Business Ownership: Go-It-Alone vs Franchising
by Seth Lederman
…studies show that nearly 90% of all new franchises succeed. The statistics differ depending on the type of franchise and its industry…
That has many considering the prospect of becoming a small business owner. According to the latest statistics, small businesses currently dominate 99.9% of all companies operating in the US, and they employ over 47% of employees around the nation. Some major shifts will affect small business owners and their bottom line. When choosing which business will find the most success, there are many things to consider.
Is Going-It-Alone Worth the Risk?
Although recent events certainly altered the face of small business survival, the latest figures do not veer very much from what they were in 2019. Currently, 67.6% of all new startup businesses have survived the two-year mark; when stretched out to five years, the percentage dropped to 48.9%, and only 33.5% of small companies celebrated their tenth anniversary. However, studies show that nearly 90% of all new franchises succeed. The statistics differ depending on the type of franchise and its industry.
Launching a new business startup from the ground up is a much riskier proposition because it has never been done before. Unlike a franchise with a playbook for success, new small businesses come with a ton of trial and error – and often, more error than they can handle. The key to being successful as a small business owner is weighing factors such as personal strengths and weaknesses and external factors and economic conditions. For some, franchising is an excellent way to accumulate wealth, but only if they thoroughly investigate the many things that will make a business successful or lead to its downfall.
Who Should Invest in a Franchise vs. Go-It-Alone?
Most intuitively think that being a franchise owner is only for trailblazers looking to do something dynamic. Franchise ownership is something that people consider appropriate for type-A and classic entrepreneur-type individuals, and they are shocked to find out that it might be the opposite. In franchising, success is typically found in the slow and steady, more even-keeled type of personality that is not looking to buck the system or be super-innovative. Caution is not counterintuitive to franchise ownership success. These eight personality traits tend to go hand-in-hand with successful franchise ownership.
Personalities that are Results-Motivated
Running a successful franchise is not about working harder; it’s more about working smarter. A franchise might be for you if you understand that acting does not necessarily mean meeting goals. Setting attainable and quantitative benchmark goals is the best road to successful franchise ownership. It requires someone who can continually pivot to find out what is working and what is not and then make the necessary alterations to get back on track.
The Big-Picture Type
The most successful franchise owners recognize that they may have to get their hands dirty and get to work until things pay off. If you understand that the fruits of your labor will take time to grow and ripen on the vine before being picked, you are more likely to find success.
The Motivational Speaker Type
You not only have a high sense of energy and enthusiasm; you recognize that it is your job to breathe that energy into those around you. You have a strong work ethic and expect it from those who work alongside you. People who can rally the troops are more likely to make big things happen.
The Optimistic Type
There is no half-empty in franchise ownership success. It takes a person who can find solutions and see opportunities where others see roadblocks. If you love a challenge, then franchise ownership might be for you. There is no room for wasting time rehashing what went wrong; you have to be able to put it behind you and move on!
The Likable Type
It is essential to know that you have fantastic communication skills as a business owner. Still, you have to take it one step further to see that customers and employees and their satisfaction are the keys to success. Business owners who seek to build relationships with those who work for them and those they work for will always enjoy more success.
The “Wear Your Seatbelt” Type
Becoming a business owner will always come with inherent risk, whether it is a startup or a franchise. Franchise owners who score lower on the scale of “risk-taker” and are more the “cautious” type tend to enjoy more success. Mitigating risk is critical to achieving the greatest amount of success. Taking chances is different than assuming risk, and knowing the difference has a huge impact.
The Perseverance in the Face of Adversity Type
For a successful franchise owner, failure is never an option. As an optimist, you don’t just push through those things that keep others down; you take it to a whole new level of seeing opportunities and seizing them. No matter what gets thrown at you, the franchise owner who throws it right back and forges ahead with excitement will find the greatest amount of success.
The Calm, Cool, and Collected Type
Successful business owners don’t lose their cool. One of the most critical personality traits for success is looking at a situation that might be incredibly anxiety-provoking and breaking it down calmly into something manageable. You can’t operate in a state of panic, and in a crisis, the leader who will survive is the one who knows how to find the path out and force everyone into a single-file line.
Three Benefits of Investing in a Franchise Rather than Going It Alone
Going it alone versus opening a franchise both come with advantages and disadvantages. But franchises tend to enjoy three significant pros, whereas new startups have cons.
