Jul 08, 2015 Written by Guest
Starting a business is exciting, exhilarating, freeing, and terrifying. Pretty much like my first experience learning to ride a bike. I was six, maybe seven, and my dad must have lost 10 pounds that summer from running up and down the block, holding on to the back of my bicycle seat. As long as I could talk to him or hear him breathing, I was good. The minute I thought he wasn't there, I would crash. The truth was I could ride my bike, I just needed to know there was someone there to support me.
I always knew I would be an entrepreneur, but the risk of being completely on my own is terrifying. Even though I knew I could do it on my own, I want to have someone holding my bicycle seat. I guess I just need training wheels, before I feel enough to go it alone. That's why I have sought out business opportunities that come with support.
Owning a Franchise
After fifteen years in corporate and tech marketing, I was done with mergers and acquisitions, closing companies, and lay-offs. I was ready to go out on my own and run a company that gave back to the community, offered work-life balance, was positive, and treated employees with integrity. After searching through my options I found Young Rembrandts, a home-based business that teaches children drawing.
The feedback that I received when I told people about my new business was...interesting. I know the people around me thought I was crazy, first it was an 'art' program. Isn't art synonymous with starving? Second, I was just walking away for corporate. Third, it was August 2008 and the Great Recession was starting. Ok, the third issue did pose some problems as banks were not giving out money for businesses loans; so I took out a personal loan, threw in some person cash, remained at my corporate job for a few months, said a prayer, and was on my way.
Franchises run the gamut from behemoths like McDonalds, to small business that take only a small investment. In addition to the initial investment, make sure you have funds to cover office expenses, supplies, employees (even if that is just an attorney and accountant), your personal salary, royalties, and have an emergency fund for surprise expenses. I made several trips to the headquarters of Young Rembrandts for a "Discovery Day" and for a week-long training seminar. All of these trips from Dallas to Chicago were at my own expense. When starting a business, a good rule of thumb is to have at least 18 months of personal income set aside, because you will end up paying yourself last and it may take many months to become profitable.
Most franchises come with an operation model and national marketing . I was also paired with another franchisee who acted as my mentor. Not all franchise home offices are so supportive, but I was lucky in that I had a franchise advisor that spoke with me weekly, then bi-weekly, then monthly until I was ready to be on my own. The system provided advertising templates, a CRM system, website, sales support, and a strong product (the art curriculum). Because my business is home-based, I did not need to worry about real estate or build-out.
For me, the support I received helped me have the confidence to be successful. Not all franchisees are successful. Even good concepts can fail, because of differing markets, different economies, and the strengths of the owners. This particular business was a fit for my personality and the market where I live. After only three years, I was in the top 10 percent of franchisees. And in five years, I was in the top two percent.
Licensing a Business
After I achieved my goal of being not only an entrepreneur, but a successful small business owner, I began helping other small business owners providing advice on marketing, sales and operations. This led to the decision to sell my business and become a serial entrepreneur.
The natural progression for providing helpful business advice, is providing helpful business advice for money. Marketing is my love, it doesn't matter what business title on my business card read, marketing was always what I did. I knew I wanted to start a marketing firm, and I saw a need for small businesses. Large businesses have in-house marketing support and agencies do a good job filling the gaps that corporate marketing can't fill. Small businesses must either do their own marketing, hire an entry level marketer, or hire marketing on an ad hoc basis. I knew this was the niche I could fill, I just had to determine how I would fill it.
I began researching other marketing firms to determine if a model already existed and determine if it was successful. I made a list of business models I liked in Dallas, the U.S., and internationally. One firm I kept returning to and that was Marketing Eye.
I noticed on the Marketing Eye site that the founder was looking to license her business in the US. With a strong Australia presence and a successful office in Atlanta; Dallas seemed like a perfect choice. I submitted my information through the Marketing Eye web site and through a series of phone and Skype, conversations I was in. This makes it sound easier than it was. Mellissah Smith, the founder of Marketing Eye, has had hundreds or inquires, so making the decision for her and for me was an involved process.
Licensing is different than franchising in that you do not have a defined territory. You obviously are respectful of other owners, but there are additional freedoms. Licenses still come with royalties, but they also come with operations and marketing support. There is also the shared wisdom of learning from someone who has already ridden bike you are about to use on your journey.
Franchising and licensing are a good way to reduce risk. Obviously, with every entrepreneurial venture there is risk. Many times the higher the risk the greater the reward. Just note, even franchise and license agreements bring risk and some fail.
Before embarking on your entrepreneurial venture, consider ways that you can reduce and mitigate risk. Talk to as many people as possible. I interviewed fifteen franchisees of Young Rembrandts before I moved forward with the buy. I also spoke with mentors and other business owners before entering into both my franchise and license agreement.
Buying an existing business is also another avenue of entering into entrepreneurship, with less risk. You must do your due diligence. Understand why the owner is selling, are sales declining, is there a market, local or competitor issue that is leading to the sale. If the business is intact, you will end of paying more upfront than you would for a start-up, but you will reduce your risk and will see income more rapidly.
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