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Up to date on Dec 19, 2023. Initially printed on Jun 15, 2016.
As a franchise coach, it is my job to assist individuals discover the right franchise match for his or her wants, and to assist them efficiently navigate your entire franchise shopping for and possession course of. Over time, I’ve seen all of it—the great successes in addition to the horrible errors. As a coach, it is my job to offer individuals high quality recommendation based mostly on my expertise and their ability set, however I can not pressure them to comply with it. Under are among the most widespread errors I see as a franchise coach, and how one can keep away from them when exploring franchise alternatives.
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1. Selecting the flawed franchise for you
The franchise you select should really match you so as so that you can succeed as a franchisee. Your abilities, way of life and site preferences, monetary scenario and persona are all issues you could contemplate earlier than shopping for a franchise. As an illustration, if you realize you’ll be depressing in a location with chilly climate, do not buy a franchise up north. Or if the enterprise mannequin requires you to work nights and weekends, however you are seeking to spend extra time with your loved ones, that is in all probability a foul match. Realizing your self is not at all times so simple as that, however the higher the franchise match, the extra comfy—and profitable—you’ll be working your enterprise.
2. Unwilling to decide to due diligence
Some individuals do not love to do the due diligence. They belief their instincts to make choices for them. Whereas trusting your intestine might sound romantic to some, it’s not a trait of profitable enterprise house owners. The important thing to being a profitable enterprise proprietor lies in making knowledgeable choices backed by analysis and arduous work, not blindly following a “good feeling.” If you wish to see success, it’s essential do your due diligence.
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3. Falling in love
Some individuals are likely to fall in love with an concept or an idea—then they do the due diligence that solely helps their preconceived concepts. They’re blinded by their bias and their analysis finally ends up being one-sided as an alternative of thorough and full. I as soon as labored with a person who was in love with the idea of photo voltaic and LED. It did not matter to him if the enterprise mannequin made sense. He was going to get into this space of enterprise regardless. Thus, he solely needed to see the information that will assist his want to enter this business, with out ever investigating the potential pitfalls. Once more, this isn’t a trait of profitable enterprise house owners.
4. Not constructing a stable P&L
It’s vitally essential to know the P&L—revenue and loss—associated to any enterprise you’re considering shopping for. You can not shortcut this course of. Do your analysis, communicate with present and former franchisees, and perceive the actual earnings and expense classes earlier than shopping for your enterprise. It is advisable know the financials earlier than stepping into the enterprise, in addition to the associated fee it’ll take to attain the break-even level and generate constructive money movement. Actually, this subject is so essential we devoted all of chapter 12 to this in The Educated Franchisee. As soon as you realize this and your individual monetary assets, you reduce the chance of monetary hardship.
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5. Having unrealistic expectations
Some people suppose the franchisor will do all of it for them—that in some way a franchise is a silver bullet the place you may work much less and make extra with no threat. In actuality, the primary yr in any enterprise is difficult, franchise or not. If you purchase a franchise, it’s nearly assured that you’ll work tougher and make much less throughout that first yr. The franchisor will do what they will that can assist you however, in the long run, it’s about you. You’re in control of increase your enterprise to turn out to be worthwhile. You’re accountable for your individual success.
All profitable enterprise house owners study from their errors, however the perfect at all times do their due diligence and keep away from many probably catastrophic errors within the first place. Which sort will you be?
