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Entrepreneurs: Is It Right For You?

Entrepreneurs: Is It Right For You?
Business ownership can be one of life’s most rewarding experiences – under the right circumstances and at the right time! It’s not necessarily “better” than having a job – it’s just different. For some, self-employment is the ideal career solution. How about you?

The exercises below are designed to help you ask the “tough questions,” and quickly discover whether self-employment would be right for you or not. So, take out paper and pen – or get comfortable in front of your computer – because you’re about to do some important “homework!”

If you’re seriously considering the self-employment option, there are two main questions to ask yourself:

1. Is self-employment potentially right for you?

2. If so, which of the four paths to business ownership would be most appropriate for you?

Let’s address both of these important questions.

In the world of work, you have two main career paths: Self-Employment and “Getting a Job.” You’ve probably already gone the “getting a job” route. If you’re reading this article, chances are that you’ve found your jobs unsatisfying. So, now you’re probably asking yourself, “Could self-employment be right for me?”

The following three questions will provide some direction:

1. Why are you exploring entrepreneurial alternatives at this time?

2. Rate your desire/motivation/commitment to have your own business, 1 to 10 (10 being the highest)?

3. If you could land the ideal job OR start your ideal business, which would you choose TODAY?

Focus now on the first of these three questions, because you must first understand your core motivators:

– What’s your WHY? (Lifestyle, income, image/prestige, leave a legacy, control, build equity, self-expression, independence, make a difference, passionate interest, etc.??) Unless you identify and hold onto your deepest need and desire, you will not have a strong likelihood of succeeding. So, spend some time writing about your WHY!

———————————-

There are Four Paths to Business Ownership:

1. Become a Consultant

2. Buy an Existing Business

3. Start a New Business

4. Buy a Franchise

Below, you will see the “unique considerations” for each of these entrepreneurial pathways. Take some time to answer all the questions in the four categories.

BECOME A CONSULTANT – UNIQUE CONSIDERATIONS

– What markets will you serve?

– What services will you offer?

– Who will be your competition?

– How will you price your services?

– How will you market and sell your services?

BUY AN EXISTING BUSINESS – UNIQUE CONSIDERATIONS

– What type of business do you want to buy?

– How do you envision your own role?

– How will you finance the purchase?

– What will you expect of the seller?

START A NEW BUSINESS – UNIQUE CONSIDERATIONS

– What markets will the business serve?

– What products or services will you offer?

– Who will be your competition?

– How will you market and sell your products or services?

– How will you finance the business?

BUY A FRANCHISE – UNIQUE CONSIDERATIONS

– What type of business do you want to be in?

– How do you envision your own role?

– What will you expect from the Franchisor?

– How will you finance the purchase?

Go back now, and review all your answers. Then address the questions below, as thoroughly as you can.

What are your “Pros and Cons” for each entrepreneurial option?

1. Become a Consultant

Pros:

Cons:

2. Buy an Existing Business

Pros:

Cons:

3. Start a New Business

Pros:

Cons:

4. Buy a Franchise

Pros:

Cons:

In reviewing this brief list of “Pros and Cons” for each of the four business options, which choice seems best for you right now? Why?

Another way to determine if self-employment could work for you is to consider your own qualifications and preferences. Many people THINK they could successfully own and manage a business – but in reality, this takes a particular kind of person with a specific set of skills. This section will help you do an honest self-assessment.

YOUR QUALIFICATIONS FOR OWNING A BUSINESS

The main categories of ability include:

– Marketing and Sales

– Financial Management

– Operations and Administration

– Human Resources

– General Management

For each category above, answer these questions:

– What results will the business require each year to become and remain successful?

– What education, training or experience do you have to indicate that you will be capable of producing desired results?

– Are you personally interested in, and willing to do, the required tasks?

– If you do not plan to lead specific parts of the business, who will manage them, and how much will you need to pay those people?

Every business has its challenges, but some of the biggest challenges of self-employment often come from “the inside.” Here are some of the most common personal issues faced by new entrepreneurs.

PREDICTABLE CHALLENGES

– Do you feel certain or doubtful about becoming self-employed?

– What are the major challenges or obstacles you will face?

– What are your biggest concerns or fears?

– What questions or issues do you still have?

There are definitely answers to your questions, and there is help to get you through the transition effectively!

Here are five more questions for you to consider:

1. Two years from now, the qualities that you want most in your work/career are:

2. Will you have those qualities in your work if you continue doing what you’ve been doing?

3. If not, what changes must you make in order to make these qualities a reality?

4. Could business ownership or franchising help you create these desired qualities in your work/career? How?

5. If you’re still interested in business ownership, what are the next steps you will take (include approximate dates for completion):

If these exercises have made you decide that self-employment is NOT for you, that’s actually a positive outcome. Think of all the time, frustration and money you’ll save by not going into business! On the other hand, if the questions above have crystallized and clarified your intention to own a business, then nothing should hold you back from the great entrepreneurial adventure.

