If you are planning on starting a profitable business, make sure to review some basic principles of start up success. Plus, consider investing in a franchise to make the process easier.
It is easy to start a business; but it is much harder to actually make a profit from it. Ability to research and persistent due diligence are key to identifying that money making venture everyone wants.
Fact is, franchising can take away many of the risk factors of an independent start up by making the key elements of due diligence easier.
When evaluating the potential profitability of you business, review and evaluate the following areas of your potential venture.
Remember, the following applies to both the franchises and the independent start ups:
Demand
Is there a demand for specific products or services in your community? Is the demand seasonal?
For example, lawn and garden care or swimming pool maintenance may be profitable only in the spring or summer. Is there likely to be a continuing demand for the products or services in the future?
Is the demand likely to be temporary, such as selling a fad food item? Does the product or service generate repeat business? Is there potential to sell membership type services?
Competition
Unless you have a unique idea, your road to starting a profitable business will likely involve taking customers away from somebody else. What is the level of competition, nationally and in your community? How many competing companies sell the same or similar products or services?
Are these competing companies well established, with wide name recognition in your community? Do they offer the same goods and services at the same or lower price?
Your Ability to Operate the Business
Any business has a potential to fail. You need to consider that possibility during your planning process. Do you have the proper educational background and/or experience for this business?
Do you have enough financial resources to invest in marketing or to survive a downturn in the economy? Could you conduct the business alone if you must lay off personnel to cut costs?
Importance of Name Recognition
Do you need a brand name to succeed in this business? Can you build a brand name on your own? Franchises in particular, often sell themselves on fact that they have established a brand name. Therefore, before purchasing a franchise, consider:
1.The company's name and how widely recognized it is
2.How long the franchisor has been in operation and how stable they are
3.If the company has a reputation for quality products or services.
Training and Support Services
How entrepreneurial are you? Are you ready to "fake it until you make it?" Are you going to need additional training and support for this business? What is the cost of the consultants and vendors who can provide that training?
If buying a franchise..... What training and ongoing support does the franchisor provide? How does their training compare with the training for typical workers in the industry? Could you compete with others who have more formal training?
Growth
It is often tough to estimate business growth when starting a profitable business. There are so many variables to think about. Often, entrepreneurs just want to start making many... any way possible.
On the other hand, a growing franchise system increases the franchisor's name recognition and may enable you to attract customers. Growth alone does not ensure successful franchisees; a company that grows too quickly may not be able to support its franchisees with all the promised support services.
In the end, there are many key factors to consider when you are planning on starting a profitable business. Take your time to research every one of them. It may seem like a chore, but it is much easier than, years later, coping with running a business that is loosing money.
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