For any individual looking to capitalize on franchising opportunities and owning a franchise business, there are several advantages to consider. Some of those you may be interested in are outlined below:
The Franchise Business Pros
· Having a brand behind you, whether it is locally or nationally famous, will save you a lot of time and money that would be needed to create your own brand or trademark. You will also attract customers immediately rather than having to advertise extensively.
· You will have an established business framework to work within, which dramatically reduces the risk associated with a startup business.
· You will already have tried and tested suppliers and services at your disposal, which will again save you the time and money associated with finding your own.
· You will receive ongoing support for sales and marketing throughout your franchise ownership. Franchisees often choose to tap into the help that is offered to them throughout their tenure via existing marketing and advertising assistance.
· Franchisees often get comprehensive financial assistance because banks are often more willing to lend money to well-known brands and names than business startups that are completely unknown to consumers. Franchisees may also have access to direct financial assistance from the franchisor.
· The risk of investing in a franchise is lower than it is for a regular business startup. An established concept is much more desirable because there is less risk.
· Continued development opportunities and research will be available. Franchisors tend to choose to tap into information concerning competition in the local area, seasonal goods, demand, and local attitudes.
· You will get business support from your franchisor, which will help to find you the best possible site and enable any construction work that needs to be done in addition to employee training and operational assistance.
· All business procedures and methods that you use will already be tried, tested, and proven to work.
· The quality and desirability of the franchisor products have been proven and come at a certain standard level that is well established.
· You will have the buying power of the franchisor and centralized purchasing at your fingertips, so costs may be reduced as a result of bulk buying savings that are handed down to the franchisee.
In addition to the pros of franchise businesses as outlined above, there are also others that you may want to consider. For example, expansion may come more easily with a franchise business and you may enhance your business interests with additional businesses, either within the franchise or outside of it. This is how dreams of riches become realities.
That is not to say that there are not cons and disadvantages associated with franchise businesses. A few of them are outlined below:
The Franchise Business Cons
· You may lose ultimate control of your business as a result of the established franchise standards that you have to run your business in accordance with. You may also find that you cannot implement your own ideas and initiatives.
· The level of royalties could be as much as 10% or more in select cases, which will of course affect your profits.
· You will have to pay an initial fee to buy into the franchise. It could be as little as $4,000 but may extend up to $50,000 so there is significant initial outlay.
· You will have to pay advertising fees to ensure that your business is recognized as existing in your current location. If the franchisor advertises poorly then your fees are wasted.
· You may have to buy a signage pack from your franchisor. Some franchisors insist on you buying their specific signage and so you may find it extremely expensive.
· If the franchisor gets into difficulties then so do you. As you effectively bear their name then you bear the brunt of a problem, including issues with suppliers.
In conclusion, although there are some disadvantages with having a franchise business, the positives far outweigh the negatives. The risks of failure are significantly reduced and so there are fewer problems than a brand new startup business. Of course, you should always ensure that the paperwork is in order, and you should complete your research and due diligence before committing because there are no guaranteed profits, and you would ultimately be responsible should the venture fail.
About the Author:
GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchises for sale. Sell your business for sale for free with no listing fees and zero commissions. We have 1000s of franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.
Category: Starting Up
Categories
When Strategies are not Strategic
This article is contributed by Guy Kingston
Modern business planning owes it origins to two very different parents.
The first is the obligation to prepare a “Prospectus” when floating a company, outlining the “prospects” of the new venture. Although an early prospectus has little in common with a modern business plan, it might well have contained elements that might find their way into such a plan – a statement of purpose, a “vision” of where the new company intends to be in a few years, an analysis of opportunities and threats, and so on.
A prospectus is primarily a legal and financial document, but it is also a marketing tool to sell the new company to investors. What it is not is a strategy.
The second major influence on business planning is military planning. Many of the early pioneers of business planning were professional soldiers or naval officers who were retired or who found themselves surplus to requirements between wars. They brought the techniques they had learned in the services into the world of commerce.
