Monthly Archives: October 2016

Tips to Choose the Right Franchise

Franchises are appealing to new entrepreneurs who want the reduced risk of a proven product or service while still being their own boss. They can get support from the parent company or fellow franchisees to ensure success. The hardest decision, though, is which franchise to join. How do you choose?

Even if you have a general idea of the industry you want to work in, there are numerous options in a variety of price ranges within each industry, leaving you the task of sifting through dozens of websites and information packets to find the one that’s right for you. Business News Daily spoke with franchise industry experts and franchisees to aid you in the process of selecting a franchise to buy.

Questions to ask yourself
If you have no idea where to start, you’ll want to begin by asking yourself a few broad questions that will place some parameters on your franchise search.

What are my personal goals?
Everyone has different motivations for wanting to become an entrepreneur. First, start off by asking yourself what your goals are, said Dan Martin, president and CEO of franchise consulting firm IFX. Do you want to make money, spend more time at home or take an entrepreneurial step in your career?

“By figuring out your actual goals, you will be able to determine what franchise is a good fit to help you meet those goals,” Martin said.

What role do I want to play in the business?
There are two types of franchisees: Absentee owners, who hire staff to manage the business on a day-to-day basis, and owner/operators, who are directly involved in running the business.

“Many franchisors offer a hands-on opportunity, [whereas] others offer more of a management opportunity,” said Rhoda Olsen, CEO of Great Clips hair salon franchise. “The key question [franchisees] need to ask themselves is what they see themselves doing on a day-to-day basis. Do they really want to do a specific job every day? Do they want to lead an organization? Do they want to manage managers?”

What is my investment budget?
Franchise costs vary greatly, depending on the industry and specific business model. While some upfront fees are less than $10,000, others can be upward of $1 million. Terry Powell, founder and CEO of franchise business coaching company The Entrepreneur’s Source, said prospective franchisees should weigh the initial investment against their expected return, along with their income, lifestyle, wealth and equity (ILWE) goals.

“Opening a food franchise will have a much higher investment than a home-based, business-to-business franchise, simply due to the amount of equipment and inventory necessary to start the business,” Powell said. “It’s up to the prospective franchisee to decide how much they would like to invest and what will help them achieve their goals, both short- and long-term.” [See Related Story: 40+ Franchises for Every Budget]

Do I have basic business skills?
Although some franchises do want their franchisees to have industry experience, what’s more important to them is that a franchisee have the basic business know-how and entrepreneurial drive to succeed.

“We want franchisees who understand the art of marketing and the need for sales” [rather than experience in our particular industry],” said Tom Wood, president and CEO of the Floor Coverings International franchise. “We want franchisees who are focused on customer service and ways to increase transactions,” he added. “Good-quality franchisees are hard to come by.”

What to look for
Once you’ve narrowed down the field and business model you’re interested in, it’s time to choose a specific franchise. To help you narrow down your list, our sources advised looking for the following attributes in a company.

A strong support system for franchisees. “Since you are buying into an established brand that works best when the model is followed, there should be ample support through every stage of your franchise, since they should know how to guide you.” – Jeff Salter, CEO, Caring Senior Service

A great corporate staff. “[Ask yourself], ‘How is it to work for the franchise owners? What kind of people are they?’ It’s important for franchisees to meet … the corporate staff. That face-to-face interaction is huge. You have to have a connection.” – Andrea McGinness, chief operating officer, WineStyles Tasting Station franchise

Investment in your potential. “When interviewing with Hungry Howie’s Pizza, I participated in a series of tests to determine if I was entrepreneurial-minded and if I had the ambition to grow with the company. It was their interest in not just their personal, monetary gain, but in my vision that incentivized me to work with Hungry Howie’s.” – Don Copus, franchisee, Hungry Howie’s Pizza

Reviewing the FDD
Michael Daigle, a partner at franchise industry law firm Cheng Cohen, said both you and a legal and/or financial adviser should read the entire franchise disclosure document (FDD) thoroughly, and pay close attention to the following sections:

Past or current litigation. Items 1 through 4 of the FDD will tell you all about the franchisor’s experience and whether the franchisor or any of the people in charge have been involved in bankruptcies or litigation relevant to the brand or their experience as a franchisor. Existing and historical litigation between the franchisor and its franchisees might show a level of dissatisfaction with the system, or it might show that the franchisor is serious about upholding its system standards for the benefit of all franchisees, Daigle said.

