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Edmonton Business Brokers – Tip of the Day

The Success Small Business Franchisee – A Solid Plan for Start Up.  By Nigel Mayne

In the last 30 years, the franchise has grown into one of the most recognized and reputable business models on a worldwide basis. According to the International Franchise Association, there are over 767,000 franchises in the U.S. alone, providing nearly 10 million jobs and contributing $624.6 billion in business annually. In the UK, the franchise industry is growing at twice the rate of the entire economy according to a NatWest/British Franchise Association study released in 2009.

While business ownership has traditionally been just a dream for many, franchising has opened the door for ordinary people to build their own small business and reap the rewards. But how does that ordinary individual cope with the challenges of a business start up? Shopping for the right franchise is in itself a steep learning curve for many new franchisees. One way to facilitate the process is by searching out the guidance of experts on the process of qualifying as a potential franchisee and in taking the first steps as a new business owner.

Here are some suggestions on actions you should have underway when signing up for your new franchise:

Turn your business plan–the same plan you used to obtain the financing that qualified you as a franchise buyer–into a detailed blueprint for your first two to three years in business. Ask the franchisor for any checklists they have for new franchisees, along with their estimated timeframes. Year one should have high-level detail plotted out with Years two and three being more big picture.

Milestones to mark out include:

  • Final negotiation of the contracts for the desired location, equipment and fittings. If this is your first lease negotiation, spend quality time understanding all your rights, obligations and additional start up costs, and review them with your legal advisor.
  • Overlay all your task related activities with the timetable of the training requirements of the franchisor. This will help you set the first major milestone of opening day. Working backwards from this major event, you will be able to determine the desired lease date and the date by which you should have your key staff on board.

By now you will have easily identified a number of the steps that need to be taken concurrently.

  • Turn to your franchisor for any assistance in marketing and promotional activities to make your opening day a grand success and keep your new customers coming back for more. This key event is worthy of a detailed plan of its own.
  • Now, budget for each milestone in rough terms, so that you have the bones of cash flow control that you can flesh out as you learn more during the franchisor training sessions.
  • Allow a slippage factor in all milestone dates and budgets.
  • Your detailed business plan should be updated or adjusted two or three times a year or immediately should circumstances change.

If at any stage you feel a little overwhelmed by processes that are new to you or perhaps not your greatest strengths, remember that just as you don`t skimp on the prime location nor should you skimp on having the right people in the right places in your new business venture. Recognize your business weaknesses and compensate for them in the quality of your business relationships and key staff. Whether it is the actual hiring of staff, setting up your back-room operations or dealing with the detail of cash flow management, you must meet these challenges with the same energy, leadership and enthusiasm you have for the franchise itself.

The risks of failure in the small business franchise are the same as those in any new and legitimate business model and range from issues relating to the personality and strengths and weaknesses of the business owner to intellectual property matters, general contract disputes and failure to attend adequately to fiscal responsibilities, as well as misrepresentation and commercial fraud by third parties.

A solid plan for start-up and year one goes a long way to laying out the areas where the new franchisee needs to call on expert guidance.

Brought to by:

Dwight Lester, Performance Business Brokers, Edmonton Alberta

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