As a business owner, you see, hear and learn new things about your business, the industry and the dynamics that are inherent in a business model. As a franchise consultant, interviewing businesses to help determine when to franchise a business, it typically is easy to recognize how long someone has been at the helm of their ship. There is an evolution of a business owner as they achieve a powerful balance of industry experience, leadership over their business and a keen understanding for the variables which play a part in their business’ success.
Early stage entrepreneurs are drinking from the fire hose and taking in information about the business model at an enormously rapid pace. Their excitement, enthusiasm and energy around what is possible is contagious, fun and always enjoyable to be around. These entrepreneurs typically are not ready for franchise growth as they haven’t figured out the business model and created a solid system which would allow for duplication. Our recommendation is to always start the franchise discussions as early as you see an opportunity for growth, even in this early stage of business development. The planning and strategy can begin early and certainly presents a greater opportunity for the business to succeed in franchising at a later date.
Maturing business owners have been operating the business for two or more cycles and are seeing patterns in their business. They understand the seasonality of the business, employment trends, customer purchasing habits and effective marketing campaigns. Much like a recent college graduate, they are typically excited about the opportunity for growth, but the world is also beginning to present the reality that there may be limitations to the business and good decision making will play a role in how successful the business will be. These business owners could be in a position to consider franchise expansion, but are also still focused on driving profitability and maximizing revenue growth. They would have the ability to write a good franchise operations manual, but there would still be questions throughout the document because every stone had not be turned over.
Businesses that reach adulthood and full maturity are typically three or more years in most cases and have generally maxed out the profitability of a single unit. The business owner is starting to now think outside of the box….how do I replicate this in more than one instance in order to cover more markets and generate more income? Franchising has become a strong consideration along with additional company owned growth, partnerships and new technology. The business is still growing, but at a slower pace and the leadership sees that doing the same thing over and over again won’t continue to grow the business at the desired pace. Mature business owners have become better coaches….they hire slowly and fire quickly and can look at the battlefield with a strategic eye as opposed to being reactive to every day action. The systems and processes are in place that allow the leadership to take a vacation and step away from the business without having a coronary. The ability to teach, train and replicate the business model are a reality and the opportunity for growth is constantly being evaluated.
Many business owners do nothing outside of their day to day management and enter what I have come to refer to “the bored business owner”. Life just isn’t as exciting as it used to be, there is no challenge left in the day as the business owner has seemingly dealt with, overcome and managed every issue the business could present. The business has grown, contracted, expanded and shrunk in some cases several times. Hard work and just pushing the model more with sheer will have grown the corporate business to it’s limits and the operating model is capable of no more. These business owners are sometimes driven to franchising to add excitement back into their professional lives. They want to be bigger than an operator and leverage their experience. In other cases, they may have waited too long to drum up the energy or will to move things forward and take on another endeavor such as franchising. A business owner recently explained that he was going to drop his franchise platform and sell his successful painting business of 23 years in order to start a food concession stand. It seemed like such a shame to not leverage the business model, track record and brand credibility he had built, but the fight was gone and he had apparently just lost interest in the business entirely.
My advice to most business owners considering franchising is that there rarely is a perfect time to consider franchising a business. The variables that should drive this decision should be profitability, systems, market opportunity and people. What can push timelines forward and make franchising a viable option earlier in a business’ lifecycle is the market itself, if people are asking for franchises and the demand is there, the franchise strategy should be considered more seriously. Regardless of what stage your business is in, start the franchise discussions early in order to have a solid plan for expansion in place.
For more information on when to franchise your business, contact us:
FMS is a team of expert franchise consulting professionals based in Canada that provides solutions for franchise development, franchise consultation, and expansion of businesses globally.