Make The Jump

Five days a week, at least half of your waking hours are spent working for someone else. If that works for you, that’s great – but if, like many people, you want to feel that you have some control over your future then you might have thought about making the jump into buying a business.

Owning your own business isn’t an instant route to happiness and riches, of course, but it does enable you to make some important choices:

- where you work

- what sort of work you do

- whether you work from home

- when you work

- who you work with

And it’s not just a dream – it’s a very real option. But leaving the security of paid employment is a bit like jumping out of an aeroplane: it might give you a massive thrill but, if you’re going to do it, you want to make sure that you have a good parachute and know how to use it. The first time you do it, it’s also better to be in tandem with an instructor who’s done it many times before. That way, if anything does start to go wrong, they can put it right before the consequences become too serious.

For the first-time buyer, jumping in tandem is what franchising is all about. Starting a new business is hard. You need an idea, a viable business model, a reputation and the right equipment and connections to get you started, You need finance and you need customers. You need to be good not just at doing whatever you do, whether that’s fitting windows or making coffee, but at running a business: marketing, managing cashflow, pricing and negotiating, to name a few key skills. Not many people have all those skills when they start, which is why many small businesses never really get off the ground.

Buying a franchise, on the other hand, means you’ll get the training, systems, marketing, help and support you need to have the best possible chance of success. It also means that you have far greater choice available in terms of what you do and where you do it. If you want to get out from behind your desk and work in the open air, you can. If you want to leave the big city and move somewhere that will offer your family a better lifestyle, you can. And if you want to invest your talent in something that will increase your own net worth rather than someone else’s, you can do that too. A franchise enables you to take your experience and abilities and channel them into something new.

Many people are surprised to learn that something like 80% of franchisors say ‘No experience needed’ when they are looking for franchisees – and they mean it. In fact, some actually say that they prefer new franchisees not to have specific experience in the industry concerned so newcomers can learn the franchise’s systems without having to unlearn conflicting practices first. It’s just a question of matching your abilities, goals and attitude to the right opportunity.

Trained to succeed

Over the past 25 years, we’ve talked to hundreds of people who have changed careers through buying a franchise: bankers who have bought cafés, IT experts who build kitchens and fitters who took up lawnmowing. In the following pages, you can find corporate execs turned restoration experts, launderers turned hairdressers and teachers who run commercial cleaning businesses. In some cases, in just a few years they have gone from knowing almost nothing about the industry to winning awards for their performance.

How is this possible? Well, franchisors select franchisees based on ability rather than experience then train them in exactly what they need to know to run their own business. Exactly what this training looks like will vary according to the complexity of the franchisee’s role and the degree of familiarisation required with new equipment and/or systems.

For example, a training programme designed to help you run a pizza franchise – where you will be producing product, recruiting, training and managing staff working shifts, running a retail and delivery operation, and complying with health & safety requirements – is going to be rather longer and more detailed than one aimed at a windscreen repair owner/operator.

But whatever the technical requirements, the training provided by any good franchise should also cover the administrative, financial and marketing tasks required to run a business profitably. It should provide the systems to help you do that, too: many franchises these days provide quite sophisticated tools to help you manage your time, boost your performance and compare your performance with other franchisees. All this provides a level of support that independent business owners can only dream of.

Of course, the nature of any training programme will depend on a franchisor’s resources, size and experience. In young franchises, training may be carried out by the franchisor themselves, while established franchises will often have a team that specialises in training new franchisees in a purpose-built location. In some cases, new franchisees may even be trained overseas in Australia or the US. Whatever the training, it is likely to combine some classroom time with ‘on-the-job’ experience in a company-owned outlet or possibly with an experienced franchisee.

Support from the start

Once training is completed, the new franchisee is theoretically ready to run their own business. In practice, there is another stage to go through – opening the business itself – which requires the detailed input and support of the franchisor. This can be divided into two types of assistance: business preparation and personal preparation.

Business Preparation

In the case of a premises-based franchise, the location has to be selected, designed, equipped and stocked to the franchisor’s specifications – think of it as packing the parachute and checking the equipment. For this reason, the franchisor will usually be heavily involved in the process. Assistance may cover the areas of:

-          Site selection

-          Lease negotiation

-          Premises design and fit-out

-          Initial stock ordering

-          Staff selection and training

-          POS and IT set-up

-          Opening promotion

Where the franchise is a mobile or home-based one, preparation will usually include:

-          Vehicle leasing or purchase

-          Signwriting

-          Equipment

-          IT systems

-          Initial stock & supplies

-          Office set-up

-          Initial market promotion

Personal Preparation

No matter how well a new franchisee performs in training and work experience, opening your own business is inevitably a nerve-wracking time. This is the business in which you have invested and on which you are going to be relying. You’re about to jump out of the plane – nerves are normal.

Although this is a new experience for you, in most cases the franchisor will have done this many times before. That is why they will usually supply an experienced field support person to work with you in your own territory both prior to and immediately after opening. They will help to reduce your nervousness by ensuring that everything is set up properly so that you can apply your training. Once open, expect the field support person to stay with you for long enough for you to feel reasonably comfortable operating on your own. They are there not to run the business for you but to ease you into independence.

The amount of time that this takes will vary enormously. In food or retail businesses, a week or so of on-site support before and after opening would be quite usual. In some franchises – particularly service-based ones – the training and opening periods may overlap if, say, the franchisor’s representative goes out to meet prospects with you and helps secure your first clients.

