THE FRANCHISE BUYERS TOOLBOX
How do you work out whether a business opportunity is right for you? Our toolbox shows you how to get all the help you need
Did you know there are over 37,000 franchised units – that’s franchised shops, restaurants, mobile businesses and more – in this country? Or that some 27.6 billion dollars is spent in New Zealand franchises every year? Franchises make up a massive part of our economy, and help many people to get into their own business.
So if you’re looking at becoming your own boss, whether you want a one-man-and-a-van operation that makes the most of your practical side, a million dollar restaurant that rewards your people skills, or a building business that allows you to put your management experience to good use, you might consider buying a franchise.
But with over 600 different franchise brands in every industry you can imagine, how do you work out what will suit you best? It’s a big job and, as with any job, you need specialist tools to get the right result. But in this case, the tools are people and information. Here’s our guide to what should be in any franchise buyer’s toolbox – and how to use those tools to ensure that you really do get the business you want.
The first thing you need to do is decide what sort of business you are looking for. You need to work out what would best suit you and what you would want from it.
For a start, you need to think about what sort of business you actually want. You’re going to be spending most of your waking hours thinking about and working in your business, especially in the first couple of years, so it needs to be something that you enjoy. That might be something related to your previous experience, or it might involve a complete change.
If it’s related to your previous experience, great – you know the industry and know you want to go on working in it. Of course, owning your own business is very different from working for someone else, and may mean learning more skills – business management, for example. A franchise is a good choice, because it will give you training, support and systems in those areas.
If you’re going for a complete change, you might want to follow a passion (eg. for food or photography) or you might be motivated by a change of lifestyle (eg. getting out from behind a desk to mow lawns).
Either way, you want to look for a business where your skills will become real strengths. Do you prefer working by yourself or leading a team? Are you a ‘hands-on’ person or a ‘hands-off’ person? Are you a night owl or an early bird? If you’re an early riser, a late night pizza business isn’t for you. If you like a lie-in, you won’t enjoy being a baker.
Of course, finding what you want to do is one thing – funding a business is another. You probably don’t keep money in your toolbox, so where will you find it?
Franchises are available in a huge range of industries, and vary in cost accordingly from under $5000 to over $1 million. You may have savings or investments to draw upon, an inheritance, a redundancy payment or a Lotto win. In many cases, though, franchisees require some sort of additional finance. This could be funding from a family member or, in most cases, funding from a bank.
What matters is not how much you have to spend, but how much debt your new business can afford to service. Don’t try to borrow more than your business can repay – lack of capital kills a lot of businesses. Many franchises will insist on your having, say...
This article appears in full in the latest issue of Franchise New Zealand magazine (Year 27 Issue 1). Read the entire article in the digital magazine or, if you live in New Zealand please send for your free print copy.
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