The perfect business for sale?
In part one on franchise business opportunities we looked at the top five areas to consider when weighing up different business opportunities. Here are another six things you should think about when looking at franchise business opportunities versus established small businesses for sale.
1) Buy a business not a job
When you go to purchase a business for sale, be clear as to whether you are buying a job or buying a business because there is a big difference between the two.
When you consider a non franchised business for sale, have a clear understanding of what role you will play in the business. Will you be passive, will you manage the business or will you work hard delivering the goods and services. Many small businesses in particular see new owners working 100% of their time in the business. If you will be delivering the goods or services all the time make sure you are happy doing this- if not have a clear time horizon to ease your way out of it.
Similarly some franchised businesses are a buy a job scenario while others will see you work 80-90% of time in the business, work on different facets of the business and in many instances progress into more of a management role. To determine what you will be doing consider the system itself, how many staff it can support and your own working capital.
2) Market Intelligence
You’d be intelligent if you looked at what current up to date research a business opportunity had on its customers. Stepping into a business and having your finger on the pulse is critical- even more so when you are buying into a category that you are not familiar with. Getting involved in a new venture is all consuming as you are learning new skills and managing the day to day business. Markets move so quickly today that if you step into a business with no current research you could be on the wrong path six months down the track when you lift your head for a breath. When you discover the market has shifted it can be too late and your hard earned investment can be thrown away.
It obviously depends on the scale of the business, but generally a franchise business is more likely to have customer research and targeted information on the quality of a business location you will operate from than other small business opportunities.
3) Lifestyle and faster Opportunity for expansion
When considering business opportunities- the lifestyle factor can be a catch 22.
An existing business will already have done a lot of hard work to build a customer base, but if systems are poor when you press the accelerator the business might start to wobble and create headaches seeing you work long hours patching up poor systems. You will also be taking over managing existing staff who are set in their routines- if you are lucky you will buy into a culture that suits your management style and everything will be rosey, if you are unlucky you may be working hard to motivate existing team members, dealing with office politics or spending a lot of time rehiring.
For franchise business opportunities you will need to attract new customers and hire staff, both are time consuming and as you grow the business you may need to stretch the number of hours you work. The plus with a franchise is the systems will enable you to handle more business quickly, delegate and step out of your business. This means you can expand your business faster and take in greater rewards to feed into your ideal lifestyle.
4) Passionate positive people.
When you buy a business for sale, there are going to be some times when things don’t quite go to plan.
With non-franchised business opportunities you will need to surround yourself with positive people whether that is staff, business partners or family to help you get through the tougher times.
In a franchise business for sale- the same goes and if you pick the right franchise you will be surrounded by a network of supportive people- from the support manager you deal with on a day to day business through to other franchisees.
5) Business Simplicity
When considering a business for sale- make sure you understand it- Understand what the inputs are and the outputs and understand what happens when you vary each of those inputs to your bottom line.
The model of non franchised business opportunities you are looking at will not always be clear. In a franchised business the better systems will clearly articulate how the business works, and what areas of the business you will need to manage tightly to make sure you get the returns you are looking for. In a non franchised business for sale, ask the established owners to give you numbers on what has happened as they have varied inputs in the past.
6) Social Rewards
Let’s be honest when you buy a car it says something about you. When you buy a business for most it is no different, and the dollar returns you pull out of it and visible success will be something you will be keen to be proud of in front of family and friends.
In many instances while potentially very successful a non franchised business is not something that all family and friends will immediately be aware of. For a franchised business the brand is often well known, family and friends may have been customers of existing franchisees and if respected for what is stands for and for making good money, you will be able to be proud of your business pretty quickly.
Remember what ever business you choose and there are plenty of good and bad business opportunities out there whether franchise or non franchised, you are just being handed the keys to the car. How you drive it will determine your success.
Best of luck searching for your ideal business for sale. Whichever option you take make the most of it!
If you haven't already done so I suggest you also read the first article, What is the best business for sale?, which includes 5 extra points to help you find the best franchise system for you.