What is the best business for sale?
Head of Intelligence
10 THOUSAND FEET
5 Reasons why
consider a Franchise
Business for Sale...
5 Reasons why you should consider Franchise Business Opportunities
In the current economic times, there are plenty of businesses for sale. So why look at franchise business opportunities when there are plenty of established small businesses for sale?
Counter the skills shortage with Systems
The best franchise businesses are set up with systems in mind. Systems enable a good business to be replicated over and over. One of the benefits of this is all the critical paths in a business are mapped out. Having business processes that are easy to follow enables you to hire team members for attitude, rather than past skills and employ less experienced people at a lower cost to the business.
When you see a business for sale, check what expertise will be leaving that business when it is sold. In a non franchised business if you want support, you might be fortunate to have some experienced employees who will stay with the business and share their knowledge with you, otherwise you need to set up a board of directors, get a mentor, and turn to suppliers who are experts in their fields.
The better franchise business opportunities allow you to tap into a network of support from the outset. Support staff and area managers will likely mentor you, there are experts in operations, training and marketing at the support office, suppliers have already been tried and tested and you could touch base with them to get their expertise as well.
Then there are fellow franchisees who have been there and done it, either through formal monthly meetings or just picking up the phone the best franchise systems have a network of franchisees who can turn to each other for support, and in some instances run each others businesses while they take a holiday.
Many businesses for sale have an established customer base. While new franchise business opportunities lack this pool of customers, if the brand is strong it will allow you to pick up business and momentum a lot faster. Fast forward a few years with collective brand strength you will be able to grow further should you choose. Later on, when its your business for sale, you will attract more interest in it because people have confidence in a well known quantity and a strong brand can add dollars onto the valuation of your business.
Proven financial model
An existing business for sale will have it’s Profit and Loss statement- but depending on how well records are kept will gross margins for each product and labour input for each product be recorded? Possibly not. Good franchise business opportunities have the business model clearly mapped out, and how to get the most out of a franchise opportunity.
A critical part of assessing different business opportunities is considering what return on investment you want from the business. Treat the business like you would any other asset like a house, shares or cash deposit and project what it will return you in the future in terms of profit, your personal salary, and sale price.
For a non-franchised business for sale the line between personal salary and profit can be a bit blurry depending on the accounting method of the existing owners, with franchise business opportunities you can always ask to see average returns on investment and average salaries drawn from the business, to determine where your money is going to work harder and give you a greater return.
Check part two of this series for more insights into how to choose the best business for sale.