This is a collaborative post.
The thought of owning a business and being your own boss is an attractive prospect for many of us. That said, the journey to entrepreneurship can be very difficult, especially when doing it alone. For this reason, many prospective business owners are choosing to invest in a franchise rather than start their own businesses, and here are a few reasons why.
Higher chances of success
According to research, 50% of businesses don’t survive long enough to celebrate their fifth anniversary. The first few years of a business are crucial to its success, and without a well-written business plan, great marketing strategies, enough capital, and outstanding leadership, it won’t survive.
Luckily for franchisees, their businesses come equipped with a recession-proof business plan, effective marketing and advertising strategies, and a motivated management team who is as invested in the success of their businesses as they are. They also enjoy easy access to loans because lenders and banks consider a well-known franchise a much safer bet than start-ups.
Franchises have a recession-proof business model
Every business owner wants to maximise their potential returns and minimise risk as much as possible. Investing in a franchise drastically reduces the risks involved in starting a business because you’ll be buying into a tried and tested business model that has been successful over good and bad financial times. Most franchises for sale, especially those in the B2B industry, have a robust customer base that can weather almost any economic condition. They invest heavily in marketing collateral, especially when there’s a slowdown in business to bring in more customers.
Better market penetration
In the first stage of a new business, obtaining customers for your products and services is the main challenge. Without customers to sell to, you will make no revenue, and your business will fail. As the new kid on the block, obtaining customers can be very challenging and expensive, especially when you’re competing against well-recognised brands. Many entrepreneurs are choosing to avoid these challenges by investing in franchise opportunities. Since franchises are well-recognised brands, your business will benefit from immediate brand recognition and a loyal customer base, making it easier for you to penetrate the market and quickly acquire a big market share.
Lower start-up costs
Home-based franchises have relatively low start-up costs compared to other businesses because they eliminate the need to rent an office or a brick-and-mortar shop. Understandably, some franchises require physical stores to be successful, but working from home significantly reduces the initial and ongoing investment required to own and operate a business, allowing you to save on rental and utility fees. Lower overhead costs will enable you to plough back profits back to your business for faster expansion.
Generally, franchises are more profitable than start-ups. This is because most new independent businesses struggle a lot in their first few years and operate on trial and error. Franchises, on the other hand, operate in a conducive environment that allows them to make profits as soon as they open. Using the name of a well-established brand gives your business high popularity, which helps bring customers in droves. Franchising also allows franchisees to buy equipment, supplies, and inventory in bulk. This reduces their overall operating costs and increases their profitability.
Initial and ongoing training
One of the reasons franchising has become so popular over the years is the initial and ongoing training provided by franchisors. This is extremely useful to business owners, especially those with no prior experience. You will have an experienced partner to guide you through day-to-day management, marketing and promotion, opening procedures, etc. Also, being part of a network of franchisees provides a perfect opportunity for you to share your challenges and have other people advise you accordingly.
Marketing and advertising are crucial to the success of a business. Your business can’t survive without effective marketing, but this can be very expensive and out of reach for new independent businesses. Luckily, franchisees don’t have to worry about marketing so much because the franchisor runs nationwide advertising campaigns that ultimately benefit their businesses. The franchisor also helps you create effective marketing campaigns for your local market.
Franchising is a safer way to own a business
Building a new business from the ground up can be a risky venture. According to research, 90% of new businesses fail within the first year because of inadequate capital, ineffective marketing, and lack of expertise in the industry. Investing in a franchise helps you avoid these problems because you can easily access expert advice from your franchisor and other franchisees. Financing options are also more accessible, and you have your franchisor’s business model to guide you on the best marketing strategies.
Disclosure – this is a collaborative post.