There is a saying to the effect that “When amateurs talk about war, they talk about strategy; when professionals talk about war, they talk about logistics.”
There is much truth in that. The key to winning wars is less actual fighting than being able to move men and material at short notice and under pressure to the place where they are most needed. The army that does this most effectively will usually win the fighting.
Since professional soldiers devote a great deal of their time and thought to this, they tend to get good at it. Experience has taught them a few simple techniques that are usually very effective in practice. Although there are many famous logistical failures, they are famous because they are exceptional.
This is the military efficiency that proved so useful in the private sector.
However, the downside of professional soldiers being good at logistics because they talk about the subject more than strategy is that they are not so good at strategy.
Career soldiers are not necessarily expert strategists. The skills that make them good at logistical detail rarely come with a view of the bigger picture. Experienced commanders have often made elementary strategic errors that even a well-informed amateur would have foreseen and avoided. Whatever one’s view of the policies of the West in Iraq and Afghanistan, no one can deny that the implementation of those policies has been full of avoidable strategic errors.
Many of the fine military minds that influenced the development of business planning were characterised by the same combination of logistical skill and strategic blindness.
Here then is the great gap between the two sources of business planning: neither was particularly interested in actual strategy.
Those who could draft a good prospectus might be able to conjure up an enticing picture of how things could be, and those in the military tradition could deal with the nuts and bolts of running a business, but the problem of turning the pretty picture into the nuts and bolts was never addressed.
There were plans and plans but no real strategy.
This original problem has never quite been resolved. One sees it reflected in too many business plans today. They are big on the broad vision and sound on the operational details, but have no strategy to turn one into the other – which, one would have thought, was the whole point of a business plan in the first place!
About the Author:
Guy Kingston produces and presents the Mind Your Own Business podcast, offering free business advice to entrepreneurs and business owners. As well as audio podcasts there are more articles like this, compelling videos and a must-read blog. All at www.myobpod.com or you can network and join in discussions on the MYOB Facebook group.
OnStartups: The following is a guest article by Jason Cohen. Jason is the CEO and founder of Smart Bear, Inc. Smart Bear creates tools for peer code review. Jason “gets” software startups.
Doom and gloom. Layoffs, bankruptcy, insolvency, bailouts. Blah blah blah Wall Street, blah blah blah Main Street.
It’s a terrible time to start a company, right? Wrong!
Here are six reasons why you should start your new company right now.
1. Low opportunity cost
When the economy is booming, staying in a regular job makes sense. Generous bonuses are common when revenues are soaring, stock option grants are valuable when an IPO is imminent, your resume is improving in direct proportion to the success of the company. Upside and safety! Fabulous.
Of course that scenario is almost non-existent today. Most companies aren’t hiring; many are laying off. Salaries are low, bonuses are suspended, stock options are as worthless as a vote for Pat Buchanan.
So if the alternative is working for low pay without job security, why not work for yourself and build your startup? You’ll be investing your time and energy into something with more potential upside in future. If you’re talented and have always toyed with the idea of a startup, financially it makes sense to do it now.
2. Cheap Talent
It’s hard to hire good people because they already have a job. But right now that’s not true — companies are exploding and laying off everyone, even the stars.
If you’re starting a company you’re probably looking for a co-founder more than an employee. Even better. In an environment where few companies are hiring, lots of stars (or, better, potential stars) are out of work.
The market is flooded with good people. Maybe you yourself just got laid off with some co-workers you like! Just keep your hiring standards high and dig into your social network. (Or go get a social network now. See? That Facebook account really was a good idea.)
3. Cheap Stuff
Need cheap office space? Layoffs mean newly empty desks in empty offices with phones that still work. Look for subleases where someone is trying to recoup some costs — often they’ll throw in Internet as long as you don’t abuse it.
Need cheap furniture? Companies are dumping stuff into used furniture stores and there aren’t a lot of buyers. Drive a hard bargain.
