A Newbie Business Owner is always in a quest for an opportunity to grow, whether by signing a big-budget project or by expanding their business through a new setup or franchise.
Talking about the franchise, is just diving into the franchise concept an excellent business growth plan for Newbie Business Owner? Perhaps franchising has proved to be a strategy to elevate the business graphs exponentially, but does it work for all niches?
Maybe or maybe not! It’sIt’s better to take a broader view of your decision to open a franchise, considering all its good and evil, to avoid falling into any pitfalls.
Let’sLet’s glance at the pros and cons of franchising business to decide whether it’s a good idea.
- Pros of opening a business franchise
- Reduced risk of failure
- A great way of business expansion
- Helps test run your idea in different areas
- Increased profitability and growth speed
- Increased Fundraising chances
- Cons of opening a business franchise
Pros of opening a business franchise
Reduced risk of failure
The first advantage of having a franchise for your business is its high chances of success. If you own a business, you better know all that can help your business work out in the market and what things you need to keep in mind to make things work.
By setting up a franchise, you are imitating the same strategy as you apply for your already established business. Still, this time, the plan of action you have in hand is already tried and tested and has maximum chances of getting success, which thus reduces the pressure of loss and failure.
A great way of business expansion
A newbie business owner from scratch needs real hard work, time, and money to be invested in making it a success. As a newbie business owner, you have to plan some workable strategy that can be beneficial to your business idea to get you some bucks after you launch it in the industry.
On the other side, when you opt for the franchise option, there is no need for base investment to make for its setup and fulfilling the necessities like a source for raw materials and other working requirements.
This branch-out and grow option can be the best in business expansion as it requires minimal effort to generate good revenue.
Helps test run your idea in different areas
The concept of a business franchise can be a great way to experiment with your view. Your business idea has got enough attention to identify whether it is acceptable for the people in the market.
It might also have worked well for a specific audience, but launching it all over again with a franchise will help you grab the attention of some new audience to test the idea acceptance all over again to decide whether the business has the potential to earn more than what it is making by reaching to the broader range of audience.
Increased profitability and growth speed
The people already know your business as they have been using your service; branching out a new setup that provides the same service and the customer experience can be a little easier.
People know what you serve, and the trust you have built for your service from your main branch can help you get valued for the new business.
It will symbolize growth in terms of money and business value in the market, creating a buzz about how well your business worked in a brief span to launch its franchise. Moreover, the dual power you get with your new setup will increase the growth speed to generate revenue at a more incredible velocity.
Increased Fundraising chances
Who doesn’tdoesn’t like to invest in a growing business? Most investors look for the business potential before planning to invest in some new venture. Setting up a new unit for a company that has already seen success makes them interested in investing their money. It becomes easier for a franchise newbie business owner to convince the investor as he has some accurate success data from its main setup.
Here what helps you get the main benefit is you can bring up your business name with the money of someone else and can make a benchmark for your business to compete with any of its contemporaries.
Cons of opening a business franchise
Hitches to maintaining consistency
There are very few negatives to franchising your business, but one of them is the ability to maintain the essence of the original business idea and service. Yes, it happens in many cases that people seem to like the food of a particular restaurant in an area but hate the same from its other branch or franchise.
Yes, if we look at the other side of the coin, the chances of creating a negative image increase if the newbie business owner fails to maintain the consistency and experience they give the customer with the original unit.
The bigger team, the more problems
Double the unit, double the workers, and double would be the problems you used to face with the single branch. To maintain a consistent workflow of your business, you would surely need a good management team who could take care of these small details to help you maintain a proper balance between the work and your human resources.
As your team can help your business function well, keeping them on track is what could be the hurdle with the increasing number of your business franchise.
Growing your business through a franchise can be a significant step towards your business expansion only when you know it is the right choice for your business. Find the “why” and “how” before making this decision. The better you understand the answers to these questions, the more the probability of getting the proper perspective to make some correct choices.
Hopefully, the pros and cons mentioned above could help you enlighten yourself about some fundamental business aspects to consider before jumping into your first franchise unit.