Beat the recession by investing in a franchise opportunity
- Wednesday, August 1, 2012
The United States economy is slowly fighting back against the recession, but some people believe that the worst is yet to come. While there is no definitive answer or quick-and-easy solution to the nation's financial woes, the market is still ripe for entrepreneurs who want to embark on a franchise opportunity.
Franchising does not carry a lot of the inherent risks that come with opening a business because much of the trial and error of the startup phase has already taken place. If you are looking to beat the recession and take advantage of a small business opportunity, consider some of the following advantages of a franchise.
Established operating procedures
One of the riskiest parts to starting a company is the unknown scope of daily operations. Most owners and managers work frantically to establish a list of daily responsibilities, and sometimes critical tasks will not become apparent until after a few months of continuous work. Often, companies fold at this point because executives have spent too much time ignoring everything else.
However, a franchise requires none of the above. The parent company (and previous owners) normally provide a manual that includes explicit instructions on how to run the business. This typically involves everything from hiring procedures to end-of-month cash flow management. The weeks or months you would have spent figuring out these intricacies can now be dedicated toward other critical operations.
Another problem that startups frequently face is doubt due to a lack of investor confidence. This stems from reputation - how do you convince someone to sink money into a business with no accolades or track record? In the same vein, many companies only care about clients who give them the most money, and neglect any periphery customers who comprise a loyal base.
"Franchising is changing," said Mary Jo Larson, vice-president of Franchise Times Corp. "A lot of older systems are increasingly relying on bigger franchisees to operate their systems. Many of these franchisees are owned by private equity groups and more sophisticated investors that have a lot more influence with the franchisor than the traditional mom-and-pop shop."
Again, franchises avoid this initial phase altogether because the founding organization already has a proven and trusted reputation. Investors will be confident enough to grant your branch at least partial funding because they will understand you are part of a cherished corporation.