You’ve decided to open a franchise. Congratulations! You’ve determined this makes sense for you personally and are excited to start training. The territory and store location are available. The franchisor has been supportive and available every step of the way.
What could possibly go wrong? Well, a few things, really. Below are four errors of your own judgment that could fell a successful franchise start:
1) You overestimate your capital availability and underestimate your financial needs. I’ve seen this dozens of times. New franchisees make the mistake of believing that they can find cash more easily than they can. Likewise, they underestimate what will be needed to keep a young business going in its early days. Even with franchisor guidance, be prudent in your estimates. If you are not accurate and honest, the only one you are fooling is yourself. And it hurts in the wallet to be made a fool.
2) You assume that, just because it’s a booming market sector, you will be as successful as others. Ouch. You are not your competitor—you are you! And you are without years of clients and experience in that field. Yes, it can work or the franchisor would not have approved you. And yes, a growing type of franchise will naturally have growing numbers of customers, but they won’t all be yours. You need to find them, earn them and serve them well to keep them. The already-operating competitor around the corner has already done this. You can build new clients or lure theirs away, but you won’t get them all unless you find a way to be better or different—or both!
3) You’re trying to lowball your rent rather than finding a site that will work best. Location is critical for retail franchises with a physical presence. Convenience, parking, and easy-to-find sites will draw clients better than another store that a customer never sees. Lease payments are a big part of your overhead, yes, but even a low rental fee is too high if the site is in the wrong place.
4) Patience is not your virtue, so you open for business before you are ready. As a newbie to the franchise force, Padawan, you must be patient and thorough in all your plans: marketing, training, quality control. Start on a carefully calculated path. If you open too soon or without solid preparation, you might lose your first customers when you appear unknowledgeable or unable to correct a problem. First impressions matter—wait, if you must, until you can make a good one.
These are all mistakes that come from not being honest with yourself about finances, abilities, and what it takes to make your franchise grow. Judge your opportunity with openness and a realistic expectation to avoid the pitfalls of a new franchise.
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