May you achieve success greater than your dreams!

April 17, 2014 Today's Business, , , , , , , 1 Read more >

Entrepreneurship: What is It and What Does It Takes?

Entrepreneurship: What is It and What Does It Takes?

In discussing entrepreneurship and writing articles on the subject, I have found that it aids understanding when we begin by agreeing on exactly what the word means to us.

 

Entrepreneurship is the process of creating or seizing an opportunity, and pursuing it regardless of the resources currently controlled. The American Heritage Dictionary defines an entrepreneur to be “a person who organizes, operates, and assumes the risk for business ventures.”

 

These are rather abstract concepts for a person just beginning to consider whether they ought to start a business rather than take a job, or leave a secure job for a chance at greater self-fulfillment. Let us try to refine our understanding of entrepreneurship by asking some more specific questions.

 

Is everyone who runs a business an entrepreneur? Many would not consider the newspaper carrier, shoeshine person, and grass cutter entrepreneurs, though these are often the youthful pursuits of those with an entrepreneurial bent.

 

Does it matter whether the business is merely part-time? Whereas some part-time activities are basically hobbies, or undertaken to supplement income, some entrepreneurial ventures can be tested in the marketplace on a part-time basis.

 

The path to an entrepreneurial venture might begin by earning a salary in the business one expects to enter, while learning more about it, and waiting for the opportune time to go out on one’s own. This time can be used to develop a support network, professional and personal, and generating ideas to “bounce off” people whose opinion one respects.

 

At what scope does self-employment become a venture? The primary objective of many self-employed people is merely to employ themselves (and others if necessary) at a moderate to good salary; some are even willing to eke out a living to do what they enjoy. This approach is often referred to as a “lifestyle” business, and is generally accompanied by little, if any, plan for growth.

 

These questions are intended, not to develop a precise definition of

entrepreneurship, but to help us understand our attitude toward its many forms of expression. We may each answer these questions differently, yet all answer appropriately within our own frame of reference.

 

Entrepreneurship is more an attitude than a skill or a profession. Some of us may prefer a corporate or public service career path, but many would choose an entrepreneurial opportunity that “feels right.”

 

Would you consider a person who inherits a business an entrepreneur? From the point of inheritance on, it is their own money and financial security at risk. They could possibly sell the business, invest the proceeds in blue-chip stocks, and live off dividends. Some might consider managing a personal stock portfolio for a living as an entrepreneurial venture.

 

Would a person who inherited a small or marginal business, then took it to new dimensions be considered an entrepreneur? The inheritor could have tried merely to keep it going, or even to pace the business’ decline to just carry them to retirement. In a family-held business, long-term success is often a central goal.

Over the years countless institutes and individuals have asked the million dollar question. What makes an entrepreneur an entrepreneur? What traits or characteristics are inherent to a successful entrepreneur and is one born with those traits? There’s great news! Successful entrepreneurs are born every day!

Some people believe an entrepreneur is born while others believe an entrepreneur can be taught. Some believe an entrepreneur is like an artist – either you have it or do you don’t. Some see entrepreneurs as leaders that are focused, disciplined, competitive, and charismatic, while others see them as huge risk takers. And all of these analogies are right to some degree.

It’s true all successful entrepreneurs share a few qualities and skills that allow them to be successful. These inherent qualities can be taught; but they often seem to be an inherent driving force that sends individuals down the path of being in business or formally training to for a career in business.

Entrepreneurs see the world differently. They have the ability to see the world as a system. They have the ability to see something in its entirety and as an integrated unit, and they seem to possess the ability to see opportunity within the global picture. They are what is called a system thinker.

There are other characteristics they possess. Entrepreneurs possess an overpowering need to achieve and tend to be very competitive against themselves. They are continuously trying to outthink themselves and others and they are constantly looking for the edge. This is a process that occurs as naturally as breathing and is a driving force behind most entrepreneurs.

They have the determination and dedication to follow through with commitments and they always appear confident and in control. You’ll notice they also possess a positive atmosphere. They are of the mindset “I can,” and “I will.” They are not afraid of failure because failure is not in their vocabulary nor is it an option.

They are objective but have the ability to weigh risks realistically within the big picture. They have an uncanny ability to anticipate developments which gives them the edge on many competitive situations. Entrepreneurs seem to feel right from their gut, call it instinct. They are a resourceful group that possess excellent problem solving skills and are able to diligently work through obstacles as they occur.

Entrepreneurs are excellent communicators and recognize how important clear and concise communication is to their success. They also possess a sound working knowledge of the business they are involved in.

When it comes to successful entrepreneurs it’s a question of what came first, the chicken or the egg. Is it inherent qualities that we are born with that lead us to be entrepreneurs or is it when we choose to become an entrepreneur that we develop the skills and qualities of success? That’s a question we shall leave to the great debaters to resolve.

What is for certain is that successful entrepreneurs are born every day and that you too can be a successful entrepreneur by developing the skills of success.

