Opening a franchise business is widely regarded as a very effective way for the average entrepreneur to minimize their risk when starting a new business. In general terms I would agree that this claim is accurate. However, don’t kid yourself that just because you opted to start a franchise business that you are more or less guaranteed to achieve success. In my experience nothing could be further from the truth. Many new franchise businesses fail, and fail all the time. Below in my opinion and experience is a few of the main reasons why some franchise businesses don’t make it.
Poor Location:
For retail franchise businesses it’s all about location, location, location. In my opinion a marginal location with poor visibility and low organic traffic can often be an impossible obstacle to overcome when launching a new retail franchise business. Before signing any retail lease for a franchise location make sure you thoroughly investigate the organic traffic potential of the site including soliciting the opinions of other business owners in the immediate area.
Incompetent Ownership & Unrealistic Expectations:
Many new franchise businesses never stand a chance of surviving because the owner is just not capable of following the basic franchise system, or is unwilling to put in the hard work and make the necessary sacrifices required to succeed. Unfortunately as a small Business Broker I see this scenario arise all the time in the form of a phone call from a new franchise owner that wants to sell 6 months after opening. Many of these owners reveal that operating a franchise is not what they expected or it’s just too much hard work. In lot of these cases I believe the Franchiser probably never should have awarded a franchise license to some of these candidates in the first place. But at the end of the day it’s the responsibility of the franchisee to make sure they fully understand the commitment and hard work that’s required to succeed in today’s marketplace.
Brutal Competition:
Many new franchise businesses face overwhelming competitive forces from similar franchise concepts and independent businesses already entrenched in their target market. In some cases this includes competition from other fellow franchisees who have been allowed by the franchiser to open other locations in a relatively small market area. In short, it’s my opinion that many major metro markets are completely oversaturated with certain types of franchising concepts making it sometimes extremely difficult for new franchise owners to make a living and ultimately succeed.
Franchise Fad:
Inevitably there are going to certain hot franchising concepts that emerge in the market place that are ultimately going to fizzle out as a fad. Remember the meal preparation franchise craze? Maybe because I’m a guy, but I never thought this was a very compelling or strong franchising concept to begin with. But regardless of what I thought, it appears that the vast majority of meal preparation franchises that opened between 2002 and 2008 (under several different franchiser flags) have closed their doors already with many franchisees loosing hundreds of thousands of dollars in the process. The moral of the story is just because a new franchise concept is popular or hot doesn’t mean it’s a proven business model.
Under Capitalization:
One of the most common reasons I have found that a lot of franchise businesses ultimately fail is they are simply don’t have enough working capital to survive the initial start-up phase. It’s a fairly well known franchising fact that the majority of new franchise businesses are not able to show a profit until there second year in business. This is why it’s crucial to have adequate working capital in reserve to meet your operating expenses until you can reach profitability.
Summary: Please keep in mind that all prospective business buyers should thoroughly investigate any franchise or business, obtain all appropriate disclosure documents available, and seek expert consultation prior to making any investment decisions.
About the Author:
Ray Haiber has 10 years experience as a professional Arizona Business Broker and franchise sales consultant. You can view and research many different types of franchises for sale for sale across the USA here.
Month: January 2010
Article Contributed Kendall SummerHawk
Hiring a virtual assistant or VA is like any relationship. At first, you’re both feeling the love and everyone is happy. But after a few months you may start noticing tasks slipping through the cracks or that you have to spend as much time tracking your assistant’s tasks as you used to spend doing them yourself. This is something no busy entrepreneur should have to worry about.
Nobody likes to be disappointed, especially when you’re investing in someone who is supposed to make your life easier.
And no one likes to feel like a meanie. So, what do you do when you’re no longer feeling the love but still footing the bills for your virtual support team?
Here are three respectful, yet powerful tips on how you can nip an assistant problem in the bud, without losing sleep or feeling like you’ve suddenly turned into a raging diva.
Tip #1 Stop Making or Accepting Excuses for Your Assistant’s Performance
Sure, anyone can have a bad day but if you find yourself saying, “Well, I know she’s…busy/not feeling well/taking care of family issues/etc.” more than once in a short period of time then you’re making excuses for your assistant’s poor performance. Excuses create cracks in your sense of self-worth and personal power. Instead of excuses you’ll need to…
Tip #2 Have A Courageous Conversation
Let’s say your VA failed to get a task done when promised, despite having plenty of notice. Give her (or him!) a call and simply ask, “I noticed this wasn’t done on time, what happened?”