Payments and revenue model. The FDD also explains what you’ll be paying to the franchisor and its affiliates pre- and post-opening, as well as how much the franchisor relies on franchisees for revenue. Daigle said that items 19 (financial performance representations) and 21 (historical growth and revenue sources) give you a glimpse into how well the units are doing financially.

Turnover and resource strain. Item 20 of the FDD provides a list of currently operating franchisees and a list of franchisees who have exited the system or stopped communicating with the franchisor. You should contact as many current and former franchisees as you can and ask questions about their experiences, struggles and profitability, Daigle said. “Look behind the curtain and the sales pitch,” Daigle told Business News Daily. “Don’t be afraid to ask the hard questions — in fact, ask the same question of different people to see if you get consistent answers. Talk to as many franchisees as physically possible, and don’t stop until you’ve heard at least some of each of the good, the bad and the ugly.”

What to ask the franchisor
Alan George, vice president of Franchise Marketing Systems, recommended taking some time to ask specific questions of the parent company that may or may not be covered in the FDD. For instance, ask what its sales approach is, whether there’s enough available business in your marketplace and if you have enough money to wage successful campaigns. He also advised asking about their sales and advertising approaches, and whether they will work in your marketplace.

Bryan McGinness, CEO of WineStyles Tasting Station, added that a potential franchisee should be very clear on what the franchisor expects of him or her, and vice versa.

“Make sure it’s a good fit for both parties,” McGinness said. “It’s easy to sign franchisees and take their royalty money. What happens after is what matters. Make this a long-term partnership and a win-win [situation].”

Some Tips for Preparing Your Business to Grow

bu1Everyone wants their business to succeed. You want your business to be around next year and the following year, don’t you? The question is, how many customers do you need to be successful and, more importantly, sustainable?

Here are four tips for preparing your business for growth.

1. Treat your business like a restaurant.
Do you have enough capacity to accommodate an increase in your customer base? Before you decide to acquire more customers determine whether that strategy is realistic. Take inventory of whether your production and assembly facility can handle an increase of even 10 percent more customers. Everyone dreams of their business being wildly successful. The reality of growth without preparation is like giving a party where everyone shows up — at the same time. Can you feasiblly and successfully serve everyone?

2. Build your growth strategy around a loyal and retained customer base.
If you are constantly replacing customers you lose, that’s no growth strategy at all. A loyal and retained customer base is comprised of your early-adopters and continuous ambassadors. These folks become the fulcrum for leveraging improvements, new product introductions, enhanced and expanded services and referral business. They are gold. Identify who they are early on and make them the focus of your attention over the long haul.

3. Acknowledge customer growth angst.
Your early customers can become anxious as your business grows. Some early adopters will perceive that you have become “too big and famous” to meet their ongoing needs. Create a strategy for maintaining contact with and reassuring your first customers that your success is founded on their belief in you. Realistically, your growth strategy should include how to transition smaller accounts to other companies better able to meet their needs. Some original customers won’t want to increase their job size to meet your need for a customer base seeking increased capacity and complexity — especially in the case of manufacturers.

4. Differentiate yourself and your business via continuous customer touches.
Build your business on the basis of customer experience: The sum total of what each customer experiences when working with you and your company over the lifetime of your relationship. Think about it like a restaurant: You won’t maintain a loyal customer base if you are running around your overcrowded restaurant trying to serve new customers while your original customers wait outside in the rain. If you need to make changes, be transparent. Communicate with your customers and prepare them for changes you are making. It’s better to offer to transition them to other suppliers (in advance) than to disappoint them with your lack of attention and have them voice their feelings to the community.

