A Newbie Business Owner is always in a quest for an opportunity to grow, whether by signing a big-budget project or 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 a 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’s better to take a broader view of your decision to open a franchise, considering all its good and evil, to avoid falling into pitfalls.
Let’s glance at the pros and cons of franchising business to decide whether it’s a good idea.
Table of Contents
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.
Setting up a franchise means imitating the same strategy 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 to make 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 that you need to make for its setup and fulfilling the basic needs 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 idea all over again. 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 certain 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 earning by reaching to the wider 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 providing the same service and the customer experience can then 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 set out too.
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 concise span to launch its franchise. Moreover, the double power you get with your new setup will increase the growth speed to generate revenue at a more incredible velocity.
Increased Fundraising chances
Who prefers to avoid investing in a growing business? Most of the investors look for the business potential before planning to invest in some new venture. Setting up a new unit for a business 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 for franchising your business, but one of them is the ability to maintain the essence of the original business idea and service. Yes, people often seem to like a particular restaurant’s food 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 that 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 an even workflow of your business, you would need an exemplary management team who can 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 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 if it’s 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.