About a year ago, I wrote about some questions to ask yourself as you search for the right franchise business. If you are in the process of evaluating a franchise or small business opportunity, I’d encourage you to check out that old post and, in addition, here are a few more aspects of small business ownership you may want to contemplate.
1. Are you investing in a financially viable business? If you are considering a franchise opportunity, ask the franchisor for their current Franchise Disclosure Document. In Item 19 of this document, the franchisor may choose to provide Financial Performance Representations, which can be very helpful to you in evaluating the financial health of the concept. The initial investment is obviously important too. You can find a break-down of the initial costs in Item 7 of any Franchise Disclosure Document.
2. Is your concept recession proof? In the past few years we have all seen businesses close because they targeted a sector that was particularly hard hit. Take a long hard look at your concept to determine if it would be viable in both good and bad economic times.
3. Are you getting value for the ongoing royalty you pay a franchisor? Make sure you have a clear understanding of the services they provide, and validate these services with existing franchise owners. If the franchisor doesn’t have on-going support systems in place, you probably want to keep looking.
4. Can you see yourself building a strong team? One of the biggest challenges in any business is leading employees. Do you have the ability to create and motivate a strong team? Can you delegate effectively? Are you able to fire someone if they are hurting your overall team? Can you inspire your team to embrace your vision for the business?
5. What will your business look like when you sell it? It’s important to consider your long-term vision for your business and your exit strategy. What do you want it to look like when the day comes for you to transfer ownership?
Every week I speak with people who are considering the leap to small business ownership. I understand it’s an important decision. If you are also considering this or already own a small business, what are some questions you’d recommend?
