Why Invest in a Franchise?
Budding entrepreneurs are often met with the decision to either create their own business or invest in a franchise. This can be a difficult choice, but the benefits of being a franchisee are undeniable.
Rather than starting a company from scratch, franchises allow motivated individuals to build upon a brand that’s already established. This simple fact is enough to attract many who want to start their own business, but that’s not where the advantages of this route end.
By understanding the key reasons to invest in a franchise, you can make a more informed decision on what’s best for you and your life. Franchising might not be right for everyone, but the following information will let you know if it’s right for you.
When the question of ‘why invest in a franchise’ comes up, the most common answer involves how quickly everything can get started. There’s little or no need to figure out aspects like promotional campaigns, necessary tools and merchandise inventory. In some situations, not even a storefront is necessary.
The whole point of this business model is that everything you need is provided. Franchisors succeed only when their franchisees are successful. This means they have a vested interest in making sure you accomplish your goals. To this end, they give you all the necessities to hit the ground running.
Recent studies found that 92 percent of small business owners say the growth and survivability of a company is directly impacted by mentors. Enthusiastic individuals who believe they’ve got everything it takes for success often overlook the importance of mentoring. Unfortunately, this leaves them to learn everything on their own.
The benefits of a mentorship are not just anecdotal. Even though half of new businesses don’t make it past five years, a full 70 percent of those with mentors surpass this goal. When you invest in a franchise, you don’t have to go out searching for this type of help. It essentially comes ‘preinstalled.’
Franchises that promote collegial relationships and camaraderie within their ranks create an environment where mentorship is encouraged. This gives you access to professionals who have already experienced many of the ‘growing pains’ of running their own business. Insight of this kind can be invaluable for your success.
When you start your own brand, you’re basically the new kid on the block. No one knows who you are, and this won’t change until you get your name out there. Unfortunately, this typically means large marketing costs. In fact, the average expenditure for marketing can take upwards of 20% of a company’s annual budget in industries that are considered competitive (most any industry in this day and age tends to be competitive). According to a more granular survey published in the Wall Street Journal, companies in the consumer services sector can spend upward of 15% of their budget on marketing, and that is for established companies.
That’s a significant portion of your profits, but if you’re building a business from scratch, it’s a necessary expense. When you invest in a franchise, however, you’re becoming part of a brand that already has name recognition. Every bit of promotion done on their own behalf directly benefits your marketing strategy.
And the cost of marketing when starting from scratch does not tell the full story, because the other side is the expertise and keeping up with the trends in marketing and technology and social media, to name a few.
Additionally, most franchises provide marketing and branding kits to help you build a local presence. There are even companies that go the extra mile – like WIN Home Inspection – by providing comprehensive support that far exceeds industry standards, direct business training and cutting-edge and highly innovative marketing support.
When you don’t have to learn promotional strategies through trial and error, you have a much better chance of success.
As an example, the home inspection industry is very attractive (high margin, multibillion dollar, relatively stable) to build a business. Veterans, contractors, Realtors®, veterans, mid-level executives and contractors make up a significant portion of those who invest in a home inspection franchise. This is because these individuals tend to seek independence and flexibility.
When you invest in a franchise, you become an independent business owner. While you’re provided with the tools necessary for success, day-to-day operations still rest on your shoulders. Having the infrastructure, intellectual property and other tools of a national brand is undoubtedly beneficial, but it doesn’t mean that you aren’t your own boss.
Starting from scratch typically means you’ll need to figure out everything on your own. Unfortunately, the simplest of mistakes can be disastrous when building a brand. By having an infrastructure and entire community behind you, though, you can reduce the risks faced by traditional business owners.
When you invest in a franchise, you’re buying into a business model that’s already been proven to work. There’s no having to figure out the best way to build the brand – there’s already a successful track record to follow. Fortunately, the statistics bear out this logical fact.
Studies from the U.S. Census found that franchises in some industries have twice the average payroll of ‘made from scratch’ counterparts. This means they’ve been able to bring on more employees and pay them a more respectable wage.
You can also judge risk by looking at specific companies. The average gross revenue of established franchisees can be substantially higher than their initial investment. If you’re properly motivated, you can minimize the risk that small businesses face.
A bit of experience can go a long way when you invest in a franchise. The type of experience you think you need, though, is not always the type you actually need. When you consider the extensive training and foundational assistance you’re receiving from the franchise itself, other traits become far more important.
Veterans, for instance, have the leadership qualities, strong work ethic and teamwork mindset to make a franchise successful. Contractors have a solutions-focused mindset and are versatile, which are important traits to own and run your franchised home inspection business. Corporate professionals bring operational experience, a collaborative approach and an ability to quickly adapt to the table. Realtors® exhibit likability and enthusiasm, and the knowledge of their local community, which can prove valuable in starting and growing a franchised home inspection business.
Even if you’ve never worked within a given industry, the experience you bring to the table is often more than enough to achieve success. Focus on your drive for success, and let the franchisor focus on providing you with the skills necessary to attain your goals.
We’ve all witnessed the success of bigger companies across the country, especially when it comes to buying power. Instead of purchasing 50 units of a product for inventory, they can order 1,000, and their price per unit is exceedingly low.
This buying power with a franchisor is a huge benefit received when you invest in a franchise. You’re no longer shopping around for the best price on a single item. You gain the buying power of a business that’s part of an industry employing 9 million American workers.
The benefits of this type of purchasing power cannot be overstated. A full 65 percent of individuals with failed businesses cite financial mismanagement as the main reason for the demise of their businesses. It all comes down to money, and when you have the financial power of a franchise behind you, you’re in a much more comfortable position.
There are two primary roads you can travel to become a business owner. When you understand the benefits of franchise investment, it’s hard to claim that it’s not the best path forward. An established brand having your back is never a bad thing.
If you’re interested in starting your own franchise and for more information, please call (800) 967-8127 or email us at firstname.lastname@example.org and one of our experts will contact you promptly.