Failure. The word itself invokes intense emotions. For some, that emotion is fear. For others, it’s motivation.
I’ve been fortunate to know hundreds of small business owners during my time in franchising. I’ve seen some that were wildly successful who achieved things even they themselves thought were beyond their reach. They grew personally and professionally, and provided the lifestyle they wanted for their families. I’ve also seen horrible failures. In those situations, what started out as a great opportunity with buckets full of hope turned into bankruptcy and despair.
So how do you ensure you are one of the successful ones? What do you do to make sure that you’re making the right decision for you and your family? Well, the answer isn’t necessarily a popular one because it involves time, a lot of gut wrenching conversations, decisions, and commitments.
No one can do your due diligence and soul searching for you. No one can do the research for you. And no one can decide for you. Only you can decide if you are qualified for business ownership. As a society we want quick and easy. Look no further than the grocery store as proof. We’ll pay a lot more for our veggies at the grocery store if they’ve already been cut up and washed. Precooked meals can be found in several places inside most grocery stores. On a recent visit I found a warm, fully cooked rotisserie chicken right next to the register (I bought the last one at around 5pm). And fast food and quick service restaurants are everywhere. But, with all this convenience there is still no shortcut to finding a business. You have to do the work. The following 5 steps summarize what you’ll have to do.
First, evaluate yourself and ask yourself (and your spouse) the tough questions. Questions like:
- What kinds of things am I good at?
- What exactly are we willing to do to achieve our goals?
- Are there other ways to achieve our goals that don’t involve opening a business?
- What’s the real reason that I want to be a business owner?
- What lifestyle sacrifices are we willing to make?
- Do we really have the risk tolerance to be business owners?
- Are we doing this for the right reasons?
Second, establish the amount you are willing to invest, remembering that the amount invested has little to do with the amount you will make. There are many low investment businesses out there with returns that are much higher than those with much higher initial investments. That’s not to say that high investment businesses are bad choices. But, there’s no rule that says you have to invest all of your savings into a business either.
Next, establish your criteria and, once identified, don’t change it just because you find a business that sounds like fun. These criteria might be things like degree of recession resistance, number of employees required, retail v. service, etc. Those that choose Right at Home are usually looking for something that is service oriented, recession resistant, and mostly variable cost (i.e. very low fixed costs for real estate and employees each month). They are also looking for a business that allows them to provide necessary services to the community. But, Right at Home would be the wrong choice for someone who preferred to let customers find them (retail) or someone who prefers to work alone. So, as my old college professor Jim Donnelly once told me, “Figure out what you enjoy doing, and then figure out a way to get paid for it!”
Then, do your homework. Talk to several franchisees of each concept you are considering. Talk to several different franchise concepts, too, and consider striking out on your own! Although most find the risk to be too much outside of franchising (especially if they have no prior experience in the industry), for some it makes sense – especially those that feel confined by requirement to utilize a franchisor’s established system. Also, while the decision is 100% yours to make, consider hiring an expert accountant and/or attorney to provide guidance on your decision.
Finally, make a decision. This actually is the toughest part of the whole process for most people. Why? Because it involves fear. And then there’s the chance of failure. I’ll say it again…failure. The word itself invokes intense emotions. Which is where the aforementioned fear comes into play. If you do 30-60 days of real due diligence (this is the average for most people), follow the steps above, ask yourself the tough questions, talk to a bunch of existing franchisees, and then visit the franchisor at their headquarters, you should have the information you need to make an informed decision. If you still can’t decide, you either didn’t do it right, or you’ve already made your decision and you haven’t told yourself yet! Either way, for your own well-being, commit up front to making a decision, even if that decision is “no.” If you skip this important step, you’ll likely find yourself “in limbo” for years as you try to decide, only to find that the opportunity passed you by.