Owning a franchised business can be extremely lucrative. Franchises are established businesses that have had market success and function under a corporate structure that dictates the business’ operations, making management a streamlined process.
Owners can benefit from this corporate framework because it will often provide built-in branding, marketing and operational processes, saving the owner from having to build the business from scratch.
However, franchises require a significant financial investment, making it necessary to examine your current financial position before deciding if it’s something you want to take on. You’ll want to understand the costs associated with running the business including those that are upfront and those that are ongoing like maintaining inventory, signage and promotion, to determine how much of a financial output is needed to sustain the business.
These ten questions are designed to help you determine if franchising is the right move for you:
- Realistically, how much money do I have to put into the project? If I have to put in a 10% to 15% cash injection for a Small Business Administration (SBA) 7a loan how much can I borrow?
- What are my skills?
- What are my strengths and weaknesses?
- What industry do I see myself working in?
- What are my personal goals with the business?
- What role do I see myself having in the business?
- Am I willing to make the commitment to opening a new business?
- Can I accept the risk that comes with starting a business?
- How long do I plan on being in business?
- What do I plan on doing with the business when I am ready to walk away?
These questions will help you identify the costs associated with owning the franchise and outline your professional and financial goals for the business. Importantly, they will guide you through the rest of the franchise selection process.
Reflecting on your finances, your interests and professional goals is the first – and most important – step in deciding if you want to own a franchise. To better understand your financial position, and how you can prepare to meet the costs of franchising, consult with Valley’s SBA National Franchise Lending Group, who can help guide you as you move to franchise selection process.