Fear: leverage it to achieve your dream of business ownership

Fear is a natural protective response, especially when you are about to experience something you’ve never experienced before. Fear of the unknown can keep us safe because it forces us to evaluate the situation before moving forward.  While fear can keep us safe, if the perception of fear is not managed and assessed rationally it can also keep us from realizing our dreams.

For example, a Gazelle can leap ten feet in the air and jump nearly thirty feet in a single bound. However, place them in a zoo, bound by a six-foot concrete wall, and they are paralyzed. They are paralyzed by the fear of not being able to see what is on the other side. Therefore, they won’t attempt to make a leap for their freedom. Many of us are like the gazelle. If we can’t see what lies on the other side we won’t take the leap. Thus, we remain caged by fear and live our lives always wondering, what if?

The Dream of Business Ownership

There are many people in the world that dream of owning their own business. Odds are that you are one of them. When people tell me that they would love to own their own business, I always ask, “Why?” In most cases, they talk about the freedom that comes with business ownership. Freedoms like, the ability to make their own decisions, set their own schedule, determine their own fate, and one day realize a level of financial freedom that just isn’t possible when working for someone else. However, I also find that few ever act on their dreams of owning their own business.

When I follow-up with, “What’s holding you back?” I usually hear things related to fear of failure, such as: What happens if I don’t make it? What happens if I quit my job and realize this wasn’t for me? I have a family and can’t put them at risk. I’m afraid I don’t know enough to do it on my own. And etc… While these are great reasons to take a step back and evaluate the opportunity before taking the leap, none of them should stop someone from investigating the possibility of business ownership. Fear of the unknown should force us to do our due diligence, it should not cage us.

Knowledge Is Power 

When we experience the emotion of fear we first must ask ourselves, “Why am I fearful?” Knowing the genesis of our fear helps us in our investigation of that fear. In many cases, fear is based on perception, a lack of knowledge, a lack of confidence, or all three. We let the fear of what might happen paralyze us. Starting a business certainly involves a lot of unknowns. However, if we take the time to understand all aspects of the business we might find that those things we fear are not to be feared at all. We might also find that if we operate as a good business person should their is more to be excited about than feared.

Experience tells us that the more we can learn about those things we fear the less fearful we are. For example, think about something you feared, but through education and practice you overcame that fear. For some, it might have been learning to drive a car. For others, it may have been learning to ride a motorcycle, jumping off a high dive, rock climbing, or navigating a boat. For me, it was learning to scuba dive. No matter what it was, once you became knowledgeable and gained experience the fear subsided and you became more confident.

Take the Leap

Business ownership is no different than learning to ride a bike. To overcome the fear, you must do your due diligence and educate yourself. Then, practice those skills that have been identified to be the best practices for whatever business endeavor you choose. If you are a person who just doesn’t have the skills or knowledge to start a business from scratch, but you have the drive, desire, and business savvy to try it on your own, there are other options. You can achieve the freedom of owning your own business and the support of proven systems through franchising.

Franchising offers an opportunity to own your own business while benefiting from someone else having figured out the systems, process, product, and brand. If you implement the franchisor’s systems properly and operate using tried and true business practices your odds of success are much greater than trying it without franchisor support. With that said, you must realize that franchising does not guarantee success. There are many out there who have tried franchising and failed. However, I have found that many of those who have failed not only failed to implement the franchisors systems properly, but they also failed to utilize fundamental business practices. In most cases, it is the franchisee’s failure to operate efficiently and effectively, follow procedures, hold people accountable, maintain tight financial controls, and focus on customer service that led to their demise. Likely, had they gone it on their own without the franchisor’s support they probably would have failed anyway and much sooner.

What If?

Business ownership is scary and it is a lot of work. However, if you talk to those who took the leap you will most likely find that the risk was worth it and the reward was much greater than staying in their comfortable job that restricted their creativity, passion and drive. Business ownership isn’t for everyone, but until you dig a little deeper you’ll never know if it might be perfect for you!

Navigating The Road To Franchise Success

There are many reasons an entrepreneur chooses to engage in business with a franchise as opposed to going out on their own. Just like personal relationships, most franchisees are drawn to a franchise because they like how the brand looks and feels. Maybe it was the brand marketing that caught their eye. Maybe it was an experience they had with the company. Maybe it was a product or service that blew them away. No matter what it was that attracted them to the franchise, it was something they believed others would find equally appealing.

In most cases, the attraction to a franchise comes through a product or service experience. Humans are fairly consistent when it comes to identifying differences in experiences. For example, most people can quickly describe the differences between K-Mart, Walmart and Target. There is no doubt that product pricing will come up in the conversation. However, if product pricing were the only deciding factor when it comes to business success Target wouldn’t exist today. There is much more to business than price. People are willing to pay more if a company can make a case for the added cost. For example, corporate culture, brand image, established systems and processes, customer experience and etc…all contribute to the overall experience and either draw the consumer in or pushes them away.

