Franchising will boost small business growth
Businesses have faced unparalleled challenges over the last couple of years but with the UK finally moving out of the recession, now is the time for people to capitalise on opportunities for growth.
T here are many investment options available for those of us who haven't got their own winning business idea. Well established franchises should be high on your shopping list.
A franchise business should already have been tried and tested and, when you add in initial training and ongoing support from the franchisor, it is easy to understand why so many view franchising as an attractive alternative to setting up their own independent business.
If you are considering investing in a franchise then those that have a successful track record over several years and have prospered through the ups and downs of the economic environment are best placed to offer you the opportunity to build a successful business of your own.
The benefits of a supportive franchisor should not be under-estimated. A knowledgeable and experienced franchisor can share ideas and guide you through your business lifecycle.
Belonging to a network of businesses has many benefits for franchise owners including brand recognition, greater buying power and proven marketing strategies.
The opportunity to share best practice and to talk through your problems with other franchise owners is a valuable resource which should not be overlooked. Independent business owners often find it a lonely existence with no one to turn to when they need help.
The choice of franchises can sometimes be bewildering. Thorough research is essential to select the right franchise for you.
Banks with a specialist franchise department are often a good source of free, independent advice. I also recommend that you attend one of the British Franchise Association's franchise owner seminars to gain a better understanding of the benefits and pitfalls of owning a franchise.
Speak to as many existing franchise owners in the brand you are researching as possible. Ask for a list of all the franchise owners and don't let the franchisor cherry pick who you speak to.
By asking a series of carefully chosen questions you should be able to build up a picture of the franchise and how supportive they are to their network. Existing franchise owners will be one of the best sources of information to help you decide upon the viability of the business opportunity and whether it is likely to generate a good return on your investment.
Financial projections for the business are another vital assessment tool. Most franchisors will provide you with illustrations of possible trading performance, however it is up to you to dig deeper.
Find out what the financial projections are based upon and the assumptions that have been used. Do the figures reflect the average performance of existing franchise owners and if so are they regularly updated?
Figures produced a couple of years ago before the recession may bear little resemblance to what franchise owners are likely to achieve now. You need to research the local market conditions when compiling your own projections and it is always prudent to get an experienced accountant to check them over before you present them to the bank.
Before signing on the dotted line ensure there is a clear vision for developing the franchise and you are happy with the direction it is heading.
Get the franchise agreement checked and explained to you by an experienced franchise solicitor before you make the commitment to invest. The Lloyds Banking Group offers a franchise agreement review service in conjunction with a British Franchise Association affiliated solicitor at a discounted rate.
It's worth remembering that no franchise can offer you a guarantee of success. Some franchises provide better investment opportunities than others.
Choosing a well-established franchise model will give you a head start.
Self-employment can be a daunting prospect however hard work, determination and a large amount of common sense will take you towards achieving your business goals.
Reported by Richard Holden