What follows next is critical! Does your VA own up and take responsibility for missing the mark or does she make an excuse or try to shift responsibility to someone else? What you’re looking for here is a sense of accountability and a valid reason for the missed deadline, one that isn’t likely to take her off track again.
Follow up by asking, “What needs to be done so this doesn’t happen again?” Listen for specific actions and commitments, not conciliatory promises.
Tip #3 Making a Request Doesn’t Make You a Diva
Complete your conversation by making a clear request that you need to have your time table for tasks met, without fail. Let your assistant know that it’s better to under promise than to under deliver. Make sure she’s connected to the fact that what may seem like a small task slipping through the cracks actually has a bigger impact on you, making it more difficult for you to focus on growing your business.
But Should You Really Have Such High Expectations? Yes! Here’s Why…
Listen ladies, as a business owner you’re in an amazing position to not only make a big difference for your clients but for all of the people your clients impact as well. Add to this the impact your business success has for your family and your loved ones and you start to see that if you allow anything (or anyone!) but the best into your life, it’s not just you that will be impacted.
So please, give yourself permission to set high standards. Believe me, there are plenty of assistants who will love and champion you by providing extraordinary service. Besides, when you expect the best, you often get it!
About the Author
Kendall SummerHawk, the Million Dollar Marketing Coach, is an expert at helping women entrepreneurs at all levels design a business they love and charge what they’re worth and get it. Kendall delivers simple ways entrepreneurs can design and price their services to quickly move away from ‘dollars-for-hours work’ and create more money, time, and freedom in their business. For free articles, free resources and to sign up for a free subscription to Kendall’s Money, Marketing and Soul weekly articles visit www.kendallsummerhawk.com.
Article Contributed by Michele DeKinder-Smith
Every female entrepreneur dreams of the day her preparation meets opportunity and her own good luck is born. In her dreams, she knows exactly what she’ll do when presented with an opportunity, and exactly how the cards will fall when she takes it. But in real life, opportunity often seems to come out of nowhere and all the confidence she felt in those dreams disappears as she’s faced with the very real question: how do successful women decide what to do with new opportunity?
A new study from Jane Out of the Box, an authority on women entrepreneurs, recently revealed five distinct types of women in business. Each of these five types – each Jane – has a unique approach to running a business. As a consequence, each of them has a unique combination of characteristics and factors.
This article profiles two of those Jane “types” and the ways they may respond to a new opportunity.
Go Jane Go is passionate about her work, and has no problem marketing and selling herself, so she has plenty of clients—but she’s struggling to keep up with demand. She may be a classic overachiever, taking on volunteer opportunities as well, because she’s eager to make an impact on the world and may really struggle saying “no”. Because she wants to “say yes” to so many opportunities, she may even be in denial about how many hours she actually works during the course of a week. During the worst of times, Go Jane Go may tend to run herself ragged or feeling guilty about all the things on her “to do list” that aren’t getting done quickly enough to satisfy her exacting demands.
Although, as a Go Jane Go, you might be tempted to take on any new opportunity because you know you’re good at multitasking and you feel obligated to make it work, wait! Think about whether you really want to get into a new venture and all that comes with it.
Because you’re so good at what you do and you know all the fine details of your business and how it runs, you have a hard time delegating sometimes. If you know you’re going to take on this new opportunity and then feel overwhelmed because you won’t feel comfortable assigning any of your workload to someone else, maybe this isn’t the time to do it.
Because you’re such a hard worker and demand perfection from yourself, you work long hours. Do you have the time to deal with any new activities this opportunity will undoubtedly create? Before you accept this challenge, use some of your valuable time to determine whether the new opportunity is realistically feasible, given your time constraints. Especially, consider the cost to yourself in accepting the new assignment – will you push yourself to your breaking point? If so, it’s OK to let the opportunity gracefully pass you by – because of who you are, there’s undoubtedly another right around the corner.
If it turns out that the new opportunity will work with your calendar, commit to delegating wherever possible – and make sure you’re also taking care of yourself in the process.
Accidental Jane is a successful, confident business owner who never actually set out to start a business. Instead, she may have decided to start a business due to frustration with her job or a layoff and decided to use her business and personal contacts to strike out on her own. Or, she may have started making something that served her own unmet needs and found other customers with the same need, giving birth to a business. Accidental Jane enjoys what she does and is creating a satisfactory level of income.
