Entrepreneurship is a word that evokes thoughts of soaring to reach a dream. Being an entrepreneur can be an exhilarating venture. At the same time, many people discover that operating your own business comes with many risks and pitfalls. This can make some entrepreneurs feel apprehensive about the risks of starting a new venture.
Consequently, entrepreneurs may consider ways to mitigate losses or risks. In other words, they may wish to utilize their management skills on more reliable business models, such as franchise opportunities. Franchises offer an excellent way for entrepreneurs to realize their dreams of business ownership with minimized risk.
Here are 6 benefits of franchising for new entrepreneurs.
1. Lower Risk
One of the biggest worries of an entrepreneur is that if they start a new enterprise, they will fail. It’s not surprising that this would be a concerning issue since half of all new start-ups fail within the first five years.
Starting a new business is risky, especially in an economy still reeling from pandemic shutdowns. As much as branching out on your own might be tempting, it brings with it a degree of uncertainty.
One of the biggest advantages of owning a franchise is the lower risk you have compared to starting your own business, since the brand is already established. The franchisor has already done much of the work to build the organizational model.
Through research, development, and market analysis, the franchisor has created a business that’s ready for the entrepreneur to take on without as much risk.
2. Smaller Upfront Costs
Entrepreneurs need a great deal of capital if they decide to start a business from scratch. From a potential building to research, marketing, and business plan costs, the expenses are numerous. These initial costs that go into opening a business can seem like an impossible amount for someone just getting started.
A franchise doesn’t require as much of an upfront investment as a start-up does. Depending on the franchisor, you may have to pay a startup fee and then a percentage of profits monthly. This reduced amount initially means you can achieve your dreams of business ownership without tons of debt hanging over you.
3. U.S. Brand Recognition
As mentioned earlier, approximately 50% of businesses fail in the first five years. Why does this occur? This may happen because the company doesn’t get the attention necessary to attract customers. Without customers, there won’t be any profits, and the company will fail.
For this reason, one advantage of owning a franchise is brand recognition. People in the community will know and recognize the company because of the established brand name across the United States.
Being part of an established brand helps attract customers, build trust, and encourage loyalty. These are necessary elements for an entrepreneur to excel in their endeavor. It can take many years to build name recognition. So, when you get that right from the start, it puts you on an upward trajectory.
4. Business Assistance and Support
Starting your own business consists of many tasks. Even if you have substantial management experience and skills, starting a business is much more involved. You would be responsible for developing the plan, doing all the research to see if it’s viable, marketing testing for your area, selecting a business structure, and so on. The initial learning curve can be steep for some entrepreneurs.
On the other hand, when you purchase a franchise instead, you will have the assistance and support you need for all aspects of company ownership. This includes setting up the enterprise, training, marketing, daily operations, and supply chain management. This lifts a big load off your shoulders.
5. Generate Higher Income
Let’s face it, entrepreneurs are in business to make a living (and then some). They need to generate income right from the start to cover costs and live comfortably.
But most new start-ups don’t see cash flow right away. It may take a substantial amount of time before you see the money coming in. In fact, it’s common for a new business to have just enough to cover monthly expenses for the first year or so.
However, with a franchise operation, you’re working with an established business model already accustomed to generating regular income. The combination of having an established business model and reduced marketing and training costs allows you to bring in profits right from the start.
6. Access to Better Financing Options
Chances are, you’ll still need to borrow money to open a franchise. Unless you’ve been saving money for a while, you must discuss loan options with a bank. An entrepreneur who doesn’t have assets and isn’t established may find it difficult to secure the necessary loan they need, or if they can get it, the interest rate is high due to risk factors.
However, with the established brand and business model that a franchise offers, a bank is more likely to provide reasonable financing options.
Unlock the Possibilities of Franchise Ownership Today!
Begin the journey for your new future as an entrepreneur with Confie. We offer franchise opportunities for motivated entrepreneurs ready to take on our well-known, established brand.