 

March 9, 2014 Today's Business, , , , , 0 Read more >

Trying Not To Get Above Your Business

Trying Not To Get Above Your Business

Young men after they get through their business training, or apprenticeship, instead of pursuing their avocation and rising in their business, will often lie about doing nothing. They say; “I have learned my business, but I am not going to be a hireling; what is the object of learning my trade or profession, unless I establish myself?'”

“Have you capital to start with?”

“No, but I am going to have it.”

“How are you going to get it?”

“I will tell you confidentially; I have a wealthy old aunt, and she will die pretty soon; but if she does not, I expect to find some rich old man who will lend me a few thousands to give me a start. If I only get the money to start with I will do well.”

There is no greater mistake than when a young man believes he will succeed with borrowed money. Why? Because every man’s experience coincides with that of Mr. Astor, who said, “it was more difficult for him to accumulate his first thousand dollars, than all the succeeding millions that made up his colossal fortune.” Money is good for nothing unless you know the value of it by experience. Give a boy twenty thousand dollars and put him in business, and the chances are that he will lose every dollar of it before he is a year older. Like buying a ticket in the lottery; and drawing a prize, it is “easy come, easy go.”

He does not know the value of it; nothing is worth anything, unless it costs effort. Without self-denial and economy; patience and perseverance, and commencing with capital which you have not earned, you are not sure to succeed in accumulating. Young men, instead of “waiting for dead men’s shoes,” should be up and doing, for there is no class of persons who are so unaccommodating in regard to dying as these rich old people, and it is fortunate for the expectant heirs that it is so.

Nine out of ten of the rich men of our country to-day, started out in life as poor boys, with determined wills, industry, perseverance, economy and good habits. They went on gradually, made their own money and saved it; and this is the best way to acquire a fortune. Stephen Girard started life as a poor cabin boy, and died worth nine million dollars. A.T.

Stewart was a poor Irish boy; and he paid taxes on a million and a half dollars of income, per year. John Jacob Astor was a poor farmer boy, and died worth twenty millions. Cornelius Vanderbilt began life rowing a boat from Staten Island to New York; he presented our government with a steamship worth a million of dollars, and died worth fifty million.
“There is no royal road to learning,” says the proverb, and I may say it is equally true, “there is no royal road to wealth.” But I think there is a royal road to both. The road to learning is a royal one; the road that enables the student to expand his intellect and add every day to his stock of knowledge, until, in the pleasant process of intellectual growth, he is able to solve the most profound problems, to count the stars, to analyze every atom of the globe, and to measure the firmament this is a regal highway, and it is the only road worth traveling.

So in regard to wealth. Go on in confidence, study the rules, and above all things, study human nature; for “the proper study of mankind is man,” and you will find that while expanding the intellect and the muscles, your enlarged experience will enable you every day to accumulate more and more principal, which will increase itself by interest and otherwise, until you arrive at a state of independence. You will find, as a general thing, that the poor boys get rich and the rich boys get poor. For instance, a rich man at his decease, leaves a large estate to his family. His eldest sons, who have helped him earn his
fortune, know by experience the value of money; and they take their inheritance and add to it. The separate portions of the young children are placed at interest, and the little fellows are patted on the head, and told a dozen times a day, “you are rich; you will never have to work, you can always have whatever you wish, for you were born with a golden spoon in your mouth.”

The young heir soon finds out what that means; he has the finest dresses and playthings; he is crammed with sugar candies and almost “killed with kindness,” and he passes from school to school, petted and flattered. He becomes arrogant and self-conceited, abuses his teachers, and carries everything with a high hand. He knows nothing of the real value of money, having never earned any; but he knows all about the “golden spoon” business.
At college, he invites his poor fellow-students to his room, where he “wines and dines” them. He is cajoled and caressed, and called a glorious good follow, because he is so lavish of his money. He gives his game suppers, drives his fast horses, invites his chums to fetes and parties, determined to
have lots of “good times.” He spends the night in frolics and debauchery, and leads off his companions with the familiar song, “we won’t go home till morning.” He gets them to join him in pulling down signs, taking gates from their hinges and throwing them into back yards and horse-ponds. If the police arrest them, he knocks them down, is taken to the lockup, and joyfully foots the bills.

“Ah! my boys,” he cries, “what is the use of being rich, if you can’t enjoy yourself?”

He might more truly say, “if you can’t make a fool of yourself;” but he is “fast,” hates slow things, and doesn’t “see it.” Young men loaded down with other people’s money are almost sure to lose all they inherit, and they acquire all sorts of bad habits which, in the majority of cases, ruin them in health, purse and character. In this country, one generation follows another, and the poor of to-day are rich in the next generation, or the third. Their experience leads them on, and they become rich, and they leave vast riches to their young children. These children, having been reared in luxury, are inexperienced and get poor; and after long experience another generation comes on and gathers up riches again in turn. And thus “history repeats itself,” and happy is he who by listening to the experience of others avoids the rocks and shoals on which so many have been wrecked.