Need cheap advertising? Ad revenue is drying up as companies down-size marketing budgets and miss their next round of funding. Combine that with lower readership (especially in print) and ad deals are everywhere. Don’t listen to the protestations of ad reps — they’re under duress and will take almost any offer. (I’ll post later on ways to wrangle with ad reps.)
With everyone hurting, deals are everywhere. Your expenses will never be lower than right now. Low expenses mean getting to profitability faster — exactly what a new bootstrapped company needs.
4. Eager customers
When budgets are tight, people need to get stuff for free. Good for open source projects, bad for companies, right?
Good for startups. Remember, with your first twenty customers you’ll be giving away your product for nothing. You need to — your product isn’t fully-formed, they’re helping you work out the kinks, you’re counting on them for testamonials, and you need to prove your product works in the market.
You’ll be a Godsend to companies who need your product. Their (lack of) budget prevents them from buying anything else, including competing products that are better than yours. They’ll be ecstatic to get something for free or cheap.
Here’s a trick: Trade your product for a customer story (that you write and they approve). They’ll be happy to tell the world how you bailed them out of their crisis.
I’d like a side of grated cheese, please?
5. Competitor carnage
Is there an 800 lb gorilla blocking your market? Or a few hip companies you’re afraid to compete with?
They’re all in SOS mode now. They have overhead, recurring bills, 12-month advertising contracts and 5-year office leases. Their prices are high and are hard to lower.
They’re eating cash. Those that are unfunded are watching cash reserves fall, computing months-remaining before they’ll have to close the doors. Venture-backed companies are in a bigger pickle — they weren’t profitable before, cash is now disappearing at an alarming rate, and many of them won’t get fed again when they run out.
Perfect, if you’re a little startup. You have none of these pains; you’re sipping cash with no overhead and lots of time to devote to coddling new customers. While your competitors convulse, shed talent, and invent stories to calm their doubting shareholders, you’ve got nowhere to go but up. While they’re figuring out how to wring more money from their existing customers, you’re acquiring new customers they can no longer entice.
6. “Now” is always the right time
The most common day for starting a new company is the same as starting a new diet: Tomorrow.
Take the leap. Not tomorrow. Today.
The third-hardest thing you’ll do is to take the leap. (The second-hardest is getting through the first fifty sales, the ones well before the chasm, when you’re sick of tech support and wondering when the real money is going to show up. The hardest is firing someone.)
Never mind all that. Get started. “Now” is always the right time to start, because otherwise odds are you’ll never start.
If you don’t start, you’re doomed to a life of trudging through jobs, depending on someone else for salary and bonuses and health care and retirement, a life’s work without ownership or upside.
You’re better than that. That’s why you’re reading this blog.
So go for it.
Article Contributed by Kelly Kilpatrick
Starting a business strong can be a challenging endeavor for small business owners and entrepreneurs. There are many factors at play when getting your fledgling business off the ground and running smoothly and effectively.
After looking past all the logistics, there are some key things you can do to help your business connect with people on a more personal level and keep them coming back to you in the future. The following five tips are some suggestions on how you can do just that.
1. Have a great website and related blog. If you aren’t on the web yet, you must do this right away. Being listed in the appropriate local directories and being available to your customers 24/7 is one of the greatest functions of the internet. Maintaining a great site with appropriate blog entries to enhance your page will help to ensure your success.
2. Forge relationships with complementary businesses. It only makes sense that you should try to work with other businesses that complement your own. For example, if you are starting a photography business, you should get to know event planners and other people that can recommend your services. You can do the same for them as well. No business is mutually exclusive; take advantage of what the referral system and word of mouth can do for you.
3. Donate goods and services. You can gain much-needed exposure when you employ this tactic as part of your business plan. Donate to silent auctions, give services for free to get your name out there. Your name recognition and reputation will grow rapidly if this is done in the right venues.
4. Become active in your community. Get involved in what is going on in your locale and people will know that you care about the community where you’ve decided to start your business. People will take more of an interest in your business if they know you have a vested interest in the community.
