Business Conversions: When is Franchising Right for Your Business?
You’ve spent your career building your small business, but what do you have to show for it? You’re looking at your business plan for the next 10 years and wondering how to take the next step to success.
For many entrepreneurs, converting a standalone business to a franchise can pay off. The benefits of converting to a well-established, successful franchise brand or using it to add an additional service line to your business can range from better name recognition to accessing proven back-end systems that can transform your organization.
So, what are some of the possible benefits?
Your business may have a long and distinguished history locally, but, realistically, you may have far less market share and name recognition than you assume. Brand does matter.
It can be a wrenching decision to give up a family business name full of nostalgia and emotional attachment; however, by joining a successful franchise system, you gain the advantage of established brand recognition that will only continue to grow.
The power of franchise systems
Joining a successful franchise means more than just slapping a more-recognizable name on your business. Many businesses convert to franchises because the model gives them access to business systems and processes that they were not able to come up with on their own.
Successful franchisors have developed proven ways of doing business. They can provide their partners with the equivalent of a business office in a box —turnkey support systems for management, human resources, finance, sales and marketing. Does trying to keep track of business metrics and best practices seem overwhelming? Converting to a franchise system can help. With the back-office systems provided by the franchisor, it’s easier to determine the key metrics to provide you the necessary day-to-day guidance for growing your business.
Some business owners have a marketing knack. Some don’t. For business owners who don’t have that knack, a franchise conversion can be a gamechanger. It’s marketing in a box. Not only does the successful franchisor provide the components of a good marketing system, but proven strategies and tactics.
Joining a successful franchise means more than just a name and business systems. It gives you access to a network of fellow business owners, who are willing to help you succeed. It provides entry into what author Napoleon Hill called a mastermind group, a network of likeminded individuals who share the same goals. Now you can establish relationships with other franchisees and ask questions. How do you do this? How do you handle that? What do you do when this happens?
Converting your business
There are many benefits to joining a successful franchise, but how difficult is converting an existing business to a franchise? That’s a fair question. It is far easier to convert an existing business than starting-up a new franchise from scratch. With an existing business, many of the pieces are already in place. You may be changing much about the way your company operates, which is never easy, but it’s far easier than starting from nothing.
One priority for many business owners is to establish a successful exit strategy. Who wants to run a business forever? At some point, you’ll want to consider retiring or selling your business. A franchise can provide a mechanism to develop the financial security to enjoy life after leaving the business world.
The best exit strategies hinge on maximizing the value of your business for its eventual sale. How do you do that? Your local business may be well-regarded but will it be attractive to buyers?
The name recognition provided by a successful franchise can help increase the resale value of your company when it comes time to exit. In addition, converting to a franchise makes it easier for potential buyers to gauge the value of your company.
There is a substantial difference in value between a business that is personally tied to you vs. a branded business that is managed by you. There is much greater value in buying a business that is associated with a successful franchise brand rather than one associated with an individual owner.
An exit strategy doesn’t have to be focused solely on retirement. An entrepreneur who is continuing to look for other business opportunities can maximize the value of a franchise business as an asset to sell later.
Summing it all up
Your existing business might be successful, but joining a successful franchise can lay the groundwork for even greater success. Independent of the growth of your individual business, as a franchise network continues to grow and expand, your franchise purchase will continue to grow in value. By joining a successful franchise, you can position your business to maximize its eventual sale value. Converting to a franchise can be a key part of building the financial security needed to enjoy a happy life once you’ve left the business world.
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