How to Start a Small Business or Franchise

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How to Start a Small Business or Franchise

So you have decided that you are going to start a new business. Congratulations – starting a new business is one of the best steps that anyone can take if they want to enjoy a higher level of financial freedom and live the kind of life that they want. A commonly quoted concept is that while only one in ten of all new business are successful after the first year, the people who run those businesses are able to make ten times as much as the people who don’t own their own businesses. This fact may or may not be true depending on the specific kind of business that you are talking about and the current state of the industry and the economy; however the basic principle is sound – if you want to put yourself in a different class as far as making money, owning your own business is the only way to go.

One of the possible routes that many first time business owners go is the way of the franchise – this is a way of getting help with your first business by immediately taking on a name that people have experience with and trust buying from. There are a lot of other benefits to going with a franchise, as you will see, but there are also down sides. A benefit besides the trusted brand name is that you receive help with your business planning, your strategy and answers to questions that you may have about adapting the business to the local market. Another one of the various benefits to running a franchise business is that when you run a franchise business your marketing is largely taken care of by the franchise company – the company which owns the brand and which spends hundreds of thousands of pounds on advertising every year to make people more aware of their identity and products.

You will also be able to enjoy a higher level of customer satisfaction in many cases, because the experience that you are offering the customer will be something that they are expecting and as long as you deliver a good product with the quality that people know and love they will be happy. Consistency is a big part of what people go to chains for and you can achieve consistency and live up to people’s expectations by simply following the precise rules and techniques which the chain management at the franchise headquarters will offer you. In many cases you will be contractually bound to operate within certain limits and create the products in a certain way / sell them in a certain way, etc. because the franchise company wants to keep its brand strong and that means having their entire set of businesses act the same.

This kind of strict control can be a turn away for some new business owners who want to be able to make their own decisions, but it can also be one of the strongest points in favor of going with the franchise business as you can rely on the franchise company for a lot of the management help and know that the way that you are running the business is a time tested and proven strategy which has worked for hundreds or thousands of other locations and is highly likely to work where you are. The franchise company will also usually help you to get the best deals on supplies as well as negotiate with all kinds of local institutions and set up the business loan through your bank which will put the monies you need for starting your business within reach that much easier.

Of course many people are perfectly successful with business models which they develop themselves – and many of the same issues apply for people who are creating their own new businesses as people who create new instances of franchises. For example, you are faced with a lot of the same start-up costs whether you are running a franchise or a business that you thought of yourself – you will need some kind of place for the business to be located, which generally means that you will be paying a lease or purchasing property and that you will be spending money to put together some kind of storefront and all of the furnishings and materials that you need for the business to look and feel right.

In the months to come you will also be paying for a staff, paying to train them (or training them yourself), paying for utilities, paying for any kind of repairs or upkeep that the location needs, and generally looking for any way that you can to cut costs in the days before the new business even opens its doors to the public and starts to serve its first customers. These first few months are what people save up for – the costs can quickly spiral out of control unless you have done your research and thought of every possible way to reign them in. A combination of spending enough time on advance negotiations to get the answers that you need for local savings, and a mind flexible enough to find the cheapest possible solution to a problem will help you to get through the costs of beginning a new business.

Your first month of operation will help you to determine what works and what doesn’t work about your approach. If you are able to make a profit on your first month, then chances are pretty good that you will be able to be a success in the next month and the month after that. In the beginning you will want to set yourself small goals – be profitable on this day, be profitable for this week, and be profitable for this month, and so on until you get past that major hurdle – the first year which separates the wheat from the chaff. If you can make it to the one year mark then you will have seen all of the things that your environment is likely to throw at your business; differences in people’s behaviour from one season to the next which have an impact on your business will be identified and you will either find ways to adapt (and succeed), or not.

What kind of tips are there for people who are starting new businesses to make sure that they make it past these hurdles? There are a few things to remember – whether you are running a franchise business or your own idea, you should make sure to cut costs in any way possible, starting with the largest cost that you can identify. The single largest ongoing cost to your business is usually the lease. If you can put together a business which does not need a leased space to operate (i.e. a home business) and have a hope of it being as successful as a business which requires a fixed office or storefront location, then you should go for it. If there is a way that you can adapt a business concept not to require a leased space then you should make the effort to get along without it. Only lease a location if you have no other options, because not only will you be paying a lot each month, you will have to pay for upkeep and maintenance.

Negotiate effectively with everyone who you encounter and create business relationships where you can become a favored client and get the best prices on the supplies that your business relies upon. If you are saving money on your day to day supplies you will see the savings and the profits stack up over time. This money is available to all business owners who are willing to put in the time to ask around for the lowest prices and find out just how low most people are willing to go. Eliminate any costs that you can and try to find ways to turn your variable costs into minor costs and to lower the amount of your fixed costs (the ones that you can’t eliminate entirely no matter what).

Finally, don’t go overboard on marketing your business, but make sure that people have ways to know what you are doing. The number of marketing opportunities that you receive will probably be far in excess of what you actually need, and you should only spend money on the marketing techniques which bring in money in the form of sufficient customers to justify the expense. The only real way to find out what works and what doesn’t is to experiment, but by using a little common sense (think about how you learned about businesses which are similar to yours) and paying close attention to how your sales and profits ebb and flow you can find out what is having the greatest effect on your business.

Use these tips wisely and stick to your resolve to be successful in creating your own business or a franchise business. Consider all of the possibilities that are open to you and your personal goals and choose the path that is best suited to your life and ambitions.

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