5 Steps You Need to Take Before You Buy a Franchise
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Recent headlines touting near-record low unemployment are everywhere. At 3.8 percent as of May 2018, the country hasn't seen unemployment numbers this low since April of 2000. Prior to that, you'd have to go back to 1969 when it touched 3.4 percent. According to the Bureau of Labor Statistics, there are more job openings (6.7 million) than there are job seekers (6.4 million), meaning anyone who wants a job should be able to snag one or more.
Low unemployment has many wonderful benefits. More people employed means stronger consumer confidence and more money being spent to grow the economy. Wages generally increase, with some reports expecting three percent growth this year. Employees hoping to further their careers are finding new opportunities to climb the corporate ladder, either with their current companies or other.
Yes, it's a good time to be an employee, but if you're tabling your dreams of small-business ownership to reap the benefits of traditional employment, you're making a big mistake.
Traditionally, franchise businesses will see an uptick in interest during an economic downturn. That's because downsized corporate executives too young to retire but too experienced to find what they want in a shrinking job market will look at franchise business ownership as a way to bridge the gap to retirement, create a family legacy and build the life they always wanted as an entrepreneur.
Unfortunately, in a good job market, aspiring entrepreneurs will often put their small-business goals on the back burner while reaping the rewards of higher pay and better employment opportunities. Times are good, the money is flowing in, so why change what's working?
The obvious answer is that all good things must come to an end, including this period of prosperity. Yes, the economy will contract again. Corporations will make sweeping cuts to their labor force. Opportunities for advancement in the job force will dry up and millions of talented, experienced employees will find themselves asking, "What's next?"
If that answer is small-business ownership through franchising, the smart play is to start preparing now. Here's how.
Take that bigger paycheck and improve your financial health.
It's easy to take those extra wages and use them to upgrade your standard of living -- but aspiring small-business owners should be using the extra income to pay down debt and build up a reserve of cash to launch your franchise.
Most people will need to take advantage of finance options to start their business, so whether they use a Small Business Administration loan or use a local lender, they'll want a strong balance sheet to expedite the process and ensure their loan is approved. Upgrading your car may be more fun, but upgrading your net worth will serve you better over time.
Use some of that vacation time to explore opportunities.
As the economy has improved and fear of being replaced has subsided, Americans taking advantage of their paid vacation has risen steadily. However, only 54 percent of Americans are using all of their paid vacation time.
Rather than give this time back to your employer, take a few days here and there to use for small-business exploration.
Use the time to read up on small-business ownership, drive around town to see what types of businesses your community could use. Schedule that lunch with your friend or family member already living life the life of a franchise owner.
No one says you have to spend every vacation day at the beach. Use some of that time to feed your interests of one day opening your own small business.
Make some meaningful professional connections.
When most employees scan their professional networks, they see lots of people in positions similar to their own, but few who are where they want to be. Instead of waiting for a period of job insecurity to start making inroads into the business community, reach out to some people who could help you start planning now.
Schedule meetings with your local chamber of commerce or office of economic development to learn more about the business environment in your area. Visit the International Franchise Association website to see what resources are available. Develop a relationship with a franchise consultant who can help you find a good opportunity when you're ready to launch.
Get input from your family and friends.
Periods of prosperity are ideal times to discuss your small-business ideas with those invested in your success. Discussing your next move with your spouse, your children or other loved ones while generating a good income allows people to have calm and rational discussions about the future while feeling secure in the present. Waiting until a period of financial insecurity to get going increases the chances of decisions being based on fear.
Being able to acknowledge that the current good conditions of your employment situation likely won't last forever, and the time to plan for tomorrow is now, will offer a sense of comfort to your family. You are already planning to ensure that the family remains secure through good times and bad.
Like most things, the first step is the most difficult. The order of the aforementioned steps you can take to further your entrepreneurial dreams isn't important. Youjust need to choose one and get rolling.
Decide you aren't going to let yourself get comfortable in a cushy job market. Write down a few ideas that could help you further your small-business goals. Choose a date and time to make some phone calls, have that lunch with a franchise owner you've been wanting to get to know or call a family meeting to discuss your thoughts.
Whichever way helps you break free from the comfort of your good situation to plan for what's next is fine. Pick an idea, mark your calendar and go!