Select A Business That Is A Good Fit For You (written November, 2012)
In searching for the ideal home based business you might consider purchasing a business opportunity or franchise from the many that exist. One study revealed that more than 760,000 franchised businesses produced almost 10 percent of the U.S. private sector economy, or more than $1.53 trillion dollars (International Franchise Association, www.franchise.org). Wow!
An advantage that business opportunities and franchises have over independent startups is that potential customers already recognize their names and related products and services. These opportunities however often require their buyers to give up a certain amount of operational control. Still many entrepreneurs invest in these turn key businesses, because they are less risky than starting a business completely on their own.
The Right Business – If you wish to purchase a home business opportunity, take time to examine carefully each company that interests you. A friend of mine is a plumber so when a drain cleaning franchise opportunity came knocking at his door – bingo! It’s right up his alley! Success is more likely if a business complements your interests and talents and utilizes your acquired expertise in its operations. If you make a list of the experiences and skills gained from former jobs and/or military service, education, training, volunteer work, or hobbies, you can use it to find a business that will encompass all your assets. In thinking about your life’s goals, can you see yourself operating this business for the next twenty years? Does it involve work you always dreamed of doing? If needed, professional career counselors or franchise consultants can assist you in selecting the ideal business, or even decide if an opportunity or franchise that suits you at all. Are you and a friend thinking of buying an opportunity together? Partnerships can combine one another’s strengths and talents to achieve success, but most dissolve due to business disagreements. If an important factor in your selection is whether you will or will not be required to operate with company personnel, ask the opportunity’s representative whether you will be working independently or with company stuff.
Financial Resources – Financing is a big challenge for any type of business startup. Prepare a personal financial statement to assess what you can realistically invest in a business without placing you and/or your family into financial difficulty. Your accountant can assist you in preparing this statement, and later on help you to analyze prospective companies’ audited financial records. In exploring financing options, ask your bank’s officers about their loan policies and if they are a participant in the U.S. Small Business Administration (SBA) Franchise Registry. In this program, The SBA works with franchisors (company owners), franchisees (you, the buyers), and qualified lenders (banks) to streamline the loan application and qualification process. My buddy the plumber has gotten tremendous assistance from the SBA. They want to help people who are inspired to be better like my friend the plumber! For more information, visit www.franchiseregistry.com. For additional financing resources, ask company owners if they have funding plans for qualified buyers. Consider contacting additional independent lenders, or asking friends or family members for possibly co-investing with you. Paying down personal debt & increasing your savings to invest in your business will help improve your chances for outside funding.
What to Look for in a Good Company – Here are some important factors to consider when selecting a home business opportunity: *Training and support. Does the company provide training? If yes, for how long and what type? Is it adequate for a novice or must you have some prior background or training? *Market demand potential. Has the company conducted test marketing of its products or services in your targeted area? If so, do the results show there are enough potential customers for you to make a profit? Is there a business and marketing plan you can review? Will the company provide marketing support and what will be your role in ongoing marketing activities? Will you pay any advertising fees? *Competitors. Were any recent competitor market studies conducted in the area where you will be operating? If so how does the company’s products and/or services compare with, or standout from the competitors’? Will your territory be exclusive within this company? *Time to profitability. How long does the company estimate that it will take for your particular opportunity to make a profit? How much money does their average opportunity make? Does the company have written substantiation to support its earning claims? (The Federal Trade Commission requires written proof if you request it.) *Startup costs. What do the opportunity’s total startup costs include? Initial purchase fee? Rental or building costs? Inventory? Equipment? Are there additional costs like ongoing royalty or licensing fees or insurances? How much working capital do you need for your first year in business? *Equipment required. What equipment is provided and what must you purchase? What happens to that equipment should you retire or your contract not be renewed? * Legal aspects. By law, all franchise programs must provide you with a Uniform Franchise Offering Circular (UFOC). It is a document disclosing items about the franchisor(s), such as their prior franchise managing experience; litigation or bankruptcy involvement; their contractual responsibilities; and much more. *Structuring an agreement. Is the seller willing to negotiate contract terms with you? If so, use the guidance of your lawyer and accountant in arranging a favorable price and terms that are beneficial to you. *Restrictions. What are the company’s management policies? Are you limited in what supplies you must use? The goods and services you offer? What standard operating procedures must you follow? Ask yourself if you will be satisfied having limited control of the business and can you conform to the company’s practices? Straying too far from the company’s set guidelines may jeopardize your contract. *Due diligence. This is the time it takes to complete, a thorough background check and investigation to ensure you have all the information you need to proceed and purchase your chosen business opportunity. Before signing anything or making a down payment, make sure that all your questions have been answered.
Researching Before Buying – Legitimate business opportunities and franchises welcome questions and will provide company information at no cost. Federal and state laws exist governing the operations of both opportunities and franchises so perform the necessary research. Check the legitimacy of any venture before buying and always seek legal counsel before signing any purchasing contracts or agreements. My friend the plumber researched this franchise drain cleaning service for 8 months before his took the leap. It costs a lot of money to get involved with franchises. Do your due diligence my friends.
Starting up the Business – Signing a contract is just the first step in launching the business. Here are additional tips. *Work with the parent company. Involve yourself in every aspect of the company so you can understand its complete operations, policies, ethics, procedures, and what it expects of you. In turn tell the company what your expectations are of it. *Deal with problems and issues. Encourage good communication between to prevent misunderstanding.
Once you are off and running with the right opportunity, you’ll be on your way to a happier and a more successful life that you deserve!
The author of this article is Larry Costello, President of All-American Print & Mail, 2200 Wilson Blvd #102-57, Arlington, VA 22201.