KwanG Venture Blog

I guess after the big players like McDonalds, Starbucks, Coffee Bean and the emergence of local ‘hero’ franchises like Old Town, The Manhattan Fish Market, Pappa Rich, etc, many want to be business owners are turning towards buying franchise license. It is one of the easiest ways to own a business and not having to deal with the inexperienced, the hassle of formulating the initial business model and concept and branding issues. But before deciding on buying a franchise license, it would be worth the money to take a look at the ups and downs of becoming a franchisee.

What do one gets for becoming a franchisee?

• Becoming one’s own boss to a certain extend although one is lacking in capital or business operation experience.
• Acquire a ready establish business model, thus would be able to operate as a mature business and with advises from the franchisor. Faster returns (in many cases) as compared to a newly start-up business.
• Gain other businesses efforts, expertises, know-how, procedures, training, collective buying power, and advertising.
• Established Brand recognition brought over the Franchise, thus eliminate this hurdle by developing an image in the marketplace.

What do one forgoes for signing the franchise agreement?

• One must work, operate and act according to the franchisors terms and conditions. Therefore loosing the will, control and capacity to do as you want or need to do to develop your own market. It is a no go for someone who dislikes working for an employer.
• One would have give up a portion of its profits in return for the benefits gain from buying the franchise licence. In addition to initial franchise fee, there is also a percentage of monthly gross that is put back to the parent company.
• Forced to purchase goods from appointed suppliers or parent company, which may prohibit you from getting the best prices.

After considering the above benefits and disadvantages of buying a franchise licence and you have decided to go ahead with franchising as your mode of entry to becoming a business owner. Then, you would need to consider the type of franchise that is most suitable to your interest and character.

• Do not be misled by promise of high income, potential growth and popularity. Consider the possibility of interest, enjoyment and knowledge of a particular product or service. This would induce one to stay longer with the business or franchise.
• Should research on the existing and possible competition from within and without the industry or market.
• Another must consider would be the stage the franchise business is at in the product or market cycle. Whether it is at the growing, maturing, saturated or declining stage.
• History of support provision by the franchisor that would be the essential building blocks for personal growth and also business viability.

Any decision made on whether to buy a franchise licence or start your business should be base on your own research, planning, strategising, projections and capacity in terms of knowledge, experience and capital.

Next article we would be looking into the how to create your own franchise and its requirements. And for more information on the article posts or publish, do not hesitate to contact us at jason@kwangventure.com.

A business whether home base SOHOs that only provide services or full fledged companies that manufacture and sells their own products, may fail for many reasons. Thus, it is important for businesses owners to know what these reasons are so that they can be overcome and give themselves a fighting chance to stop loosing more money or even worst, from closing down.

These reasons which are simple in nature but have a great important role in determining the survival of your business:

Poor capital or fund structuring and management.

Learn to pay strict attention to your finances and keep careful records of all cash flowing in and out, do not over spend your seed money before cash has begun to flow in at a positive rate, be prepared for volatile times, Make sure that you protect your investment and keep enough reserve cash to carry you through sudden market downtrends and seasonal slowness.

Poor execution and internal controls.

Don’t let poor customer service, accounting controls, and overall employee incompetence to bring down your business and brand image. Premium customer service can generate repeat business, establish protocols and procedures that are easy to follow, and remain steadfast in the know on all things accounting.

Inadequate business pre-planing.

Your business plan is your blueprint in building your business and brand image successfully. A well-thought-out business plan forces you to think about the future and the challenges that you may face, to consider your overall financial state and needs, your marketing and management plans and your overall strategy for survival in the business jungle.

Underestimating the competition.

Consumer loyalty is not served to you on a platter, it has to be earned. If you don’t take care of your customers, your competition will. Be aware of your competitions movement and counter react with precision.

Ineffective marketing.

Many people think that marketing is only advertising or selling. In fact real marketing does not involve the art of selling what the consumers do not need. Marketing is the understanding of the consumer needs and providing a “solution” to satisfy their needs which give them value and gives your profits.

Bad Public Relation.

Learn how to target and cost-effectively publicise business through the most suitable medias for your business and budget range. If no one knows about you, you are as good as invisible.

These are just the few of the many reasons that may cause the down fall of your business. Therefore if your business is merely surviving or loosing loads of your precious reserved funds, it is our advice that you list down the areas where you needed to strengthen and improve, and source for the professional help that you would need to overcome the problems that you have listed down.