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Four Business Skills Needed to be a Successful Franchisee

Every American has the right and opportunity to become a business owner. It’s a huge part of the American Dream and if you have the drive and desire to own a business and create income you can do it, too. It’s a dream that people from other parts of the world continue to risk life and limb to acquire.

The benefits of the franchise model are reduced risks to achieving that dream. Postal Connection offers a proven business model and systems in place to help franchisees become as successful as their dream requires.

Skills Needed to be a Good Business Owner
However, It helps to understand a few of the basic tenets of business when embarking on business ownership whether it be an independent business or a venture with an established franchise. While attaching yourself to a franchise can help, you still want know the basics of the following four areas:

Sales: Learning basic salesmanship is essential since sales is what makes any business run. This means knowing how to satisfy your customers, creating appealing offerings and knowing what people respond to in relation to what you offer.

Marketing: This is related to sales but it’s more about understanding where your customers and prospects come from and figuring out how to attract them to your business. A good franchise system can help enormously with this.

Accounting: Basic knowledge of your revenue streams (where they come from and how you can get more), your expenses (and how can you reduce them) and how revenue minus expenses equals profit which every business needs to survive.

Strategic Planning: Usually, when running a business, you find yourself planning 3 to 6 months ahead under an umbrella of a 1 to 5-year overarching strategy. You create these strategies and plans. You also have to be flexible in your thinking and know when to stick with, alter or even jettison a strategy/plan if it’s not working.

A strategy would be something like this: The goal is to increase revenue by 10% in 2016. A plan to achieve that might be that you will introduce high margin products into your mix of offering in 2016.

You don’t have to be an expert in each one of these areas but acquiring some basic knowledge of them will help your business run smoothly. Many community colleges offer useful workshops in these and other business disciplines.

Reasons to Consider Becoming a Franchisee

Maybe you’re one of the growing number of baby boomers who have been downsized or have become fed up with the corporate politics. You might be seeking a business to own after serving our country in the military. Or you realize it’s time to act on the entrepreneurial spirit burning within you before it’s too late.

Whatever the reason, the next decision is what type of business to buy. One of the venues you might be considering is a franchise. Because you haven’t delved into it before, you might be unaware of a few key benefits of this business model. Many people have made very good livings under the protective umbrella of a franchise. Following are five reasons why:

  • It’s Established. A new business would require you to set up everything from scratch. Even with an existing business, you may be buying its problems. In either case, you will have to experiment (which may be costly) to get to the money making formula.

One variation of buying an existing business is purchasing a current franchise. Here the franchisor should be willing to provide a description of the business model and what it takes to work properly. With a franchise, everything is ready to go. Unsuccessful techniques have already been drummed out of the system. What’s left are methods that should work with your investment and efforts.

  • Marketing. Probably one of the toughest business concepts to execute well as an independent start-up, especially if you’re not familiar with it, is how to successfully market your product or service. Due to the enormous change that the Internet has introduced to business (Think about what it did to the Yellow Pages.), this has become particularly challenging without the help of a franchise system.

The Internet has been a great boost to many franchises that compete with bigger companies that spend millions on mass media advertising. Most franchises are about local business or one-on-one customer connections. The Internet helps make these connections. Look for franchises that help you use the Internet juggernaut in tandem with other marketing ideas.

For example, the types of ads, where to run them and how to reach your target market are all crucial to your business success.  A franchisor not only creates advertisements beneficial to all but also provides guidance for what media is most effective for specific business locations.

  • Pricing. This is a two-part consideration. First, considering the initial investment, starting up a business from scratch can be a tough guessing game. A very common cause of business failure is under-funded start-ups since no accurate cost estimates were available.

Be sure you purchase a franchise you can afford that does not result in an excessive debt burden. And consider how much cash in reserve you need to have. This is the extra money that is needed to keep up with the ongoing cost of doing business before the business can provide a good level of income. The franchisor should be able to give you fairly accurate start-up costs and alerts to extraordinary things that can happen. The franchisor can also give you an estimate of how long it can take to have a new store pay the bills.  Finally, consider what it takes to keep your household going and have the cash on hand for that.

The second part of Pricing is how to charge your customers. This often is a mysterious trial and error process with non-franchise businesses.  For franchises, in many cases, the franchisor will set the prices or provide price guidelines so that you can make money. This saves you from having to perform the tough task of arriving at the right price point on your own.

Keep in mind, though, that the franchisor cannot set your day-to-day prices unless you sign an agreement that stipulates this is the way you will operate the business. This is especially important to retail businesses where local competition can radically affect pricing.  Be sure you closely review your franchise agreement wording around this issue before entering into a long term arrangement.

  • Support. One of the major pluses of owning a franchise is that you will find assistance and guidance for setting up the business. This support is ongoing through any rough patches you might encounter. In addition to the franchisor, you have a network of other franchise owner-operators with whom you can discuss concerns.

Look carefully for how business information is delivered to franchisees and how easy it will be to get the franchisor’s attention on important issues. Ongoing access to decision makers and personalized attention when needed goes beyond company manuals and online email contacts.  Being able to get this valuable input if/when it’s needed, can make the difference between costly mistakes and consistently implementing what works.

  • Innovation. A good franchisor is always on the prowl for ways to improve the experience of their business owners. This could come in the way of new advertising, additional ancillary products/ services to sell and opportunities to expand beyond the original business model.

Ask the franchisor if new ideas and products are tested or proven when they are introduced. Also, find out whether new things not in the business model when you join up, are optional or if they become mandatory when they are introduced.

Remember, franchisors have a vested interest in the success of their franchisees.