Simple Ways a Small Business Can Scale to Profitability

bu3Downfalls like not being a profitable venture, startups shutting their doors or even bankruptcy are often caused by a lack of knowledge or a willing ignorance amongst small-business owners.

“If the owners really knew what they were doing wrong, they might have been able to fix the problem,” entrepreneur and business speaker Jay Goltz told The New York Times. “Often, it’s simply a matter of denial or of not knowing what you don’t know.”

Don’t fall into the trap. Armed with the following knowledge and know-how, you have a fighting chance of making it as a profitable business that continues to scale for years to come.

1. Prove your expertise. To get customers to trust you (and pay for your products or services), you have to prove you’re an expert in your industry.

You can accomplish this by posting blogs, sending out newsletters, participating in interviews, publishing content through noteworthy blogs or publications and making informative how-to and instruction videos that relate to your business.

“You cannot buy trust at any price. But slowly, over time, you can build it for free,” business advisor Jeffrey Gitomer told Copyblogger.

2. Take calculated risks. All entrepreneurs are risk-takers. They kind of have to be, as it is a huge leap of faith to start a business. But what makes one entrepreneur succeed, where another will fail has to do with if a person makes calculated or reckless risks.

Look at the costs and benefits of every decision and figure out the worst-case scenario. Have back-up plans in place and rely on trusted advisors like your accountants, bank, marketing consultants, lawyers and insurance agents.

Carefully plan out your course of action and make it a collaborative effort amongst you and your employees. That way, if failure does occur, you have people there to support you and assist you in deciding the next move and risk you should take. Plus, by taking these more conservative risks, you are less likely to make a mistake that could have detrimental ramifications — ones that could create financial situations that are hard to climb out of.

3. Develop a cash-flow strategy. Having a steady flow of cash is critical when you have a small business. You need to pay the bills and your employees, as well as purchase materials to scale your services or build your products and more. You also need to make a list of one-time expenses and ongoing expenses and figure out how much money you’ll need to operate on a day-to-day basis.

One great tool is SCORE’s break-even chart, which allows you to track your profits and can help you see how to increase them. To prepare for slow times of the year, you should save at least three to six months worth of cash to keep your operations going.

4. Appreciate your employees. When you hire employees, make sure that they’re actually passionate about the industry you serve. If an interviewee is enthusiastic, does his or her research about your business and asks engaging questions, then he or she is likely to be a good candidate for a position and could provide amazing insights into growing your company.

Once you hire your rock-star team, treat employees as equals and trust them. Show that you appreciate their efforts by encouraging new ideas and collaboration. You can do this by simply being available to them and being positive when they have suggestions. If everyone is on the same page and feels like they have a say, the business is more likely to thrive.

Small business success can be achieved by thinking ahead and planning out your next move. It’s a challenge to run a small business, but with the right preparation, you can come out on top.

More Information About Online Business

bu2Business forecasts indicate that ecommerce is exploding, which means now is the perfect time for startups to firmly establish their online stores. There are numerous tactics for nurturing a new online business. If you’re just getting started, now’s the perfect time to make sure all the elements for your online success are in place.

Let’s review 10 crucial steps to capitalizing on this trend:

1. Carefully target the online audience.
Ecommerce depends largely on a reputable, accessible online presence. To be recognized as such, businesses must make themselves available to those who are most likely to notice. Identify the demographic characteristics of consumers who will benefit from relevant products and services, and base marketing strategies on these details.

2. Create high-quality content and deliver it at high speed.
High-quality content is described as relevant and engaging information that encourages site visitors to return in the future. Content should reflect the given brand in tone and style, and include the company’s mission statement, services and policies. It should also offer industry education and urge interaction with consumers. This may take the form of asking questions, answers to which can be provided in online comment sections. Interaction can also take place via surveys and contests.