“In England, the business makes the man.” If a man in that country is a mechanic or working-man, he is not recognized as a gentleman. On the occasion of my first appearance before Queen Victoria, the Duke of Wellington asked me what sphere in life General Tom Thumb’s parents were in.

“His father is a carpenter,” I replied.

“Oh! I had heard he was a gentleman,” was the response of His Grace.

In this Republican country, the man makes the business. No matter whether he is a blacksmith, a shoemaker, a farmer, banker or lawyer, so long as his business is legitimate, he may be a gentleman. So any “legitimate” business is a double blessing it helps the man engaged in it, and also helps others. The Farmer supports his own family, but he also benefits the merchant or mechanic who needs the products of his farm. The tailor not only makes a living by his trade, but he also benefits the farmer, the clergyman and others who cannot make their own clothing. But all these classes often may be gentlemen.

The great ambition should be to excel all others engaged in the same occupation.

The college-student who was about graduating, said to an old lawyer:

“I have not yet decided which profession I will follow. Is your profession full?”

“The basement is much crowded, but there is plenty of room up-stairs,” was the witty and truthful reply.

No profession, trade, or calling, is overcrowded in the upper story. Wherever you find the most honest and intelligent merchant or banker, or the best lawyer, the best doctor, the best clergyman, the best shoemaker, carpenter, or anything else, that man is most sought for, and has always enough to do. As a nation, Americans are too superficial– they are striving to get rich quickly, and do not generally do their business as substantially and thoroughly as they should, but whoever excels all others in his own line, if his habits are good and his integrity undoubted, cannot fail to secure abundant patronage, and the wealth that naturally follows. Let your motto then always be “Excelsior,” for by living up to it there is no such word as fail.

 

February 6, 2014 Today's Business, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0 Read more >

Self-Employment: Is It The Right Choice

Self-Employment: Is It The Right Choice!
Business ownership can be one of life’s most rewarding experiences – under the right circumstances and at the right time! It’s not necessarily “better” than having a job – it’s just different. For some, self-employment is the ideal career solution. How about you?

The exercises below are designed to help you ask the “tough questions,” and quickly discover whether self-employment would be right for you or not. So, take out paper and pen – or get comfortable in front of your computer – because you’re about to do some important “homework!” Self-Employment: Is It The Right Choice!

If you’re seriously considering the self-employment option, there are two main questions to ask yourself:

1. Is self-employment potentially right for you?

2. If so, which of the four paths to business ownership would be most appropriate for you?

Let’s address both of these important questions.

In the world of work, you have two main career paths: Self-Employment and “Getting a Job.” You’ve probably already gone the “getting a job” route. If you’re reading this article, chances are that you’ve found your jobs unsatisfying. So, now you’re probably asking yourself, “Could self-employment be right for me?” Self-Employment: Is It The Right Choice!

The following three questions will provide some direction:

1. Why are you exploring entrepreneurial alternatives at this time?

2. Rate your desire/motivation/commitment to have your own business, 1 to 10 (10 being the highest)?

3. If you could land the ideal job OR start your ideal business, which would you choose TODAY?

Focus now on the first of these three questions, because you must first understand your core motivators:

– What’s your WHY? (Lifestyle, income, image/prestige, leave a legacy, control, build equity, self-expression, independence, make a difference, passionate interest, etc.??) Unless you identify and hold onto your deepest need and desire, you will not have a strong likelihood of succeeding. So, spend some time writing about your WHY! Self-Employment: Is It The Right Choice!
———————————-
There are Four Paths to Business Ownership:

1. Become a Consultant

2. Buy an Existing Business

3. Start a New Business

4. Buy a Franchise

Below, you will see the “unique considerations” for each of these entrepreneurial pathways. Take some time to answer all the questions in the four categories. Self-Employment: Is It The Right Choice!
BECOME A CONSULTANT – UNIQUE CONSIDERATIONS

– What markets will you serve?

– What services will you offer?

– Who will be your competition?

– How will you price your services?

– How will you market and sell your services?
BUY AN EXISTING BUSINESS – UNIQUE CONSIDERATIONS

– What type of business do you want to buy?

– How do you envision your own role?

– How will you finance the purchase?

– What will you expect of the seller?
START A NEW BUSINESS – UNIQUE CONSIDERATIONS

– What markets will the business serve?

– What products or services will you offer?

– Who will be your competition?

– How will you market and sell your products or services?

– How will you finance the business?
BUY A FRANCHISE – UNIQUE CONSIDERATIONS

– What type of business do you want to be in?

– How do you envision your own role?

– What will you expect from the Franchisor?

– How will you finance the purchase?
Go back now, and review all your answers. Then address the questions below, as thoroughly as you can. Self-Employment: Is It The Right Choice!

What are your “Pros and Cons” for each entrepreneurial option?

