By Eric Little, Senior Vice President of Franchise Development at Right at Home
Similar to choosing a home for your family, a decision like selecting a territory for your Right at Home franchise can cause emotions to run high. After all, the territory you choose is the place you put your stake in the ground and venture into the world of business ownership. Most importantly, it is the place where you will spend a lot of time helping families and building relationships in your local community.
A territory is one of the most tangible things you “get” when you pay a franchise fee. Let’s face it – by definition, it’s territorial. So it is easy to see why this part of the process can heighten your stress levels. In reality, this process does not have to be stressful. This post is written to help you avoid some of the common mistakes that others make during this stage of the process.
The analogy of purchasing a home works very well in helping folks to understand the territory selection process. If you think back to when you chose your current home, you most likely chose the part of town you wanted to be in first and considered things like safety of the overall neighborhood, proximity to shopping areas, distance from your job, or quality of the school system if you have children. Then, you probably had a list of criteria for the specific house that you wanted.
You will go through a similar process when selecting a territory for your Right at Home franchise. But instead of looking at school systems and youth activities, there will be other characteristics to consider that are more business and consumer focused. Then, once you choose your “neighborhood” (territory), the next step is to select the specific location for your office using certain criteria such as square footage and proximity to caregivers.
Think of territory selection the same way you think of home selection. The difference is simply in the criteria you use to make your decision.
Read on to discover some of the common mistakes that people make when selecting their Right at Home franchise territory.
Assuming areas with high incomes are good territories
The story behind this assumption is that people are constantly looking for data to tell them whether or not a territory is good or bad, and they often zero in on the average income number. This makes sense if you open a business that serves customers who have incomes. However, it’s important to remember that those who use our services, people who are in their 70s, 80s or 90s, have little income or no income.
Assuming that a territory is good because it’s where you live
There are a variety of reasons why people often want their territory to include the specific zip code that they live in. Most of the reasons I hear are related to their own expectation that their territory should include their own home. While convenience certainly could play a role – many people would certainly love to work in the same area where they live – you should have a specific business reason for wanting your zip code to be in the territory. A valid example could be if your home is in an area with a lot of older, owner-occupied homes that people have lived in for the past 40 or 50 years. But most commonly, that is not the case. Many of the types of houses and neighborhoods that our franchisees live in are quite different from those that our clients live in. If the demographics of your neighborhood and the neighborhoods surrounding where you live don’t fall in line with the demographics you aim to serve, it would be wise to think of your business’s potential success more than the convenience factor.
Not considering where your potential caregivers might live
This goes hand in hand with the aforementioned point. Focusing the selection of your territory in an area that has high incomes and big houses means you will likely be missing out on a key component of the Right at Home business model: caregivers. Many caregivers are in different places in their lives and do not come from the same socioeconomic statuses as the franchisees that employ them. As such, they are more likely to live in working class neighborhoods. One of the things we pride ourselves on is matching the right caregiver with the right client. We do this by making sure the caregiver is happy in their working environment, which includes making sure their travel distance to the client is appropriate. If the caregiver has to drive long distances to reach their client, they may ultimately decide that they need to work closer to where they live and as a result, choose to work for a different home-care company.
Falling prey to paralysis by analysis
Right at Home strongly encourages franchisees to understand the market where they are going to operate their business. Where are the boundaries? How many people are over the age of 65? Where are the referral sources in the area? Who are the competitors and where are they located? What other Right at Home franchisees are in the area? What do they have to say about doing business in the area?
Determining the answers to questions like these is important. But, one of the most common mistakes that people make is becoming paralyzed by the demographic report for a particular area. Some get caught on the average income, as I mentioned above. Others find some other data point in the report that prevents them from moving forward. And ultimately, if that data point is of particular importance to them, then they definitely should not move forward with the business. But, it’s also important to keep things in perspective and to remember that these reports are helpful in order to gain a base understanding of a particular territory. However, there is no substitute for getting in your car and driving through your territory. Searching for one data point that will tell you whether a territory is a good one or not is likely going to lead you on a wild goose chase. And in some cases, prospective franchisees who have zeroed in on one specific demographic data point have later found that there were actually other factors regarding the decision to open a business that were holding them back.
Assuming that because a territory is still available that there is something wrong with it
Territory selection is definitely a place where you should avoid letting crowd mentality affect your decision. If a market is still open, we often hear, “If this is a good market, why hasn’t someone else already purchased it?” Obviously there is no reasonable basis behind this assumption. But, as human beings, we do sometimes hear that nagging question in our heads. We assume that we must have missed something in our analysis if others haven’t already purchased the territory we are looking at. The reality is that there are many reasons why certain markets are still available. After all, there are still more than 300 Right at Home territories still available. Maybe someone else who looked at the territory liked it, but ultimately decided the commute was too far. Or, maybe the territory didn’t meet the minimum number of seniors we require at that time and is now newly available. The main point: do not let the fact that a territory is still available hold you back.