When you think of starting a business, are you thinking of starting from scratch? Are you thinking of developing your own idea and building that idea from the ground up?
Sorry to burst your bubble but, according to Bloomberg, 80% of new businesses fail in the first 18 months. So, you could try and be part of the 20% that succeed or you can buy a franchise and have a 90% chance of succeeding. The main reason why most start-ups fail is because they go into it solo. They also lack of the experience, expertise and funding.
But, you can be in business with other people by buying a franchise. And, as much as it’s more costly than starting from scratch, investors and banks are more comfortable dealing with an already established business with a proven track record. Furthermore, buying a business could give you valuable legal rights, such as patents or copyrights.
Buying the perfect business starts with choosing the right type of business
This means you need to understand your not only interests and talents but also which of them match with your skills and experience. You need to answer these two important questions:
1. What are you good at? Think of all the things you’ve done especially in your working life and what work you’re comfortable with. Match your experience against your skills set to help you narrow your choices.
2. What industry are you familiar with and understand? It’s very important that you not only understand your business but, believe in it and its product. You can’t start a beef burger joint as a vegetarian… That wouldn’t work.
How to get your franchise up and running
Because 90% of franchises are a success and banks know that, it will be easier to get a loan to start your franchise. However, before you approach the bank for a loan, you need to do a few things:
1. The first thing you need to ensure your own finances are in order. Your financial record has to be clean because the bank will not trust you enough to finance your new business venture if you can’t keep your own house in order.
2. Once you’ve decided on the franchisor to approach, you need to get approval. You can actually research the franchise you want when you’re matching your skills and experience.
3. You have to get all the right documentation required by the bank including your personal financial information , a sound business plan and comprehensive financials for the new business. And, don’t forget to shop banks to get the best deal.