In business, there are no guarantees. There is simply no way to eliminate all the risks associated with starting a small business - but you can improve your chances of success with good planning, preparation, and insight. Start by evaluating your strengths and weaknesses as a potential owner and manager of a small business. Carefully consider each of the following questions:
Are you a self-starter? It will be entirely up to you to develop projects, organize your time, and follow through on details.
How well do you get along with different personalities? Business owners need to develop working relationships with a variety of people including customers, vendors, staff, bankers, and professionals such as lawyers, accountants, or consultants. Can you deal with a demanding client, an unreliable vendor, or a cranky receptionist if your business interests demand it?
How good are you at making decisions? Small business owners are required to make decisions constantly - often quickly, independently, and under pressure.
Do you have the physical and emotional stamina to run a business? Business ownership can be exciting, but it's also a lot of work. Can you face six or seven 12-hour workdays every week?
How well do you plan and organize? Research indicates that poor planning is responsible for most business failures. Good organization of financials, inventory, schedules, and production can help you avoid many pitfalls.
Is your drive strong enough? Running a business can wear you down emotionally. Some business owners burn out quickly from having to carry all the responsibility for the success of their business on their own shoulders. Strong motivation will help you survive slowdowns and periods of burnout.
How will the business affect your family? The first few years of business startup can be hard on family life. It's important for family members to know what to expect and for you to be able to trust that they will support you during this time. There also may be financial difficulties until the business becomes profitable, which could take months or years. You may have to adjust to a lower standard of living or put family assets at risk in the short-term.
Why Choose a Franchise?
If you are concerned about the risk involved in a new, independent business venture, then franchising may be the best business option for you. Remember, however, that hard work, dedication and sacrifice are key elements in the success of any business venture, including franchising.
Starting a franchise has two main advantages. It could span over 75 different product lines and services. The business model is already created and set in place for an upcoming entrepreneur like you and it establishes a specific niche for you.
The first step is to decide what type of service or product that you would really enjoy. Be sure that you would like to spend your days involved in this type of business since it requires a substantial investment. For example, according to entrepreneur.com McDonald’s total investment is $506K-1.6M
Franchise fee: $45K
Ongoing royalty fee: 12.5%+
Renewal fee: $45K
Your next step is to do some research on your own to see the demand for the product or service. Take a close look at your competition and see how they are doing. Competition is good because it helps you to learn more about the market or industry.
Look into how recognized this franchise is in the marketplace because name recognition plays a significant role in a franchise business. Does the franchise have a potential for growth? What is the latest trend in the products or services offered by the franchise? This will make or break your franchise business.
Make sure you will be receiving adequate support from the franchiser including training and staff support. Talk to other franchisees that have similar franchise product or service to get a feel for how they are doing and how helpful the franchisor has been to them. Get the negative and positive feedback since you want to make an informed decision. This is a serious business and you don’t want too many surprises.
Utilize your work experience since this will help you in choosing the right franchise business. For example a retail franchise might be better for you than a food franchise, if you were a retail manager.
Find a franchise partner if that is possible. Maybe you can ask a family member or a previous coworker to join you. If you use your past skills, then there is a good chance that you will succeed.
Before you go to the franchise interview, be sure to find out about the start-up capital and if you don’t have all the money then you can probably seek a partnership for a 50/50 or any amount that you see fit.
Purchase a franchise magazine and scout out the competition or find a franchise that you can read about and get tons of information including contact number or website to do further investigation. Research is very important before you start a franchise. Choosing the right franchise is so vitally important to your success.
Remember, starting a small business is always risky, and the chance of success is slim. According to the U.S. Small Business Administration, roughly 50% of small businesses fail within the first five years.
It is time to stop worrying about how you are going to afford to live the rest of your life, and instead, take the first step towards securing your financial future.
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