Taking on a new opportunity as an Accidental Jane may mean transitioning into a different Jane type (often Jane Dough or Go Jane Go). That means making your business more of a focus in your life. Before saying “yes,” determine if that’s what you really want.
A new opportunity may mean putting more time into your business. As an Accidental Jane, your lifestyle is very important to you.
If the opportunity is very appealing to you, ask the question: How can you make it work on your terms? How can you structure the work so that it doesn’t impinge much on your time? Can you let go of something else or can you delegate part of this work?
Further, ask yourself: Am I charging as much as I could? Accidental Jane may sometimes be a little out of touch with her industry’s going rates. As workload and opportunities creep up, she should continually think about increasing rates to make the work more profitable.
Finally, if new opportunities get you excited, start building your company for the long-term vision so you can maintain your lifestyle while also taking on more work. Envision how your company might look in 3 years if you say yes to the kinds of opportunity you are facing right now. If what you see in your vision excites you, begin building a plan that will help you manage that future business without letting it take over your life. If what you see doesn’t excite you, because you are simply happy and content with your business as it stands today, then be prepared to say no to an opportunity at least occasionally.
Whether you’re a Go Jane Go or an Accidental Jane, it’s important to know what you’ll do when you’re presented with an opportunity. Explore all the implications and possibilities – then decide whether you want to take this opportunity and deal with the outcomes.
About the Author
Michele DeKinder-Smith is the founder of Jane out of the Box, an online resource dedicated to the women entrepreneur community. Discover more incredibly useful information for running a small business by taking the FREE Jane Types Assessment at Jane out of the Box. Offering networking and marketing opportunities, key resources and mentorship from successful women in business, Jane Out of the Box is online at www.janeoutofthebox.com
Article Contributed by By Karen Armon
Are you a $100K+ executive who is thinking about leaving Corporate America and starting your own coaching or service business?
Making the decision to venture out, take the risk and become an entrepreneur is hard, whether it’s because you can’t find a job in this tough economy or you’re simply tired of working for someone else. And, believe me I know.
In 1992, I decided to start my own business after being laid-off twice in the same year. Now, the idea was not completely new to me. My father, grandfathers, and many uncles on both sides of my family were bit with the “own-your-own-business bug.” Although, I knew exactly what I was getting into and even though I come from a long line of entrepreneurs, I still faced the same questions and fears that you’re facing right now.
Below, I show you how I made my decision to start my executive coaching business 17 years ago. And this process still works today as I ask my clients the same seven questions when they tell me that they want to transition from executive to entrepreneur.
The Top 7 Questions I Asked Myself Before Transitioning From $100k+ Executive to an Entrepreneur
Question #1: What is your motivation for becoming an entrepreneur?
Your motivation to become an entrepreneur must be strong enough to carry you through the ups and downs. Wanting to work part time while taking care of your children, trying to work as a 1099 until a better opportunity comes along, or having nothing better to do are poor motivators for starting your own business.
Question #2: What is your background and experience at work?
If your experience is in a back-office function or you’ve never had the experience of working directly with customers, you need to think about how you will acquire these skill sets. This does not mean that you need to master the art of cold-calling, but you must know how to close a deal.
Question #3: What strategies and tactics will you use to find leads?
More than anything, you need to hit the ground running. You need to find potential customers fast so that you can make deals happen. My advice is to delay building your marketing materials – including your website, brochures, and tools – until you know where and how to reach potential customers.
Question 4: How will you address the three big challenges of Money, Product and Pricing that every new business faces?
Under capitalization is the biggest reason company’s become bankrupt within the first year. You need to know how to finance your start-up. Personal cash reserves, credit and loans from family and friends are the most common methods.
Building a product or service includes the time and money needed to develop these materials and you need clarity about what your target market wants and needs. Take the time to learn through your network before you spend large amounts of money on prototypes that may not sell.
Pricing is the hardest challenge of all. My advice is to slightly under price your product and/or service to enter the market and as you prove your worth and brand, you can raise your prices over time.
Question #5: What course of action will you take to make your business successful?
This question goes to the heart of your commitment and what you are willing (and not willing) to do to make you a successful entrepreneur. Going into any new venture requires you to evaluate your discipline and diligence as it relates to your desired level of success.
Question #6: What are you going to do to market yourself?
Marketing yourself is all about the process of gathering strangers into your network and bringing them to a state of interest. This requires strategic planning that enables potential customers to engage in you, experience your value proposition and build trust before turning them into a potential sale. Building a website or a social networking site is not enough.
