You have a great local business and you know you have a product or service that your customers want. Eventually there comes a point when you begin to wonder how to reach more customers. The traditional approach involves raising capital to allow you to open more locations. True, this approach can grow your brand and allow you to reach more customers, but it also means that expanding your business is all up to you. You will be securing and signing for the debt or outside equity and ultimately signing on the dotted line and taking on the increased risk of expansion.
Another avenue for achieving growth in revenues and customers, with limited capital and potentially less risk, is through franchising, though many business owners do not consider it. Franchising is a great vehicle to help you reach more customers, promote your brand, and increase your visibility and credibility as a brand. Franchising provides a method for expansion through which you are able to grow smartly by increasing revenues at a steady rate with franchisees that are hand-selected to be ambassadors for your brand.
Several critical components need to be in place before you launch a franchise: a thorough understanding of your industry; sufficient experience in your business; a thorough understanding of prospective franchisees’ interest in your model/industry; and the building of a solid, profitable and proven business model.
3 Ways to Evaluate Your Franchising Potential
- Know your competition
- Review 10 Franchise Disclosure Documents to compare the results of your operations against competitors within your industry and franchisors with a similar investment profile.
- Project your results
- Put together a financial scenario based on levels of performance vs. your company-owned locations results – and research demand for your products and services at a national or international level.
- Ask your current stakeholders if you’re Franchise Worthy
- Do a 360 degree assessment with your customers, employees and suppliers. Can your model extend nationally? Is your mission something that customers and employees want to be a part of on a broader scale?
Franchising builds on a solid business model and customer demand for goods and services. That said, the important point here is that franchising is a new business. At BrightStar, we went from being only in the healthcare business to also being in the franchise business.
Read More: Grow Smart, Risk Less by Shelly Sun Berkowitz is now available to read online!
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