connections should result in lead generation, which is essential in helping you continuously gain business and maintain a stable cash flow.
Networking isn’t the only way to find leads. You can use LinkedIn to source opportunities, as well as create them yourself. This and other social media platforms, along with the essentials of a great marketing plan, should result in plenty of people seeking your services.
Leads will be easier to acquire due to the franchisor’s established brand name and marketing toolkit, but remember that you’ll need to make your own efforts on an ongoing basis to ensure profit.
Put practices in place
It’s not just the franchisor’s brand you can make use of – there is also their tried-and-tested business model. This will have their best practices they have built over time, and you will need to make sure they are followed by your team. They include:
The franchisor will likely have benchmarking in place (for factors such as time and service quality) so that areas of improvement can be consistently identified, increasing the likelihood of a successful franchise.
Different platforms have probably been explored already, and the parent company will know which ones are most effective – as well as how often to update a website, post a social media update, or send an email campaign.
Communication and people management.
Communication issues will have likely arisen before, so the franchisor will have put in place processes that ensure the seamless exchange of information, as well as how to develop and train staff members, and set them realistic targets.
It’s best not to ignore any of the franchisor’s practices or advice. It’s been proven to work, and is therefore your best chance of success. But if you do think something could be improved, it’s always worth communicating your ideas.
Avoid the common mistakes
Not drawing on the franchisor’s expertise isn’t the only mistake franchisees make. Some rely on their instincts to run the business, rather than using the tools and experience they have at their disposal. Others don’t fully take advantage of the resources they have been provided with, diminishing their chances of success.
You should use the franchise group network to the best of your abilities because they will be able to help your business to thrive, as they have done so themselves. And remember not to make the mistake of neglecting your marketing efforts once they have had generated some results – they need to be continuously leveraged to guarantee that leads are generated.
Know where you plan to take the franchise too. You’ll need to create a business plan upon applying for a territory, so you should think about what the future holds, as well as some actionable steps towards your short- and long-term objectives.
With Rainbow, we help you put together a business plan. This is crucial when applying for funding from the reputable providers we have long-standing relationships with, and can introduce you to. They can often provide up to 70% of the finance required.
We also offer continuous training and support, so you will have the very best chances of success. Request a callback today for more advice for a first-time franchisee.