Five Reasons Why All Business Opportunities Aren’t Created Equal

Not all business opportunities offer equal returns on investments. It is important to evaluate and analyze the new venture before committing to invest your resources, like your time and money. Reflecting upon the following five reasons can help you discern which business opportunities are truly good prospects, and which ones are better to avoid:

Potential Earning Power: Will this be good for the pocketbook?

Every person who analyzes a new business opportunity wants to know whether the prospect will be financially lucrative. Earning power is often the driving force for participation in a new venture, and it is important to understand if the potential for increased profits will remain stable. Aside from evaluating the income for a business prospect, you should also consider operation costs and your ability to secure financing. If you can justify the risk, the earning power may be strong.

Network Effect: Are More Customers Good for Business?

When researching a new business opportunity, one of the first questions that should be answered is whether an acquisition of a larger customer base will be increase profits. In other words: will more customers ensure continued success for a business? Oftentimes, a business venture caters to a specific market. If the demand increases, the business suffers, as it cannot provide the proper supply or support to its growing target. On the other hand, a bigger customer base can provide better opportunities for the right company.

Support: Will you have the right resources to support the business venture?

If you are looking to enter a certain area of the business market, you must ensure you will have the proper support and training to maintain a successful business. Suppliers can often have negative attitudes toward purchasers or new suppliers in the area. All too often, companies will franchise to intermediaries while adopting a hands-off policy. Other businesses encourage acquisition and will supply the new owner with training and support staff. Identifying a company who will offer onsite assistance and operational discounts can make all the difference to someone new to the business.

Market: Is the Demand there for the Supply?

Economics 101 recognizes the founding principle of a successful business venture. There must be a demand for the product you are supplying. The economic environment does matter, but it need not be the deciding factor. Rather, you should look toward the creativity of the business opportunity and whether the new area you are entering allows you to maintain a unique position to supply the demand.

Opportunity to Expand

Similar to analyzing the supply and demand opportunities is the evaluation of industry trends. It is important to gauge whether the opportunity will present itself to expand not only monetarily but also territorially. If you have assessed a market need with little supply, then there is a strong potential to grow your business geographically and financially. The key is to always be on the lookout for an expansive business model.

Building a Better Business Plan to Franchise Your Business

In building a solid franchise strategy, I first recommend “packaging” the business, maybe first in your mind, then of course on paper, with technology, processes and documentation, but first, decide what is this model that the franchisee will be replicating? Many times an entrepreneur handles more aspects in the corporate business than what a franchisee will be tasked to do upon opening which can be a good thing – keeping things simple in franchising has never been proven to be a bad thing. Franchisees like, appreciate and typically thrive in simple, structured environments with fewer variables left open. Maybe you decide to shorten the menu… possibly decrease the amount of services offered or it could be that the franchisee won’t be operating a production facility, only the retail portion of your business. Regardless, the franchise business plan should define this model clearly and accurately in order to understand the product being sold as the franchise program takes shape.

The next stages of franchise strategic planning should revolve around research. This research should be strategic in nature and focus on the franchise market, not the consumer market. We aren’t interested in the product or service provided to your customer as much as we are the franchise comparison to similar franchise brands. Who offers a similar franchise model based in your industry? What success stories have their been in your industry throughout the franchise market? In most cases, there are examples of good, bad and ugly ways to approach the franchise market, we typically suggest replicating the good and avoiding the other two options. By coordinating FDD’s from competing brands, interviewing people in the industry, even visiting some competing franchise brand locations if possible, you will be able to formulate your strategic mission and understand the best path to success. Every franchise has a value proposition, it is important that you understand what your brand brings to the market and how you will effectively attract, sign and retain franchisees for your system.

As your franchise concept takes shape, you now should begin to lay the framework for the financials, fees and other relevant numbers to the expansion plan. Franchise fees should be determined by reviewing the costs associated with training, support, sales and marketing related to franchise management. A validated franchise fee should be able to be explained to a buyer and easily understood. You will fail if the impression is given that you picked numbers because you thought they sounded good, you approached the market with confidence and an understanding for what each franchisee gets out of the relationship and why the numbers add up to a strong value proposition. Royalties, the primary profit center for most franchise systems are absolutely critical to the success or failure of any franchise system, understand what the ongoing percentages mean to both the franchisee and franchisor in your model and confirm that the fee structure lends itself to a profitable and meaningful relationship between both entities. Advertising requirements should encompass national, regional, local and cooperative strategies and each need to be managed delicately in order to provide franchisees with a meaningful benchmark to spend on building the brand in their market. Because franchising is a business of scale, the magnitude of every decision you make related to your business, your model and your brand is increased significantly, one wrong move up front replicated many times through franchisees could be disastrous for your brand and business.

Then it’s time to begin to understand markets. The franchise business plan should delineate which markets make the most sense for your company. Understand your consumer demographics. Know your territory analytics and have a good plan in place for how to position your franchised units. Territory disputes lead the list in categories for disgruntled franchise relations. Spend the time and make the investment necessary to fully grasp how and where to place your franchisees in order to avoid cannibalization and under utilization of markets.

A Franchise business plan should lead the way for a franchise expansion model. The vision, mission, competitive landscape and clear directives related to how to accomplish your growth goals should be explained, documented and most importantly validated as to why they are attainable and how you have come to these conclusions.

4 Franchise Marketing Strategies to Bring in Clients During the Slow Season

1. Create a Partnership with Other Non-Competition Businesses

Of the best things you can do during the slow season is find other stores or businesses who are in their fast season. As stated before, different industries and businesses have different slow times of year. If you can find someone with a fast season in your slow and a slow season in your fast, you may have just found your perfect business partner relationship. Talk to the other business owner, pull together a franchise marketing plan for two, and watch your business pick up.

2. Participate in Local Events

There are usually local events year round in most towns. This may come in the form of holiday-specific events like Halloween, Fourth of July, Thanksgiving, and Christmas events or they may come in seasonal, annual events like a cause-specific 5k or baseball league. Find what your city offers and try to participate somehow either as a sponsor or a human/company participant. This is a great way to put franchise marketing smack dab in the middle of your community as a contributing, visible, human member instead of just a brand name.

3. Offer Military Discounts and Run Contests

Everybody looks for businesses who are offering specials. Not only does offering military discounts bring in more customers, but it also looks good on your business as you support your country and your troops. You can design contests with free giveaways around specific events or times of year that are happening. Make sure your franchise marketing for these events is well stated that way people know something is going on.

4. Get More Involved in Social Media

Perhaps you have a social media account or maybe your business has never put stock into social media marketing before. If your business is slow, consider looking into alternative types of franchise marketing that you haven’t taken advantage of yet. With the popularity of social media, there are few better ways to get your name out there than through social media websites like Facebook and Twitter. With the help of social media websites, you will be able to advertise your business on top of managing customer relations with real-time conversation. If you are not sure if you have the time or knowledge of social media marketing, don’t worry, there are tons of companies out there that can help you with that too.