1. Become a Consultant

Pros:
Cons:
2. Buy an Existing Business

Pros:
Cons:
3. Start a New Business

Pros:
Cons:
4. Buy a Franchise

Pros:
Cons:
In reviewing this brief list of “Pros and Cons” for each of the four business options, which choice seems best for you right now? Why?

Another way to determine if self-employment could work for you is to consider your own qualifications and preferences. Many people THINK they could successfully own and manage a business – but in reality, this takes a particular kind of person with a specific set of skills. This section will help you do an honest self-assessment. Self-Employment: Is It The Right Choice!
YOUR QUALIFICATIONS FOR OWNING A BUSINESS

The main categories of ability include:

– Marketing and Sales

– Financial Management

– Operations and Administration

– Human Resources

– General Management
For each category above, answer these questions:

– What results will the business require each year to become and remain successful?

– What education, training or experience do you have to indicate that you will be capable of producing desired results?

– Are you personally interested in, and willing to do, the required tasks?

– If you do not plan to lead specific parts of the business, who will manage them, and how much will you need to pay those people?

Every business has its challenges, but some of the biggest challenges of self-employment often come from “the inside.” Here are some of the most common personal issues faced by new entrepreneurs. Self-Employment: Is It The Right Choice!
PREDICTABLE CHALLENGES

– Do you feel certain or doubtful about becoming self-employed?

– What are the major challenges or obstacles you will face?

– What are your biggest concerns or fears?

– What questions or issues do you still have?
There are definitely answers to your questions, and there is help to get you through the transition effectively!
Here are five more questions for you to consider:

1. Two years from now, the qualities that you want most in your work/career are:

2. Will you have those qualities in your work if you continue doing what you’ve been doing?

3. If not, what changes must you make in order to make these qualities a reality?

4. Could business ownership or franchising help you create these desired qualities in your work/career? How?

5. If you’re still interested in business ownership, what are the next steps you will take (include approximate dates for completion):

If these exercises have made you decide that self-employment is NOT for you, that’s actually a positive outcome. Think of all the time, frustration and money you’ll save by not going into business! On the other hand, if the questions above have crystallized and clarified your intention to own a business, then nothing should hold you back from the great entrepreneurial adventure.

May you achieve success greater than your dreams! Self-Employment: Is It The Right Choice!

 

 

December 10, 2013 Today's Business, , , , , , , 0 Read more >

Franchising for Beginners

Do your homework before leaping into a franchise business model.

by Sherron Lumley.

“I didn’t want to start from scratch,” says Ann Bell who bought a Subway sandwich-shop franchise in 2010 with her husband Steve. “I was a stay-at-home mom and our kids are older now and off to college, so I decided it was time to go back to work,” she says. Although her husband had small business experience, Bell was more of an entrepreneurial beginner, so buying a franchise appealed to her as a safe way to invest in a business and re-enter the work force. “I work better under structure,” she says.

Pull-Quote.pngIn the franchise form of business, a franchisor licenses to a franchisee the right to operate under a trade name, sell its products and services, and receive guidance, in exchange for a fee. “My first step was to research the business model, to see if I could believe in it and embrace it,” says Bell. Typically, the franchisor provides business expertise in the form of marketing plans, management guidance, financing assistance, training, and sometimes site location. The Bells who are from Oregon, went to “Subway School” in Connecticut for training.

Here is a look at three early steps to franchise ownership.
Step One – Decision to buy a franchise: Yes/No

A franchise is a familiar form of business in America, accounting for 10.5 percent of all businesses with paid employees, according to the U.S. Census Bureau. Clearly, the decision to buy a franchise has some strong advantages. In The Franchise Bible, How to Buy a Franchise, or Franchise your own Business, author Erwin J. Keup, says that group advertising power, recognizable trademarks, franchisor experience, patents and designs, training from experts, and a lower risk of failure or loss of investments are top reasons to become a franchisee. Other reasons are uniform operation, assistance in financial and accounting matters from the franchisor, and ongoing support.

Although ongoing support is typically considered one of the greatest advantages of franchising, it comes with a price. Nolo.com, a legal resource publisher, provides a look at some of the disadvantages to franchise ownership, which include royalty payments to the franchisor, advertising fees, and high start-up costs. Indeed, nine of the top ten U.S. franchises have start-up costs averaging more than $100,000 and the top three (Hampton Hotels, ampm convenience stores, and McDonald’s) are beyond the million-dollar mark to start.

For a sense of the ongoing fees franchisors expect, Subway requires franchisees like the Bells to pay 12.5 percent of their gross sales every week to the company; 8 percent of this goes toward franchise royalties and 4.5 percent goes towards advertising. This is in addition to the initial franchise fee of $15,000 and Subway franchise capital requirements fall between $115,000 and $258,000. However, not all franchises require such a hefty investment. Number seven on the list of the Franchise 500, Vanguard Cleaning Systems, has start-up costs of just $8,000 to $38,000.

For more information on choosing between launching your own business or buying into a franchise, check out our recent story: “My Way or the Buy Way.”

