Owning a franchise isn't for everyone. Carefully deciding whether it's right for you starts with self-examination. Consider the following key points:
- Are you motivated to invest the time and energy--not to mention money--necessary? The first year of owning a franchise can be especially trying. The time required to get a business up and running, even a sophisticated franchise, is intimidating.
- Is your family behind you? Many franchises are designed for total family involvement. Even if you invest in one that isn't, you can't commit the time and energy needed without the support of every member of your family. Involve them in the decision-making process, and listen to all their doubts and concerns before you commit to a franchise.
- Have you evaluated your resources? Take out a pad of paper and jot down all possible sources of investment capital. Include not only cash, securities and other liquid assets, but also insurance policies, the equity in your home and retirement funds. Don't forget what bankers refer to as NAR and NAF ("nail a relative" and "nail a friend"). Your well-heeled friends and relatives could make all the difference, especially if you need a co-signature or additional equity pledged as a security when applying for financing.
- Consider that you may need to maintain a revenue stream while you establish the new franchise. Your spouse may want to land a job to make ends meet until your franchise is kicking out a salary, which may take a while. Talk to a banker and an accountant. Discuss what you are planning, and ask about sources of capital, loans, investors and angels.
- Are you ready for the physical challenge? This question surprises a lot of people. Depending, of course, on the type of business you get involved in, franchise ownership can be physically demanding. Your sleep patterns may change, and you may be on your feet 12 hours or more a day. Daily frustrations and the heightened stress of responding to unfamiliar challenges will draw on your deepest energy resources. In preparation, you should step up your exercise routine and stick to a healthy diet. You'll need every ounce of energy your personal fitness can deliver.
- Have you evaluated your dreams? Dreams provide the courage and drive that new franchisees need to make the leap of faith into business ownership. But you must transform your dreams into an action plan. If you dream of being wealthy, turn your attention to the steps it'll take to get there. If you start with owning a service business, research how much money it's likely to put in your pocket, and then determine how many of those businesses and how much time you'll need to achieve your dream. Use dollars in your calculations, and add time frames. Make notes about what you need to accomplish to make it to the next milestone. Before you know it, you'll have created what looks to others like a business plan, but to you, is nothing more than your dream path.