Top 5 mistakes to avoid when starting a franchise

Yes, franchising is considered as the safest growth opportunity. However, just like any other profession, it also comes with its own downsides that most aspiring entrepreneurs fail to pay attention to. If you wish to become a successful entrepreneur, you must get yourself familiar with the biggest blunders that most entrepreneurs make, says Jim LaGanke, President of Stewart’s All American.

Before you step ahead to buy a franchise, you must stay abreast with the current market and learn from the mistakes that most beginner entrepreneurs have made.

To help you avoid those mistakes, Jim LaGanke explains some of them below.

Not getting the right financing - Starting a franchise and getting the right financing isn’t as simple process as it looks. This is where most budding entrepreneurs fail. Those who start the process of getting funds late may face unfavorable terms.

For example, if you’re buying a franchise from a newer concept, a bank will require at least 30 percent down payment. And you may use your savings for this requirement. But there is an alternative way to solve this: There are some companies who can help you combine an SBA loan with a Rollover for Business Startups, where you can invest 401K without paying taxes. Hence, you must learn about the benefits of programs including ROBS - Rollover for Business Startups and SBA loans.

Failing to have a backup plan for capital - One of the common occurrences when people start a franchise is that they quickly run out of money or find it difficult to even reach a break even point. This happens because they fail to understand the overhead costs associated with running a franchise. And, they failed to have a backup plan for capital. Hence, Jim LaGanke advises to have a source of capital, so that you always have a backup capital if something goes wrong.

Buying a franchise on the basis of your passion - Although investing in a business you’re passionate about is a great idea, the most important thing you should consider is the expected profitability of the business. Make sure you’re not buying a particular product or service just because you love it. Therefore, when you buy a franchise keep in mind the objective of your business, the viability of the concept, and the expected income.

The bottom line

Whether the franchise has been in the business for years or is new in the market, you shouldn’t overlook the risks associated with starting and running a franchise. Are you planning to buy a franchise? If so, make sure you avoid the above common mistakes that most franchise buyers make.

Comments

Post a Comment

Popular posts from this blog

3 questions to ask yourself before buying a franchise

From YouTube Vlogs to blogs and personal consultation, you would have gotten the same advice everywhere that buying a franchise is the easiest way to become an entrepreneur and make more money. And yes, it is a proven model that definitely works well with planning and strategy, says Jim LaGanke , President of Stewart’s All American. On the contrary, you would have also heard some franchising failure stories where people lost their money. Although there is a risk of losing your money in running a franchising, it doesn’t mean it will happen to you. To be on the safer side, it is important to perform a careful research on your potential options and make a plan accordingly. Before you make a final decision, below are some of the important questions given by Jim LaGanke that you should ask yourself. How much I am willing to put in the investment? Buying a well promoted  franchise gives you an opportunity to take advantage of the economic benefits that you may not get otherwise. These bene
Read more

New year resolutions for budding franchisees in 2020

2020 is around the corner, and it's that time again to make new resolutions. Most people might have already started preparing their things-to-do-list for the next year. These resolutions usually vary from getting fit to involving in a hobby and working hard. However, a lot of people might be thinking to quit their 9 to 5 jobs and shaping their careers in a different direction in the New Year. If you’re one of them, investing in a franchise business might be one of the best decisions. If you’ve already set up a franchise outlet or planning to open a new one in a few days, first of all, congratulations! Indeed, this is an exciting time in your life, but you can easily get caught up in daily errands. It’s a tradition to form resolutions before you begin a New Year, says Jim Laganke . Franchise owners are no exception. In fact, these resolutions will help your business grow better and gain more profit. Below Jim Laganke, the president at Stewart’s All American , explains some of the i
Read more