The Responsibility of Business Ownership as a Franchise Owner

Written by Daniel Cargille Monday, 11 April 2011 14:03

It's a sad statistic but approximately 40% of small business will fold within the first 5 years. The remaining 60% aren't guaranteed at that point to stay open but they close or move for various reasons - often to change hands or be sold off. These statistics however show that there's a good chance a business owner may fold if not properly prepared for launching and operating their businesses.

It's a sad statistic but approximately 40% of small business will fold within the first 5 years. The remaining 60% aren't guaranteed at that point to stay open but they close or move for various reasons - often to change hands or be sold off. These statistics however show that there's a good chance a business owner may fold if not properly prepared for launching and operating their businesses.

Whatever your end goal or exit strategy, you've got to keep your business running until your turn comes up. To reach that ultimate goal you should have a living strategy in play that constantly evolved and changes as other factors shifts (economy, customer preferences, products, supply and demand). The road to success is paved with failed businesses eaten by poor planning - you need to prepare in order to navigate the most common issues franchise owners face.

Why Poorly-Planned Franchises Fail

It would stand to reason that they likely fail from poor planning but it does go beyond just "poor planning". Two of the most common reasons for business failure:

1: The business is poorly managed from the word "go" because the individual(s) operating that business lack the skills necessary to operate the establishment. If you don't know your business, and you don't understand the products or services, then you will have a difficult time communicating the value to not only your customers but to your employees as well. It's also difficult to train people on best practices when you don't understand them yourself.

2: The owner(s) underestimate just how much capital it will take to start the business and keep it running. It's extremely easy to burn through money trying to set up an establishment. Most businesses run in the red for the first year and barely break even. Undercapitalization can tear down a business or franchise extremely fast.

Being prepared is the first step in avoiding those common pitfalls. Here are a few tips that will lead you toward developing a sound strategy to get that franchise open with far less risk to yourself or your investors and partners.

The Pros and Cons - No matter the franchise choice, you should have a pro and con list going. This will help you weight the challenges and rewards that come from opening a business. Likewise, the comparison chart can help you compare the individual franchise opportunities that interest you. Making the most informed choice that best fits you having you stepping in the right direction for launch.

The Roles you Expect to Play - You can't be expected to micro-manage your business forever but when you are planning the launch and trying to keep things rolling once the doors open you will be wearing a lot of hats. Prepare for each of those roles and know what will be expected of you and what you'll need to delegate to be successful.

There's a lot to consider when you're considering going into business for yourself. Don't make the mistake of underestimating just how much time and money you'll have to put in (and sacrifice) in order to create a franchise business that sustains you as well as the lives of your employees and their families. During the launch period (the first 1 to 3 years) you'll be the busiest (personally) that you've ever been in your life.