Opinions expressed by Entrepreneur contributors are their very own.
Up to date on Dec 19, 2023. Initially printed on Jun 15, 2016.
As a franchise coach, it is my job to assist folks discover the proper franchise match for his or her wants, and to assist them efficiently navigate your complete franchise shopping for and possession course of. Through the years, I’ve seen all of it—the fantastic successes in addition to the horrible errors. As a coach, it is my job to provide folks high quality recommendation based mostly on my expertise and their ability set, however I can not pressure them to comply with it. Under are among the most widespread errors I see as a franchise coach, and how one can keep away from them when exploring franchise alternatives.
Associated: 8 Widespread Errors You May Be Making as a Chief (and The right way to Repair Them)
1. Selecting the fallacious franchise for you
The franchise you select should really match you so as so that you can succeed as a franchisee. Your abilities, way of life and placement preferences, monetary scenario and persona are all issues you need to contemplate earlier than shopping for a franchise. As an illustration, if you already know 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 loved ones, that is in all probability a nasty match. Realizing your self is not at all times so simple as that, however the higher the franchise match, the extra comfy—and profitable—you can be working your corporation.
2. Unwilling to decide to due diligence
Some folks 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 house owners. The important thing to being a profitable enterprise proprietor lies in making knowledgeable choices backed by analysis and exhausting work, not blindly following a “good feeling.” If you wish to see success, you’ll want to do your due diligence.
Associated: Why Adaptive Management Is the Key to Success Throughout Market Volatility and Occasions of Uncertainty
3. Falling in love
Some folks 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 enterprise mannequin made sense. He was going to get into this space of enterprise regardless. Thus, he solely needed to see the info that will assist his need to enter this trade, with out ever investigating the potential pitfalls. Once more, this isn’t a trait of profitable enterprise house owners.
4. Not constructing a strong P&L
It’s vitally essential to know the P&L—revenue and loss—associated to any enterprise you’re considering shopping for. You can not shortcut this course of. Do your analysis, communicate with present and former franchisees, and perceive the actual revenue and expense classes earlier than shopping for your corporation. It’s essential to know the financials earlier than stepping into the enterprise, in addition to the fee it’s going to take to realize the break-even level and generate optimistic money movement. In actual fact, this subject is so essential we devoted all of chapter 12 to this in The Educated Franchisee. As soon as you already know this and your individual monetary assets, you reduce the danger of economic hardship.
Associated: The right way to Estimate Benchmarks and Optimize Your Franchise’s Advertising Efficiency
5. Having unrealistic expectations
Some people suppose the franchisor will do all of it for them—that in some way a franchise is a silver bullet the place you may work much less and make extra with no threat. In actuality, the primary yr in any enterprise is difficult, franchise or not. While you purchase a franchise, it’s nearly assured that you’ll work tougher and make much less throughout that first yr. The franchisor will do what they’ll that will help you however, in the long run, it’s about you. You might be in control of build up your corporation to turn out to be worthwhile. You might be chargeable for your individual success.
All profitable enterprise house owners be taught from their errors, however the perfect at all times do their due diligence and keep away from many probably catastrophic errors within the first place. Which sort will you be?
