There is a lot to consider when looking to make the jump from employee to franchisee entrepreneur. Amongst concerns that come to mind for most are the economy, interest rates, access to staff, consumer confidence, election cycles and a myriad of possible scenarios, most of which are beyond the control of the individual, and generally macro issues that affect every business.
Something new that we are seeing is potential franchisee entrepreneurs creating their own barrier to entry by their expectations. It goes something like this: potential franchisee has decided that they want to be in business for themselves and have narrowed their search to a category or brand, when they find out that they are under-capitalised to buy into the brand or category they decide, “I’ll keep working until I have the funds”.
In my view these budding entrepreneurs are unnecessarily delaying their entry into franchise ownership. When you jump on the property ladder most people do not buy their dream house as their first, nor do you start you career and jump into your dream senior role – in both cases the path is not to sit on the side-lines but to develop skills, build equity, and benefit from being in the game.
The same approach should be applied to franchisee ownership and here are my top five reasons why:
Learn how to run a business
By jumping into a smaller business, the franchisee entrepreneur will develop skills and experience from owning and operating the business. Even if they are employed in a similar industry, there is no substitute for running your own business.
Learn how to get the most out of working within a franchise system
Being in a franchise is a unique business format. It’s not for everyone, and not everyone can really make the most of the system. By starting small, you can hone your skills and learn to work within a system. Franchises also provide the ability to benchmark – you can know how well you are doing against your fellow franchisees in that system.
Build an asset and create capital gains
Much like jumping onto the property ladder, by successfully owning and operating a smaller franchised business, a budding franchisee entrepreneur can build value and equity in the business and in turn create capital gains on exit. The latter can be the critical distinction versus working to build capital.
Reduce risk, increase your ability to fund in the future
Business is not without risk, and this is usually a major consideration for people investing into a franchised business for the first time. There is risk associated with business, as well as with an individual’s ability to own and operate a business. By starting in a smaller business, with a lower investment level, risks are reduced.
Additionally, if a franchisee can successfully operate a business within a franchise format, it will potentially assist them with funding a larger, higher investment level franchise in the future.
There is always more money, there’s never more time
Economic considerations will change over time, but two factors will always remain; there is always the ability to earn more money either as an employee or by owning and building your own business, but there will never be more time. So, if ultimately owning and operating our own franchise business is your goal, starting small and growing could be the strategy for you.
My question to you now is, “What are you waiting for?”