Step Two – Shopping for a franchise

Certainly, cost will be a factor and franchise options will be far different for a small business owner with a few thousand dollars of capital versus another with a million or more to invest. Here are a few of the many ways to shop for a franchise at all budget levels:

The Franchise Registry, through a partnership with the U.S. Small Business Administration (SBA) maintains a list of companies with franchises that are pre-approved for expedited loans.

The Federal Trade Commission recommends attending a franchise exposition to compare a variety of franchise opportunities and using a franchise broker who can help with applications and paperwork. But remember, the brokers often work for the franchisor. Information about upcoming national and international franchise expos and trade shows is available online at FranchiseDirect.com.

Franchise.com is another popular online resource. It offers an interactive search of franchises for sale by budget, industry, and location. The Internet is full of franchise websites to research, but “be on the lookout for certain characteristics that are very common among untrustworthy or illegitimate franchising sites,” warns Kevin Murphy, author of The Franchise Handbook. He specifically cautions against dealing with a company that does not provide full financial details at the outset and says that websites with overly aggressive marketing and a lot of hype should also be avoided.

As with any small business venture, consider the demand, competition, and ability to operate the business in making a franchise selection.

Step Three – Follow a franchise investigation strategy

“Never do business with people you have not met,” say the authors of Street Smart Franchising, Joe Mathews, Don DeBolt and Deb Percival. “Franchising at its best is a highly personal relationship. You are entrusting your dreams and capital into the care of the franchisor leadership,” they say. Visit the franchisor’s home office and further investigate the franchise by interviewing franchisees in person, and reviewing the Franchise Disclosure Document (FDD) with an attorney with expertise in franchise law.

In interviewing other franchise owners, ask questions about their experiences, both good and bad. “It’s important to interview people so you know the bad and ugly,” says Bell, who found this helped her know ahead of time what it would really be like to own a franchise. For example, she learned that unlike working for someone else, “It’s nice to work for yourself, but you do take your work home with you,” Bell says.

A look at financial prospects for franchising

Using Census Bureau data, the International Franchise Association released a detailed report on this segment of the U.S. economy called The Franchise Business Economic Outlook: 2011. It forecast growth in all industries except Business Services, reporting: “The largest percentage increases in the number of establishments in 2011 are projected in Lodging (4.4 percent), Automotive (3.9 percent), Retail Products and Services (3.9 percent), and Commercial and Residential Services (3.7 percent).”

“The forecast of stronger growth in 2011 for franchise businesses is good news for our country. When franchise businesses are stronger, so is our economy as a whole,” said IFA President and CEO Stephen J. Caldeira. “However, while the forecast reflects a stronger outlook for the franchise industry and the overall economy, franchise businesses will continue to struggle with accessing sufficient credit that would enable business expansion and job growth,” he said.

Caldeira says that lending to franchise businesses was down in 2010. “For 2011, the credit gap between supply and demand should show some improvement, but we are a long way off from the pre-recession, more robust appetite for business investment and lending.” According to the SBA, total small business lending peaked in 2008, when depository institutions in the United States held small business loans valued at more than $711 billion, then declined by 8.3 percent to $652 billion by 2010. In the first quarter of 2011, the SBA reported bank lending to small business [including franchises] fell by $15 billion.

Since 2007 when the Census Bureau first gathered franchise data, the number of franchise establishments is estimated to have grown steadily from 765,723 to 784,802, whereas overall entrepreneurship has had a slight decline. (Bureau of Labor Statistics data for self-employment in non-agricultural industries.) Perhaps one explanation for this is that risk-averse behavior kicks in during times of economic duress. The Bells wanted to own a small business, without all of the risks involved with going solo. By buying into something larger, gaining considerable expertise and centralized marketing, advertising, and promotion, Bell says she felt comfortable with the decision to buy a franchise. “I’m really happy with my outcome,” she says.

.

Additional Franchise resources:

The Franchise Registry, in partnership with the U.S. Small Business Administration maintains a list of companies with franchises that are pre-approved for expedited loans.
Read the Federal Trade Commission Consumer Guide to Buying a Franchise.
Find franchises for sale by budget, industry, and location online at Franchise.com
Investigate franchise and business opportunities with the Better Business Bureau
Learn about upcoming franchise expos and tradeshows at FranchiseDirect.com.

December 1, 2011 Today's Business, , , , , , , , , , , , 3 Read more >

My Way or the Buy-Way? Should you start your business from scratch or buy a franchise?

by Cindy Waxer.

Cary Cheung wakes up at 4:30 a.m. every morning to run a business that requires him to pay a fee. He doesn’t own it outright, and it doesn’t even bear his name. And yet he couldn’t be happier.

That’s because Cheung is a franchise owner of Doc Popcorn, a maker of flavored popcorn that uses a variety of organic and all-natural ingredients. In fact, Cheung abandoned his career as an assistant vice-president at WaMu Investments to become Doc Popcorn’s very first franchisee in November 2009. And just a few weeks ago, Cheung and his wife, Judy, opened their second Doc Popcorn location in California.