5. Make good on your promise(s). If the opening of your business intends to fill a void in the business community, make sure that you make good on that promise. Customer satisfaction and perception is essential to gaining positive feedback and word-of-mouth, which can make or break a new business.
About the Author
This post was contributed by Kelly Kilpatrick, who writes on the subject of business school rankings. She invites your feedback at kellykilpatrick24@gmail.com
Categories
Easy Accounting for Sole Traders
Easy Accounting
While a sole trader does not have to keep formal basic accounts financial records are required to enable the net taxable profit to be calculated with paperwork to support that calculation. Documentary evidence includes paperwork obtained from third parties such as sales records and receipts, purchase invoices and receipts and if maintained the business bank account. Sole Trader accounting really is the simplest easy accounting as the formal reporting requirements are the easiest.
It is not essential to employ an accountant to prepare the sole trader accounts and the tax return. Employing an accountant has the advantages of saving time in preparing the basic accounts, tax return; professional advice on what expenses can be claimed including calculating the capital allowances. The disadvantage is the cost and that is the choice of the sole trader.
Tax returns, Income Tax and National Insurance
Sole traders are assessed for income tax and national insurance on an annual basis based upon the self employed Tax return everyone self employed must complete and send to the tax authority. HMRC issue tax returns in April each year which need to be completed and submitted by 31 October following the end of the financial year. Tax returns filed online can be submitted with a financial submission date of 31 January, some 10 months after the end of the financial year.
There are 2 versions of the self employed tax return, The short tax return is completed if sales turnover is below £64,000 for 2007-08 and the more detailed full self employed tax return completed if sales exceeded the cut off point which for 2007-08 was also the level at which vat registration was required.
In calculating the tax payable HMRC deduct from the net taxable profit the personal tax allowance and calculate the income tax payable at the 20 per cent basic rate for 2008-09 on profits up to the higher earnings threshold and 40 per cent on net earnings above the higher threshold. Losses incurred in previous years can be offset against the net taxable profit.
Self employed pay class 2 national insurance contributions which were set at £2.30 for the financial year 2008-09. Refunds, through the small exceptions rules, are possible if net taxable profits are very low. In addition self employed also pay class 4 national insurance which in 2008-09 was 8% on net profit above the personal allowance and up to the primary threshold and 1 per cent above the national insurance primary threshold
Following the financial year end on 5 April the income tax and national insurance calculated by HMRC must be paid in full by the following 31 January. In addition HMRC also assess the liability for the next financial year and 50 per cent is also payable on 31 January with the remaining 50 per cent payable by 31 July.
Benefits and disadvantages of vat registration
Starting up as a sole trader does not involve compulsory registration for vat. If a business is unregistered for vat then the vat charged on purchases is treated in the accounts as a cost and vat is not added to the sales values. Businesses are required to register for vat when sales reach the vat threshold in a 12 month period, the current vat threshold as from April 2008 is £67,000.
If sales are mainly to the public who cannot reclaim the vat charged then it is usually better to delay registration until the threshold is reached. Where sales are mainly to other vat registered businesses that can reclaim the vat the sole trader adds to the sales value then it may be appropriate to voluntarily register to enable the vat input charged on purchases to be reclaimed against the vat charged to customers.
A business set up that registers for vat needs to maintain more than just basic accounts. Easy accounting can be adopted provided there ia an audit trail to support the quarterly vat return.
Bank accounts
A sole trader does not need to open a separate business account. If a specific business account is used then HMRC have a right to see the transactions through that business account as supporting evidence to the accounts and so bookkeeping records should be maintained. HMRC may ask to see a private account but they do not have a statutory right to do so.
Since all banking transactions are the personal responsibility and liability of the sole trader if a separate business bank account is opened then it must state the name of the sole trader. Typically the bank account name would be Your Name trading as Business Name.
The advantages of maintaining a separate business account are significant in keeping business and personal finances separate. The disadvantages are business bank charges and being committed to declaring the details to HMRC should they ask. If the business is run honestly then that should not be a problem.
Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.