Switch Paths Without Expertise
In many cases, for a new business startup, the pathway to success rests in expertise and industry knowledge. For franchises, that isn’t the case. Franchise owners rarely need to know much about the industry they’re buying into. That means that there isn’t a learning curve that you have to go through for success. You can start down an entirely new path by buying a franchise with no experience necessary.
That is appealing to people who want to hit the ground running with a new business proposition outside of their wheelhouse, and it’s a massive plus for those who are not enjoying satisfaction in their current careers. Often we get stuck in careers that we aren’t thrilled with purely because switching gears would take too much time and energy. Those hurdles are eliminated when you buy into a franchise.
Assuming Lowered Risk
All business startups come with an inherent amount of risk, but a franchise’s risks of failure are significantly lower than going it alone. Most lenders are reluctant to extend credit to new business owners precisely because of the risk involved. Franchises, however, do not have the same risks. When you buy into a franchise, you aren’t starting from scratch, building a business model that may or may not work, and crossing your fingers.
Franchises come with a playbook for success, and if you stick to the plan and execute it exactly as outlined, there is minimal risk involved. Your risk is even further reduced when you consider that branding, advertising, and marketing, which are the crux of a new business startup and what occupies the first several years to decades, are already done. You already have a customer base anticipating your goods or services when you open your doors!
Be the Boss
When you become a franchise owner, you are the master of your own fate. By choosing the right franchise, you enjoy more freedom and get to decide when and where you want to work. And you can enjoy a much more outstanding work/life balance; since support and training are generally supplied, all you have to do is follow the steps. Unlike a new business venture, you are in business for yourself, but that doesn’t mean that you are going it alone. There are a ton of safety nets to take advantage of, which means that while you are the boss, it is challenging to fail if you follow the guide!
Tips for Exploring Franchise Opportunities
Now that you see all the advantages of franchise owners, here comes the hard part: figuring out which one to invest in. In 2020 alone, there were over 750,000 franchise opportunities to choose from – and counting! That is a staggering number to consider. While most people think the first best step is to hit the internet, looking within is the best place to begin.
Different franchises are going to speak differently to various personality styles. It is essential to take a good hard look inside and see what motivates you and makes you tick. Most people want to become business owners to enjoy increased work satisfaction, and that can’t happen until you understand what you want and what makes you feel fulfilled and happy. Ask yourself questions such as:
- Do I like working with people?
- What kind of hours do I want to work?
- What type of franchise model works best for my needs?
- Do I want to work remotely or have a brick-and-mortar business?
- Will my family be supportive?
The more things you can challenge yourself about, the better outline you will have to find the opportunity that will be successful and suit your needs and help you find the work/life balance and satisfaction that you are currently missing.
Speak With Current and Former Owners
The best way to get a realistic picture of the ‘boots on the ground’ operation is to do two things: go to a franchise and observe the daily operations and speak to both current and former owners to get a gauge about what they liked and what they did not. Most owners will be happy to meet with you and share their experiences. By talking with them, you can quickly see whether the franchise is something that tends to excite them and what their overall take on it is.
Get the Help of a Professional Service
When it comes to deciding to become a franchise owner, why go it alone when you don’t have to? Sifting through the vast sea of opportunities can be overwhelming and take time. At Frannexus, we have the industry knowledge to help you narrow your search efficiently to focus on the most challenging part: the fine details.
We help with every part of franchise ownership, from deciding which will best suit your needs to finding financing. There is no denying that the process can be complex, but we take the guesswork out of it and help you make the best-informed decision with the most optimal chances for success!
As we head into a recovery period, some things might begin to return to normal while others never will. One issue that many workers around the nation are struggling with is returning to the daily grind. Now that we have gotten a taste of freedom from the workplace, we’re not rushing back to the status quo.
If you want to be your boss, switch paths, do something different, and start accumulating wealth for yourself instead of someone else, then a franchise is an excellent solution! At Frannexus, our mission is to find the right franchise opportunity to suit your personality and goals and start you down the road to a more lucrative and financially secure future. Contact us today to get the process started!
DISCOVER A BETTER WAY TO EARN WHILE LIVING
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In “Profits are Better Than Wages”, experienced franchise advisor, Seth Lederman answers the “how” and “why” of going into business for yourself.
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