Forging ahead – business opportunities that withstand the times
2020 has been a tumultuous year for Australians, with the continuing COVID-19 pandemic causing disruptions in the way we live our lives and the way we do business. However, there is also opportunity for those who know where to look, so while you may need to put your large venue wedding plans on hold for the time being, your business ownership plans can still continue to go ahead. Becoming part of a franchise can be a great way to be a business owner while at the same time having the support of an experienced team at head office backing you up, something that is invaluable during difficult and uncertain times such as these.
We spoke with some of the winners of this year’s Topfranchise Awards who share their top three tips on how to go about looking for a franchise opportunity during an economic recession or downturn, and what makes their business resilient during times of economic stress.
Ali Ölmez, CEO, Jim’s Cleaning Group
Speak to franchisees! Ask the franchisor to provide you with a list of franchisees in your whole region. Don’t just settle for a couple of ‘good franchisee’ phone numbers… Get the list for the whole region and call the franchisees. Ask specific questions regarding the effects of COVID-19 and the recession.
Organise a trial day with franchisees so that you understand and can see yourself enjoying the work and day to day tasks. Ask a lot of questions of existing franchisees and make notes.
Do your numbers and draw up your cashflow forecast. There are financial planning templates available online for this. Include personal expenses as well as business related expenses. Work out how much you need to earn per month, per week, and even per day. It’s crucial to know your break-even point.
It is business as usual for most Jim’s Cleaning Group franchisees. Our leads are up double digits because our franchisees operate safely and reliably, and that is something customers are looking out for more than ever.
Andrew Wild, Recruitment Manager, Smartline Personal Mortgage Advisers
Be 100% committed to what you are going to do and know your own finances and what your capabilities are.
Ensure your values are aligned with the business and know what sort of lifestyle you want to have before you take the leap.
Do your due diligence. Speak to as many franchisees as you can and ask them what they love most about the business, how it supports its franchisees, and what the benefits are of being part of that particular franchise group.
Smartline continues to be a strong system in the current climate as we have seen a huge resurgence in the industry due to record low interest rates, refinancing of home loans and government incentives. Prospective franchisees are also able to leverage our respected brand name and marketing tools to give your business a leg up from the start.
Mark Rusbatch, CEO, Mister Minit Australia/NZ/SEA
The normal factors in purchasing a business are magnified in the current uncertain times where there are increased levels of risk. Ensure that the business you are looking at is meeting a real market need, and that there is likely to be an ongoing demand for that product or service for the foreseeable future. There should also be a clear definable advantage relative to competitive alternatives.
Evaluate the franchise system. Ensure that the business has a well-established track record including consistent comparable growth of trade over a multi-year period. Speak with franchisees to see if they recommend the system.
Calculate the financials to make sure you can receive satisfactory cash returns over the first three-year period. This is magnified if establishing a new greenfield site / business and / or investing significant upfront capital.
At Mister Minit, demand for our services remains relatively constant through all economic conditions as our services are ‘essential to life’. Our technical skills create a barrier to competitor entry, providing a competitive edge for our franchisees, and our strength and scale also allows for increased support for franchisees during tough times.
Steve Plarre, CEO, Ferguson Plarre Bakehouses
Find a business with products that you are passionate about or can see yourself getting passionate about – these are the things that you will be good at selling. Look at the things you enjoy in your own life to see what you naturally gravitate to.
Find a business that can demonstrate resilience through both the good times and the bad. Look at how the business treats its franchisees when things get tough as you want a business partner who knows how to help you when you are in need.
Research how brands have adapted and innovated over time. Retail is changing faster than ever, and challenges like COVID-19 can often act as an added accelerator to change.
Ferguson Plarre has survived and thrived through two World Wars, the Great Depression, and now two pandemics. People will always look for products and services that make them happy, and at Ferguson Plarre we are in the business of Baking People Happy.
David Bell, CEO, Kwik Kopy Australia
Avoid paying too much by carefully reviewing business financials to make sure that the business is still relevant to today’s operating environment. Past performance may not be an indicator of future performance.
Carefully review your marketplace to make sure you understand the market for your product or service and whether it has changed. For example, you may find that demand has decreased because the business is in a CBD with less foot traffic, or the opposite may apply.
Many good businesses fail because they run out of cash. If you expand too quickly your business will need more working capital. If you are not growing quickly enough, particularly in a start up, you will need cash to pay your bills until you start making a profit. The bottom line is, have enough cash when you start, so that you can cover your expenses.
Communication doesn’t stop. In good or tough times, our clients will always need to communicate with their stakeholders. There is always a need for printed or digital communication, and here at Kwik Kopy we are well placed to facilitate that need.
Cam Hadlow, CEO, Dream Doors Kitchens Australia
Ask questions; there is no such thing as a dumb question! Do your research, read about the industry, make sure the business is a fit for your skills and passion. Will the business be profitable and enable you to achieve your goals, aspirations, and the lifestyle you want?
Investigate how the business performs through different economic conditions. How is it performing right now through COVID-19?
Find out what other franchisees say about the business by asking around the network. What is the onboarding training and support like? How does Head Office support their franchisees through tough times like COVID-19?
At Dream Doors Kitchens Australia, our value proposition has proved powerful during downturns or recessions. We refit existing kitchens and a facelift offers a brand new look and feel at a fraction of the cost of a new kitchen. Australian homes continue to have a need for kitchen renovations, and our franchisees are on hand to add that bit of joy to people’s lives.
Simon Beaty, Managing Director, Snooze
As we are experiencing the dawn of a new retail era with dynamic trading conditions, it is more important than ever to weigh up the sustainable competitive advantages any business has to offer. Has the business stood the test of 2020?
Investigate whether the business processes and systems have been proven to work and support the brand and its franchise partners, even through different economic conditions. What support and training are provided, and how does the business adapt to tough times?
Evaluate the strength of the brand and whether it understands its customers. Is there capacity to promote the business effectively so that your customers can be made aware of you?
Attitude is everything! How do you feel about the business? Do you feel you can commit and be positive about it?
Snooze is an established and tested business model with over 45 years of development, resilience, and success in a dynamic retail environment. Our franchise partners receive individual business development from an experienced team so that they can adapt to changing times.
David Rounsevell, Managing Director, Expense Reduction Analysts
Look for business opportunities with versatile working environments where operating wherever or whenever is a viable option, such as from home or in the cloud.
Seek industries that are directly or indirectly related to your career history so you can hit the ground running and accelerate adding value to your new business.
Ask people you know whether they can think of anyone who would be interested in the services your prospective business would provide – don’t be shy!
Create a simple one page business plan – and stick to it!
Expense Reduction Analysts weathers any economic climate because, as we’ve found during COVID-19, businesses will always have a need to strategically manage their costs but lack the resourcing or budget to do it, and that’s where we come in.
Richard Thame, CEO, Snap Franchising Limited
Do your due diligence and homework. Research, speak with other franchisees, and ensure that you have made a thorough examination of the business you are considering.
Consider if the business you are looking at has the core fundamentals in place to thrive in a recession. Recessions do not last forever; what are the opportunities for the business beyond the recession? Consider the relevance of the product or service in the market environment.
Ensure that you are well funded and have good cash reserves. Complete a cash flow forecast to ensure that you understand your cash coming in and out and that you have enough reserves on hand.
Snap has been around for 120 years and we don’t just print, we love print. Our business has shown tremendous resilience through recessions, wars, and pandemics. Snap is a business that supports other businesses, and regardless of a downturn, businesses continue to operate. Our innovation and uptake of new technologies continue to help our brand stand out.