Those factors and many more are reasons an entrepreneur may be drawn to a franchise. The idea of owning a “turn key” operation with a proven business model is extremely attractive. Knowing that someone has not only figured out what makes for a sellable product, but they’ve also figured out the branding, marketing and systems that are necessary to support that product can be worth every bit of the royalty fee a franchisee will be asked to pay. After all, the percentage of sales a franchisor will demand for having done all that work to develop a successful business model may pale in comparison to the work, financial investment, and risk one might have to take on if they were to do the same on their own.

That said, not all franchises are created equal. Therefore, a prospective franchisee must be vigilant in their assessment of not only the franchising opportunities that are out there, but also with their understanding of what it will take to succeed. While much of a franchisee’s success lies with a quality franchisor, a franchisor can only do so much. Even the most successful franchisors have some dogs in their portfolio. In most cases, the dogs are not because the brand is weak or the product stinks. It’s usually because the franchisee failed to hold up their end of the bargain. Some franchisees just don’t do what needs to be done to succeed. I would venture to guess that had the dogs in many franchisor portfolios gone it on their own and not engaged with a franchise they would have died the same death, only quicker.

No franchisee that I know wants to fail. However, just like franchises, not every franchisee is created equal. Not every franchisee is built for business.  We’ve all seen examples of a business failing under one person, only to succeed under another. Some people are naturally built for business and some are not.  However, this does not mean that someone who is not a natural cannot learn to be a successful business owner. The difference is in behaviors. The great thing about behaviors is that they can be taught and learned. Therefore, there are certain behaviors that every franchisee can learn from those who are successful. Once learned they can greatly increase their odds for success. However, the identification of the behaviors alone will not lead to success. Its the execution of those behaviors that garners results. Anyone can create a plan, but not everyone can execute the plan.

Below are some behaviors that I have found to be present in successful franchisees. I consider them to be the differences between those franchisees who DO succeed and those who DON’T.

What Successful Franchisees DO:

  • They read and understand the Franchise Disclosure Document (FDD) and Franchise Agreement (FA), ask questions about both and seek legal opinion before contractually engaging with the franchisor. A good franchisee knows the rules of the game before playing. There should be no surprises after you’ve signed the agreement. A franchisee must know all the financial obligations, as well as all of the limitations and expectations being set forth by the franchisor before they sign on the dotted line.
  • They confirm in writing any oral representations that are made. A good franchisor will not make any claims that cannot be backed up in the FDD. If claims are being made that you have not read in the FDD or FA, hold the franchisor accountable for putting it in writing. If they won’t then that will tell you all you need to know about the character of the organization’s leadership.
  • They interview current franchisees. Don’t just rely on the list of franchisees that the franchisor may have given them as possible contacts. They look in the FDD and call a few that are not on the list. Then they ask some very pointed questions about the franchisor and their experiences. One very telling question to ask is this, “Knowing what you know today, would you engage in business with this franchisor again?”
  • They seek to understand how many multi-unit owners there are. Multi-unit owners telegraph satisfaction. If there are many one unit owners it could be for a reason, which may be dissatisfaction. After all, you don’t typically invest in more units unless you are a satisfied franchisee.
  • They seek to understand why franchises have failed. Every franchisor has some number of failed franchises. This is part of doing business. Some people who get into business had no reason for doing so in the first place. Many franchises fail because the franchisee did a poor job of running the business. That’s not totally the fault of the franchisor and in many cases shouldn’t be held against them. However, a franchisee should try to figure out the cause of the failure. Even if failures were the fault of the franchisor, it is worth understanding why they failed. I wouldn’t throw the baby out with the bath water because some franchises have failed. Maybe you’ll learn it wasn’t the franchisee. Maybe you’ll learn that early on the franchisor had some poorly designed systems that contributed to some of the failures. Maybe you’ll also discover that the franchisor learned from those early mistakes and rectified those errors. Almost every company makes execution mistakes. Companies like GM, Ford, Toyota, and Apple have all screwed up in their history. It doesn’t mean they are bad investments today.
  • They know how much capital it will truly take to succeed. Every business, franchise or not, must withstand the test of time. In my analysis, the most successful units are those that have been given time to become established. There are few overnight successes. Even some of the most iconic franchise brands needed time to establish themselves. Having enough capital on hand to carry the franchise through that growth stage is critical. Cash-flow is king in small business. However, it may take a few years to get to a point where enough cash is flowing for the business to support itself on its own.
  • They interview the corporate personnel before agreeing to become a business partner. A franchisee must get to know those who are making decisions about his/her future. If there is not a feeling of trust and confidence in the ability of those at the top to take the organization where it needs to go, then it is a marriage that is doomed to fail. You need to know and understand the strategic vision of the organization. You also need to know where their passion lies. If it’s not with the brand, then it will come through in their leadership. Passionate and smart people at the top should work as hard as you when it comes to making the business work.
  • They analyze their market in advance. A franchisor may help with site selection, demographic analysis, and real estate acquisition. However, it is the responsibility of the franchisee to decide whether or not a particular location is the right location. Know the competition, market receptiveness for your product or service, and how much advertising and marketing will be necessary to break through. Not all markets are the same and some will be easier than others to succeed in. Knowing this up front can be the difference between success and failure.