For yourself but not by yourself

The process of turning a novice into a competent business person doesn’t end there, however. As the franchisee becomes more comfortable with the day-to-day operation of their business, so they start to develop greater independence. The person who felt the need to ring their franchise support person six times a day at first may soon be down to one call a week or less. Once they feel confident and able to cope with the day-to-day, that’s when they start to look for opportunities to grow – which requires a whole new level of support.

Some examples of services that franchises regularly provide on an ongoing basis include:

Field visits These visits can be incredibly valuable. While part of their function is to review each outlet to make sure it is being run in compliance with set-down procedures and systems, the major focus is on helping the franchisee build their business – finding opportunities for improvements in sales, service and cost control. They also provide an opportunity to resolve any problems and queries, and share feedback. Each visit should result in a constructive evaluation.

Marketing & Merchandising Most franchises have a national marketing fund to which franchisees contribute. The franchisor administers this and arranges national marketing, often in consultation with the franchisees. There may also be a requirement for individual franchisees to operate approved local marketing programmes in their area.

Ongoing Training This ensures that franchisees and their staff are kept up-to-date and provides an opportunity to share solutions to common problems. It not only helps maintain consistency of standards throughout the network, but can also build relationships with other franchisees and ensure everyone feels part of a network. Running a business by yourself can be a lonely experience, but being part of a franchise means always having someone to share your triumphs and disasters with. 

Purchasing A sizeable franchise can negotiate good bulk-buying arrangements not only on product but on services such as insurance, telecommunications, IT, fuel and even on financial services such as credit card and EFTPOS and borrowing arrangements. In some franchises, the discounts available can recoup a sizeable portion of the ongoing franchise fee (royalty).

Management & Business Advice Experienced franchisors are increasingly providing assistance in areas such as goal setting, cash management and exit strategies. ‘Think of it like having your very own business coach or mentor,’ says one experienced franchisee. In addition, standardised computer systems make it possible to ‘benchmark’ your business against others in the system, enabling you and your advisors to see at a glance what you are doing well and where you might find room for improvement.

Compliance With increasing legislation in areas such as health and safety making life more complicated for the individual operator, being part of a franchise that works out systems for you can be hugely valuable.

Product Development While franchisees focus on the customers, franchisors focus on the future to ensure that products or services are constantly improved or replaced where appropriate. The franchisor will also monitor the competition and advise franchisees of any developments.

Staff Matters Your franchisor may provide assistance in the recruitment and selection of staff as well as advice on pay rates and contractual matters. Hints on how to keep staff motivated and reduce staff turnover also help the franchisee maximise profits.

The right attitude

It’s clear from the above that for anyone looking at leaving a job behind and moving into their own business, franchising has a lot to offer. You’ll have the support and guidance of the franchisor behind you, and you’ll be provided with systems to help you handle most of the practical obstacles along the way. You won’t have to create products or services to sell, won’t have to work out where to source them or how to price them, and you won’t have to start advertising from scratch – you’ll have the benefit of an established brand name that will bring customers to your door.

But the success of your business will still depend very much on your own efforts, and that’s where your own determination and commitment matter more than anything else. Franchisors and advisors alike say that the biggest single obstacle which faces people moving from employment to self-employment for the first time is the need to change your mindset from ‘doing a job’ to ‘managing your own business.’

‘There’s more to it than just getting used to the idea that you won’t be getting a regular pay cheque every week,’ said one. ‘You have to accept that if you want your business to grow, it’s up to you to grow it, and if you have a problem, it’s up to you to fix it. With a franchise, at least you have someone to turn to for advice, but you have to make that mental shift to get the best out of the opportunity.’

Who’s behind you?

The other key factor in your success, you might be surprised to learn, will be the extent to which your family and friends support you. As one franchisor puts it, ‘Franchisees who have the active support and understanding of their family in establishing their business will out-perform others. Where the franchisee’s family is unsupportive or opposed to the business, it will almost always turn to custard.’

It’s something which was confirmed in a major study carried out by the highly-regarded Franchise Relationships Institute a few years ago – in fact, the study found that Family & Social Support was three times more powerful in predicting franchisee performance than any of the other characteristics measured, including practical intelligence, service orientation, sales potential and drive for success.

Don’t expect it to be easy

Moving from employment to self-employment isn’t exactly a walk in the park – there are too many things to think about. And there are risks, too: as one lawyer put it to me recently, ‘I hate seeing adverts saying “Be your own boss.” Owning a business means responsibility as well as freedom, so if “sacking the boss” is your main motivation, don’t do it. When you’re employed, if you’re made redundant, you lose your job. If your business fails, you can lose your job, be made bankrupt and lose your house!

‘You have to balance the risks and rewards, and if you choose the right business and take the right advice, buying a franchise can help you do that.’

A risk-averse friend of mine once declined the opportunity to make a parachute jump, saying: ‘Why would I want to jump out of a perfectly good aeroplane?’ It’s a fair point, and many people feel the same way about leaving a job to work for themselves.

But if you do want to do something different, own your own business, live and work where you want and potentially be much better off than before, franchising offers you the chance to do it with real help and support. You still need to make the jump, but you’ll be doing it in tandem with someone who’s done it before. That can make the difference between hitting the ground – or hitting the ground running.