Buying a franchise or a business for sale is one of the biggest decisions you will make in your lifetime. To help you ensure the decision, buying, and ownership phases go smoothly, here are 5 tips for your consideration. This is certainly not an exhaustive list, but one that will help you get on the right path toward owning your own business!
1. Make Sure You are Financially Prepared
It is very wise to have at least enough money to support you and your family for one year assuming no income for that first 12 months of business. This is especially important if you are staring a new franchise or buying a business that is currently not making money. This would be in addition to the cash you invest in buying the business. New franchises and businesses may take 6-12 months before they start generating enough positive cash flow to start providing you a salary. Obviously this can differ depending on the type of franchise you purchase, so it is best to consult the franchise for their best guidance on this financial planning topic. Existing franchisees can also provide good information on what their experience was like during the “start-up” period. Always best to be conservative with your financial projections then have overly optimistic estimates that end up putting you in a financial bind.
2. Is Your Family Supportive & Prepared?
It is recommended that you share all of your plans and aspirations with your immediate family and get their honest feedback. Discuss their concerns, questions, and feelings and make sure everyone feels comfortable before moving forward. Owning your own franchise can be extremely rewarding, both financially and professionally, however, it does require lots of hard work and long hours. Make sure your family understands the commitment and you establish a realistic “work-family” balanced plan. It is important to get the “buy in” and support from key family members (i.e. your spouse or partner) — you don’t want to alienate them from the beginning. Having them on your side is going to be a huge part of achieving success. Increase the amount of communication as you move down the ownership track — this will help you adjust the expectations and schedule as needed.
3. Talk to Existing Franchise or Business Owners
What better way to learn firsthand what being a franchise or business owner is like than talking directly to some owners yourself. Once you have narrowed your search down to 1 or 2 types of industries, make a list of franchises in your community or nearby that fall into those categories. For example, if you have decided that the Home Inspection-Home Services industry is one that you are very interested in — jot down some local franchises that fall into that industry category. Try to pick a set of franchises or businesses that have been established and you believe to be quality operations. No sense talking to “fly by night” companies. In some cases, you may have better luck contacting owners who are not in your immediate area as they won’t view you as potential competition. Once you have a list of 5-10 in each category, take the time to contact each one and set up a time to meet in person (if they are in close proximity to you) with the owner. This will likely take several calls, so be persistent and patient. Once you have some appointments set up, make sure to develop a list of questions (write them down), that way you are prepared and make efficient use of the owner’s time. Focus the questions less on money issues (strangers may not be as open when you talk about their income) and more industry trends, operational issues, their experiences, recommendations, etc. Make sure to follow up with a “thank-you” card and phone call after your visit. If you end up buying a franchise or business, they may be a potential source for additional help or support!
Business ownership can be hugely rewarding – it is just important to “measure twice and cut once” as the old saying goes — this will ensure that you purchase the right business or franchise at the right time and place. We wish you all the best and would welcome your comments, thoughts, and/or questions. Thank-you.