But Internet-based businesses live and die by their online visibility and credibility, and they’re judged by more than just consumers. They’re also judged by search engines, which play a major role in bestowing that credibility and visibility. In the wake of recent security vulnerabilities making national headlines such as the HeartBleed bug, secure web hosting which thwarts vulnerabilities is essential for maintaining credibility, and speedy website load times are essential for delivering a positive user experience, maximizing sales conversions and optimizing from an SEO (search engine optimization) perspective.

Amazon reported a 1 percent revenue increase for every 100 milliseconds improvement in load time. Furthermore, Google has stated that fast load speeds are indeed a factor in the ranking algorithm. In response, VPS hosting is quickly becoming more popular among new businesses looking to maximize site speed, as opposed to traditional, shared hosting services.

3. Personalize content.
Visitors know that unique, individualized web experiences are possible, which is why they expect such features. Take advantage of available technology that can generate shopping selections based on personal preferences. While some of the larger websites (Google, Apple, Facebook, etc.) have apps built into their system that identify users and track their online movements, small businesses might focus on smaller CRM solutions. Batchbook, ContactMe, and Zoho are perfect CRM software solutions for small businesses, each costing less than $20 a month.

4. Invest in mobile capabilities.
Consumer use of mobile devices is greater than ever before, which is why a robust mobile ecommerce platform is crucial. Available solutions include mobile sites, responsive sites, apps, click-to-call tools, maps and real-time notifications.

5. Integrate sales channels.
Enable consumers to experience the brand similarly across all channels of interaction and methods of shopping. Promotions, products, services, company information and policies should be available both on and offline.

6. Consider subscription.
Subscription commerce occurs in various forms. For instance, the replenishment model allows for a product to be sent to a customer every month or other regular basis. The discovery model provides for new and exciting experiences with each delivery. These may include customized or rare items. It’s up to the company to decide which form of subscription works best for them, and to implement that into their sales and marketing strategies. Most CRM software and programs organize consumer data that can be used to delineate and track which model each customer prefers and whether the customer has subscribed or not.

7. Remember logistics.
Scalability is integral to growing a business. To accommodate growth, third-parties such as UPS, Nippon Express, or DB Schenker can be depended upon to manage large and complex transactions. Costs will vary based upon the size of the transaction, the size of shipments, the distance that products need to be shipped or the complexity of the transaction. Third-party logistics become more cost effective as a company grows and handles larger transactions. Reverse logistics — the efficient handling of product exchanges and returns — is significant as well.

For Internet-based businesses, website speed, security and infrastructure are important foundations of not only logistics, but also SEO. These aspects of online business translate to better search engine visibility, resulting in more traffic, leads, brand credibility and sales. Speeding up your website is crucial for online logistics.

8. Skip the middlemen.
Thanks to the Internet, small businesses can reach consumers quickly and easily. Also, manufacturers are increasingly eager to work directly with small businesses because they realize small brands are likely to bring new and innovative products to the marketplace — they are less limited by minimal shelf space and complex supply chains.

9. Sell Internet-only merchandise.
Although essential to maintain continuity across multiple sales channels, it is still possible to offer products via the Internet only. Doing so builds an exclusive brand with ecommerce as the core distribution channel. By offering certain products in only one arena, it is possible to maintain greater control over margins.

10. Curate a proprietary selection.
Proprietary selection refers to a strategy dedicated to “curating” a deep but narrow array of exclusive products in a specific segment. These areas give the relevant merchandise the allure of distinction due to original characteristics and the difficulty of locating such a selection elsewhere.

One of the main goals of any business is consistent growth. Through careful strategic planning, quality marketing campaigns and a healthy combination of the steps outlined above, conversions are likely to increase steadily.