Many people dream of owning a business, and a quick path considered by many to get here is becoming a franchisee. Some people believe if you become a franchisee, you are not an entrepreneur, but that’s not true at all! You can be an entrepreneur as a franchisee — all the elements are present, and you’re definitely running a business. Of course, the first step to business success is to understand yourself. What motivates you? How much control over your business do you want and need? There are quite a few questions to ask yourself as you get started, and below are a few areas to explore:
1) Motivation – Why do you want to start a business or become a franchise owner? Is it the dream of fewer hours, less travel — maybe more travel? Do you just want to be the boss, or your own boss? Create a list of the “whys” and for each one – ask yourself at least three times “why” for each one to get to the real answer. Here’s a quick example:
Why do I want to start a business?
So I have more free time.
So I can spend more time with my family.
Because I travel a great deal and want to be off the road.
You will use these answers to “why” as part of your evaluation, which we will discuss in this series. You will need to consider if the potential business may or may not satisfy your original motivation, and carefully work through a variety of explanations and situations.
2) Risk tolerance – No matter what a franchisee sales person will tell you about franchisee success versus starting from scratch, every business has risks. Can you sleep at night if you run into challenges? How well capitalized are you? Part of sorting through these issues is the rule of threes — the idea that things take three times longer to complete and cost three times as much as projected. What if it takes three times longer to get to profitability? Are you ready for that? If you have a significant other, are they fully supportive? Can they keep the personal bills paid? If you answer “no” to any of these areas – do not get into any business. The level of stress based on your risk tolerance will take the joy out of business ownership for you. If you primarily answer yes, you are a strong candidate for business ownership.
3) Job or business owner – With any franchise or independent business, you can “buy” a job or be a business owner. If you are buying a job – you are expected to be on site as the primary operator and possibly deliverer of the goods or services. Example, some service concepts such as printing or food service will require the owner/operator to be engaged in the day to day operation full time. This is partly due to low margin/profitable profile – you will not be able to have a full-time manager running the operation for you. The other may be due to the specialized skill or complexity of the operation.
If you fall into the buying a “job” category – there is nothing wrong with that. But, unless the concept has a proven track record of success, you may unwittingly believe you have met goals one and two above – improved lifestyle and reduced risk to your level of tolerance. We will talk more in the series on reaching the concept and you may still be a good candidate.
If you fall into the business owner profile, think through how much control you want and need. If you think “I’ll get a franchise and make the service better, I can alter the recipe, I can improve the marketing” – being a franchisee is not for you. You will need to abide by operational standards – even if you could make significant improvement. You are a strong candidate for being an independent business owner vs franchisee. Dig deep and similar to topic one above –really take a hard look in the mirror and work to “know thyself.”
The more you know about your personal goals, motivators and personality, the better prepared you will be to make some decisions. Would any type of business be a fit for you? It isn’t for everyone. Better to know before investing your retirement funds, home equity line of credit, or friends and family investments. Many people lose interest in their business well before financial or other business challenges. Be sure to consider if owning a business is right for YOU. Do not yet focus on the type. We will discuss researching the concept later. Right now, it is all about you. If a small business is not for you – do not get tempted by the “possibilities”.
Tell me about any challenges you have had with being a franchisee how you managed through the situation. Small business – know thy self!
About the Author:
Gregory Woloszczuk is an entrepreneur and experienced tech executive that helps small business owners grow their top and bottom line. Gregory believes in straight talk and helping others see things they need to see but may not want to with a focus on taking responsibly for one’s own business. He and his wife, Maureen, started GMW Carolina in 2006.