What Franchisees DON’T Do:

  •  They don’t only work in the business, but work on the business (E-Myth Revisited)
  • They don’t operate without a strategic growth plan that also incorporates actionable items to be completed within a specified timeframe
  • They don’t let the established systems and processes to become bastardized
  • They don’t let things slide. They know that accountability and execution are critical to business success.
  • They don’t ignore the numbers. Due diligence in financial management is as critical to success as execution. Knowing that the product, employee and rent costs are within specified limits is key to keeping them there.
  • They don’t stop marketing. Marketing can be expensive and it can feel as if it is not worth the investment. However, they also know that when you are out of sight you are also out of mind. There is a reason McDonald’s, Taco Bell and Apple continually market the way they do.
  • They don’t ever forget who the customer is and that if it wasn’t for the customer they wouldn’t be in business.
  • They don’t underestimate the value of hiring the right people and training them accordingly. They know that the right people can be a differentiator.
  • They don’t ignore culture. They know that a culture exists in every organization. They also know that they must develop that culture or someone else will. The right culture can bring out the best in people and lead to a highly disciplined and motivated team.
  • They don’t shy away from the tough decisions. Successful franchisees do what needs to be done, whether they like doing it or not. Accountability, adherence to systems, and spending what needs to be spent to survive are not always fun or easy. However, the successful franchisee knows that success hinges on the “how” of business. Execution is key to operational excellence and operational excellence is key to success.

Owning a business isn’t easy. But then again, neither is working for someone else. If you have a desire to be your own boss then franchising may be your ticket to professional, personal and financial freedom. To achieve those goals, you need to be clear about the fact that it will require a lot of hard work. However, the rewards of business ownership can greatly outweigh the risks.  The question is most likely not whether you can do it or not. The question is most likely whether you truly want to do what it will take to succeed. That, my friend, is a question only you can answer.

Questions to ask before you purchase a Franchise

When investigating franchises to purchase it is vitally important you ask the right questions to representatives from the brand.

Here are seven questions to keep in mind when conducting due-diligence on franchise opportunities:

1. What makes your brand better than the competition?

– As a potential franchisee and business operator you need to know and believe in the competitive advantages your brand claims to offer.

2. What are the costs associated with your franchise?

– When purchasing any business the numbers are everything. Get a grip on startup and ongoing costs of the franchise system. Ex: Franchise Fee, Build out Costs, Royalty, & Marketing Fund.

3. Can you explain the training program & ongoing support?

– The reason to purchase a franchise is the operational “playbook” the brand offers. Without a sophisticated training program and documented systems the franchise offers little benefits.

4. Do you offer assistance with real estate?

– Location is one of the most important factors in any business, it is extremely important to leverage the knowledge and experience of the Franchisor.

5. What is my protective area?

– Understand where you will have the right and protected area to conduct business under the brand.

6. Can I see the FDD?

– The Franchise Disclosure Document (FDD) will lend information on the history of the company, executives, ownership structure, any litigation’s/bankruptcies, fees associated, assistance/training, territory, trademarks/patents, financial performance representations (be careful with these), and financial statements of the Franchisor.

– Under the Franchise Rule, which is enforced by the Federal Trade Commission (FTC), a prospective franchisee must receive the Franchisor’s FDD at least 14 days before they are asked to sign any contract or pay any money to the Franchisor.

7. Is there a current Franchisee I can speak with?

– The Franchisee can provide you with insight the franchise sales representative cannot. The Franchisee is able to speak about the numbers related to the performance of the business, discuss support the Franchisor provides them, and offer unbiased reviews of what it is like to be a franchisee. Maximize your time speaking with current franchisees.

These 7 questions are a starting point for investigating franchise opportunities. It is important to conduct your own research and speak with multiple brands before deciding which franchise to purchase.

A franchise is very much a marriage (at least for ten years- in most cases) make sure to “date around” before proposing the brand of your dreams.

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Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

Follow or Connect with Ryan on LinkedIn at https://www.linkedin.com/in/ryan-rao/