Question #7: How long will you stay involved in your business before you receive a consistent revenue stream?
Given that most businesses take nine months to a year to build a healthy and consistent revenue stream, you must look at your finances and determine what you will do in the meantime. Key questions include: How will you supplement your income requirements? What can you do to drastically cut your break-even point? How will you make up the difference?
There is also a personal side to building a business. You must transition from an accidental entrepreneur to taking your business seriously in order to be successful. And your family must be willing to give you the time and the resources to get your business off the ground.
Becoming an entrepreneur is one of the most satisfying, challenging, exciting endeavors any executive can do. If you want to take charge of your career, build something that gives you long-term control and provider yourself with the ultimate in freedom and flexibility, then making the transition from $100K+ executive to entrepreneur is well worth the effort.
About the Author
$100K+ Executive-Level Career Coach Karen Armon prepares leaders around the world for their next move. Her popular book, Market Your Potential, Not Your Past is a hit among executives who want a clear-cut, systematic game plan that drives careers forward. Now get her new FREE eBook, “Ten Micro-Trends that Impact Executive Careers Today” at http://www.marketoneexecutive.com/ebook.asp and take a critical look at today’s marketplace.
It is inevitable that starting and successfully operating any small business today is always going to generate an ever evolving list of complaints and disappointments for most owners. Entrepreneurs that choose franchising as the means to open a small business will have many of the same complaints as independent owners do along with a few unique ones because they are ultimately bound to a long term relationship with their franchiser. Here are a few of the most common complaints I hear from franchise owners regarding their relationship and experiences with their franchiser.
My Franchiser Is My Competitor:
This is one the most common, and in my opinion most valid complaints I hear from some franchise owners. It is the nature of small business that you are going to have competitors, but when your franchiser is creating the competition and diluting your market share by opening multiple locations uncomfortably close to yours that’s a tough pill to swallow. Before signing any franchise agreement make sure you thoroughly investigate and understand the rights and restrictions for your specific franchise territory. This would include speaking to other current franchisees in your target territory and asking them to share their experiences with competition from other franchisees.
Those Monthly Royalty Fees:
I have found that many new franchisees are so excited about getting there location open that they often defer any concerns about paying monthly royalty fees. However, once the initial excitement wears off, and they are involved full time in the hard work it takes to become successful those royalty fees become a much more tangible reality and commitment. The biggest complaint I hear from some franchisees regarding paying royalty fees is that they feel the franchiser does very little or nothing in return for them. Whether that’s true are not (I have no doubt that it is in some cases) unfortunately at the end of the day it is ultimately the responsibility of the franchisee to adhere to the terms of the franchise agreement they signed. Before signing any franchise agreement make sure during the disclosure process you speak to as many current franchisees possible and ask them if they feel they are getting real value from the royalty fees they pay.
Too Many Restrictions:
I often hear complaints from some franchise owners regarding the number of operating restrictions placed on them by their franchiser. Many complain that the franchiser exerts onerous control on how the business can be operated and are often frustrated that they are unable to react independently to local market realities and demands. I am sure a lot of these complaints are valid, but I guess I’m a little less sympathetic to these types of complaints for the simple fact that the franchisee chose to buy into a franchise system with known controls and restrictions. Many of which have been proven to given the franchisee a greater chance of success- which is the essence of the franchising. That being said, I would advise before buying any franchise business you honestly ask yourself if you have the right personality to follow a pre-determined franchise business system and all its inherent operating rules and restrictions.
Oversold Potential:
As a Business Broker I have heard a number of new and established franchise owners complain that they felt they were oversold on the potential earning power of their franchise business. This is a tough complaint to validate because it is generally a known fact that most franchisers do not disclose their earnings and are generally very careful about discussing earnings potential for a typical franchise location. That being said in my experience sometimes the franchiser (or their sales people) along with existing franchisees can sometimes paint an overly optimistic picture about how soon and well a typical franchise location will perform. Your best bet to mitigate this potential disappointment is to speak candidly with current and former franchise owners and ask them if your expectations are overly ambitious.
Summary: Please keep in mind that all prospective business buyers should thoroughly investigate any franchise or business, obtain all appropriate disclosure documents available, and seek expert consultation prior to making any investment decisions.
About the Author:
Ray Haiber has 10 years experience as a professional Arizona Business Broker and franchise sales consultant. You can view and research many different types of franchises for sale across the USA here.