Pull-Quote-Tall.pngThe Cheungs aren’t alone. According to the International Franchise Association, approximately 4 percent of all businesses in the United States are franchisee-worked. And the consultancy Franchise Marketing Systems says that franchising is a business model that generates more than $1 trillion in U.S. sales annually across more than 70 industries. Franchised businesses ran 767,483 establishments in the United States through 2008, including establishments owned by both franchisees and franchisors.

But while running a franchise business can be both professionally attractive and personally satisfying, not everyone is cut out for the task. Just ask Amy Bennett, owner of The Greene Grape, a Brooklyn, New York-based seller of fine food and wine. The choice was obvious to Bennett: “Part of opening my own business rather than a franchise was for it to be a creative outlet for me. I wanted something I could contribute to meaningfully.” Add that desire for creativity to the many negatives associated with franchising, such as royalty fees, restrictive licenses, meddlesome franchising authorities, and a lack of ownership, and it is easy to see why many are dissuaded from signing up to become a party to a franchise.

For many others, of course, those negatives are more than outweighed by the many benefits of running a business associated with an established brand and backed by the marketing muscle and support of a large corporation. So how do you know if you’re best suited to run a franchise or if you should strike out on your own? Answering these five questions can get you a step closer to the right answer.

1. How much legwork are you willing to do?

“When you invest in a franchise, you’re getting the brand name of the franchisor, the operating system, a proven track record, not to mention ongoing support, education and training,” says Brian Miller, president of The Entrepreneur’s Source, a business ownership consultancy in Connecticut. “If you started out running your own business, however, you really wouldn’t have anybody to rely on.”

That kind of pre-existing structure was precisely why the Cheungs opted to run a franchise. “My parents owned their own restaurant so I saw the struggles they had starting off and all those lessons they had to learn,” he says. “The attraction of a franchise is the system is created for you.”

“There are very few people who are true entrepreneurs and who can really go out and make a business their own,” says Miller. “But there are a lot of people who have that passion and fire in their belly and know that they want to take control of their own destiny but need a little bit of help.”

2. What are you willing to invest financially?

Launching your own business often requires little to no capital, especially if you start small. But many popular franchises demand lots of upfront capital and collateral—sometimes up to millions of dollars—from a prospective franchisee before offering a contract. These “working capital reserves,” as they’re called, are often required by franchisors so that they will feel comfortable that a franchisee can stay in business until he or she reaches the financial break-even point.

In the case of Cheung, he invested between $100,000 and $150,000 to open his first store, including upfront franchise fees. “That was a main reason why we chose Doc Popcorn—the low entry point.” Every other franchise he looked at was going to cost from $200,000 to $250,000 to start, he says.

Still, some franchises are willing to lend a helping financial hand. “My wife and I funded the store on our own, but I know that Doc Popcorn has third-party connections to help with funding,” says Cheung.

To learn more, check out our previous article on franchise startup costs.
3. Can you back someone else’s product?

While there’s definitely something to be said for creating your own business, many entrepreneurs are proud to peddle a franchise’s products. “The only reason we signed with Doc Popcorn is because of the product and what it represents,” says Cheung. “Of course, trying to make money is always a goal for all business owners but you have to believe in the product.”

For Bennett, however, launching The Greene Grape was an opportunity to express herself and act on her vision of a perfect wine shop. “At the time I opened my first wine store, there wasn’t really a franchise that focused on handcrafted, affordable wine,” she says. “My twist on a regular wine store was part of the creative process.”

4. How much say would you like in the business?

“The advantages to running your own business are mostly in creative control,” says Bennett. “I can market the way I want, my store can have a personality that reflects who we are. This means a lot more work, of course, but at the end of the day I can step back and be proud of how the store is presented.”

That’s not to suggest that franchisees don’t have any input. Rather, Miller explains, “As you become successful in a franchise system, there are opportunities for you to work collaboratively and to develop new products and services.”

5. How long can you wait to break even?

According to Miller, “the support given by a franchise in the beginning in terms of brand recognition means that you might have a quicker start in terms of sales. Educating the consumer for a new business definitely takes more time. Depending on how a franchise agreement is structured, that could mean breaking even for the franchisee earlier.”

Still, if the substantial franchise buy-in requirements are too steep, taking the franchise route (and its more desirable, early break-even point) may not be a realistic option for many budding entrepreneurs. Instead, they may have no other option but to launch on their own, either diving into entrepreneurship full-time and striving for a quick rise in profits or running a side or part-time venture for a longer period of time, until the business proves it can stand on its own.

November 8, 2011 Today's Business, , , , , , , , , , , 3 Read more >

My Way or the Buy-Way? Should you start your business from scratch or buy a franchise?

Cary Cheung wakes up at 4:30 a.m. every morning to run a business that requires him to pay a fee. He doesn’t own it outright, and it doesn’t even bear his name. And yet he couldn’t be happier.

