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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 the complete franchise shopping for and possession course of. Through the years, I’ve seen all of it—the great successes in addition to the horrible mistakes. As a coach, it is my job to present individuals high quality recommendation primarily based on my expertise and their ability set, however I can not pressure them to observe it. Beneath are a few of the most common mistakes I see as a franchise coach, and how one can keep away from them when exploring franchise alternatives.
1. Selecting the unsuitable franchise for you
The franchise you select must truly fit you so as so that you can succeed as a franchisee. Your expertise, way of life and placement preferences, monetary scenario and character are all issues you could take into account earlier than shopping for a franchise. As an example, if you realize you can 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 trying to spend extra time with your family, that is in all probability a foul match. Figuring out your self is not at all times so simple as that, however the higher the franchise fit, the extra comfy—and profitable—you can be operating 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 homeowners. The important thing to being a profitable enterprise proprietor lies in making informed decisions backed by analysis and onerous work, not blindly following a “good feeling.” If you wish to see success, it’s essential do your due diligence.
3. Falling in love
Some individuals are inclined to fall in love with an thought 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 business model made sense. He was going to get into this space of enterprise regardless. Thus, he solely needed to see the information that might support his desire to enter this trade, with out ever investigating the potential pitfalls. Once more, this isn’t a trait of profitable enterprise homeowners.
4. Not constructing a stable P&L
It’s vitally vital to know the P&L—profit and loss—associated to any enterprise you might be considering shopping for. You can not shortcut this course of. Do your analysis, speak with current and former franchisees, and perceive the actual revenue and expense classes earlier than shopping for your enterprise. You could know the financials earlier than moving into the enterprise, in addition to the associated fee it would take to attain the break-even level and generate constructive money circulation. The truth is, this subject is so vital 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 economic hardship.
5. Having unrealistic expectations
Some of us suppose the franchisor will do it all for them—that someway a franchise is a silver bullet the place you may work much less and make extra with no danger. In actuality, the primary yr in any business is hard, franchise or not. While you purchase a franchise, it’s virtually assured that you’ll work more durable 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 might be in command of build up your enterprise to change into worthwhile. You might be chargeable for your own success.
All profitable enterprise homeowners be taught from their errors, however the easiest at all times do their due diligence and keep away from many probably catastrophic errors within the first place. Which sort will you be?