Thursday, August 06, 2015

Preparing to Open a Franchise, from the Franchise King

In a previous post we talked about deciding if a business is franchise worthy. The next step is the big one.
It’s one thing to do market research on a business idea, it’s quite another to open your checkbook and put your money where your idea is.
Here are a few things you’ll need to do to get your business going, and to get it franchise-ready.

Open A Store

In the case of Just Socks, my hypothetical idea, the next step assuming that the data found in the market research step was positive for a retail store like this, would be to open one up.
And, unless you have the money needed to open a retail store, including furnishings, signage, and of course, inventory, you’re going to need to get a small business loan.
The first step: Visit a local bank that offers small business lending, hopefully one that participates in programs administered by the SBA. Loans approved by the SBA offer certain guarantees for participating banks. Check out SBA LINC, a free tool that connects borrowers with SBA-approved lenders.

Make Sales

Once your store is open, you have to make sales, lots of them.
You’ll need to do a lot of marketing. You’ll need to find ways to draw foot traffic into your store. You’ll also need to document everything you do. Things like:
  • Where and how much you paid for store fixtures
  • Lease costs
  • Costs for business licenses/documents 
  • Where you purchased the socks
  • The cost of your starting inventory
  • Ongoing inventory costs
  • Operating expenses
  • Marketing expenses
  • Payroll costs

Build A System

There’s one very important reason you need to document everything you do, daily, weekly, and monthly.
That reason has to do with one super-important word: Duplication. If you’re going to eventually turn an idea or a business into a franchise business, you’ll need to be able to duplicate everything you do.
More importantly, others are going to have to be able to duplicate what you did. What do I mean by others? Your franchisees.
What you’re really doing by documenting everything, is setting a business system up. Your unique business system. Most of the things you’re documenting will become part of your operating manual. That’s what your franchisees will use. It’s part of what they’re paying you for as part of their upfront *franchise fee. Of course, the business needs to be franchise-worthy in the first place in order to charge a franchise fee. Not every business is.

Other Considerations

The ease in which your business-or maybe my Just Socks business can be duplicated, is crucial if it’s going to be turned into a franchise business.
Another thing to consider has to do with training. Would you (or I) be able to teach others how to run the business? More importantly, would you be able to transfer your knowledge and enthusiasm over to them, so they can be successful franchisees?
I saved the most important consideration for last, and it has to do with the idea itself.
Is Just Socks or your business special enough to franchise? Know this: you’d be competing with over 3,000 other franchisors trying to sell their franchise concept to others.
These days, in business, something has to be pretty special to survive. You have to offer something no one else does.
Would my idea, a retail store selling just socks, work as a franchise? Would it be “special” enough?
What about your business or business idea? How special is it?
Is it special enough to be franchise-worthy?

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