Wednesday, June 26, 2019

How to Get Past the Fear of Buying a Franchise

By Joel Libava
From Small Business Administration

Before I share my ideas on how you can get past your fear of buying a franchise, I need to address this issue:

It’s perfectly normal to have feelings of fear when you’re thinking about buying a franchise. Let’s see if I can help alleviate some of these fears for you.

Transition Fears

You’re probably worried about the transition you’ll be making if you decide to move forward with the franchise opportunity you’re interested in.

The transition I’m referring to is from employee to employer. And it’s a big one.

The reason it’s so big is because of all the responsibilities you’ll have as the owner of a franchise. You’ll be responsible for things like:

Hiring
Payroll
Inventory
Marketing
Operations
Business Development
Expenses

And part of your fear has to do with the fact that you may not know how to do all of those things.

The good news is that when you’re a franchisee, you’ll receive formal training on every aspect of your franchise business. It’s part of what you’re paying for.

In essence, by the time you’re done with training, you’ll have the knowledge and the confidence you need to run your franchise business. As a result, your transition from employee to employer will be much smoother, and less scary.

Financial Fears

Investments can be risky. That includes an investment in a franchise business.

The fact is, you can lose your money in a franchise business. That’s because franchising isn’t perfect.

That’s why it’s important to:

A. Make sure you can afford the franchises you’re investigating

B. Choose and research the franchises you’re interested in carefully and methodically

Doing those two things can help you lower your risk, but I guarantee you’ll still be fearful about losing money.

The best way to walk through your fear is by doing everything you can to minimize your financial risk, like doing great research and staying within your budget.

Fear of Failure

This fear tends to rear its ugly head right when you’re about to make your yes or no decision on the franchise opportunity you’ve been investigating. But don’t kid yourself; this fear has been a part of your psyche ever since you had your first call with franchise headquarters.

That said, what if you do fail? What will happen?

First off, unless you’re able to sell your business before you close it down, you’ll be out the money you invested up-front. You’ll also be out the money you’ve been putting into the business since it opened.

Secondly, you may owe money to vendors, your landlord, and the bank where you took out your small business loan.

Admittedly, what I just described is very unpleasant in every respect. No one wants to lose money. But there’s something else.

When you fail at something, it affects you on the inside. You may feel like a failure.

In addition, it’s possible that you’ll feel like you’ve let others down, the ones who were rooting for you, your family and your friends. But things don’t have to go that way. You just have to be smart.

The upshot of all this is that while there’s a chance you’ll fail if you go into business as a franchise owner, there are specific things you can do to insure you’re making a good, well-thought out decision. Here they are:

1. Take the time to learn everything you can about franchising.

2. Make a commitment to only look at franchises you can afford.

3. Only look at franchises that offer an opportunity for you to use your top skills.

4. Do good research. That includes talking to 10 or more franchisees.

5. Write a thorough and realistic business plan.

6. Hire an experienced franchise attorney who will look out for your best interests.

7. Don’t allow yourself to be rushed into anything.

8. Make sure those closest to you are on board.

In conclusion, while it can be scary to become your own boss, using the suggestions I included in this article will go a long way in lessening your fears, and may even increase your chances of success.

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