That’s because Cheung is a franchise owner of Doc Popcorn, a maker of flavored popcorn that uses a variety of organic and all-natural ingredients. In fact, Cheung abandoned his career as an assistant vice-president at WaMu Investments to become Doc Popcorn’s very first franchisee in November 2009. And just a few weeks ago, Cheung and his wife, Judy, opened their second Doc Popcorn location in California.

Pull-Quote-Tall.pngThe Cheungs aren’t alone. According to the International Franchise Association, approximately 4 percent of all businesses in the United States are franchisee-worked. And the consultancy Franchise Marketing Systems says that franchising is a business model that generates more than $1 trillion in U.S. sales annually across more than 70 industries. Franchised businesses ran 767,483 establishments in the United States through 2008, including establishments owned by both franchisees and franchisors.

But while running a franchise business can be both professionally attractive and personally satisfying, not everyone is cut out for the task. Just ask Amy Bennett, owner of The Greene Grape, a Brooklyn, New York-based seller of fine food and wine. The choice was obvious to Bennett: “Part of opening my own business rather than a franchise was for it to be a creative outlet for me. I wanted something I could contribute to meaningfully.” Add that desire for creativity to the many negatives associated with franchising, such as royalty fees, restrictive licenses, meddlesome franchising authorities, and a lack of ownership, and it is easy to see why many are dissuaded from signing up to become a party to a franchise.

For many others, of course, those negatives are more than outweighed by the many benefits of running a business associated with an established brand and backed by the marketing muscle and support of a large corporation. So how do you know if you’re best suited to run a franchise or if you should strike out on your own? Answering these five questions can get you a step closer to the right answer.

1. How much legwork are you willing to do?

“When you invest in a franchise, you’re getting the brand name of the franchisor, the operating system, a proven track record, not to mention ongoing support, education and training,” says Brian Miller, president of The Entrepreneur’s Source, a business ownership consultancy in Connecticut. “If you started out running your own business, however, you really wouldn’t have anybody to rely on.”

That kind of pre-existing structure was precisely why the Cheungs opted to run a franchise. “My parents owned their own restaurant so I saw the struggles they had starting off and all those lessons they had to learn,” he says. “The attraction of a franchise is the system is created for you.”

“There are very few people who are true entrepreneurs and who can really go out and make a business their own,” says Miller. “But there are a lot of people who have that passion and fire in their belly and know that they want to take control of their own destiny but need a little bit of help.”

2. What are you willing to invest financially?

Launching your own business often requires little to no capital, especially if you start small. But many popular franchises demand lots of upfront capital and collateral—sometimes up to millions of dollars—from a prospective franchisee before offering a contract. These “working capital reserves,” as they’re called, are often required by franchisors so that they will feel comfortable that a franchisee can stay in business until he or she reaches the financial break-even point.

In the case of Cheung, he invested between $100,000 and $150,000 to open his first store, including upfront franchise fees. “That was a main reason why we chose Doc Popcorn—the low entry point.” Every other franchise he looked at was going to cost from $200,000 to $250,000 to start, he says.

Still, some franchises are willing to lend a helping financial hand. “My wife and I funded the store on our own, but I know that Doc Popcorn has third-party connections to help with funding,” says Cheung.

To learn more, check out our previous article on franchise startup costs.
3. Can you back someone else’s product?

While there’s definitely something to be said for creating your own business, many entrepreneurs are proud to peddle a franchise’s products. “The only reason we signed with Doc Popcorn is because of the product and what it represents,” says Cheung. “Of course, trying to make money is always a goal for all business owners but you have to believe in the product.”

For Bennett, however, launching The Greene Grape was an opportunity to express herself and act on her vision of a perfect wine shop. “At the time I opened my first wine store, there wasn’t really a franchise that focused on handcrafted, affordable wine,” she says. “My twist on a regular wine store was part of the creative process.”

4. How much say would you like in the business?

“The advantages to running your own business are mostly in creative control,” says Bennett. “I can market the way I want, my store can have a personality that reflects who we are. This means a lot more work, of course, but at the end of the day I can step back and be proud of how the store is presented.”

That’s not to suggest that franchisees don’t have any input. Rather, Miller explains, “As you become successful in a franchise system, there are opportunities for you to work collaboratively and to develop new products and services.”

5. How long can you wait to break even?

According to Miller, “the support given by a franchise in the beginning in terms of brand recognition means that you might have a quicker start in terms of sales. Educating the consumer for a new business definitely takes more time. Depending on how a franchise agreement is structured, that could mean breaking even for the franchisee earlier.”

Still, if the substantial franchise buy-in requirements are too steep, taking the franchise route (and its more desirable, early break-even point) may not be a realistic option for many budding entrepreneurs. Instead, they may have no other option but to launch on their own, either diving into entrepreneurship full-time and striving for a quick rise in profits or running a side or part-time venture for a longer period of time, until the business proves it can stand on its own.

November 4, 2011 Today's Business, , , , , , , , , , , 49 Read more >