That is, if you have an ironclad business model, you don’t need a franchise. The problem is that business models are formed via an expensive and time consuming process of trail and error in the unforgiving, real world marketplace. People buy franchises and licensed business opportunities in order to mitigate their risks when starting a business. Having a fully formed method for making money is what makes buying a proven model, one of the safest ways to become a business owner.
B-school professors like to say that the number one reason businesses fail is that they are under capitalized. The real reason they fail is because they lack a sufficient method for getting their product or service into the hands of enough paying customers. This causes the business to run out of operating capital before they can generate enough revenue to cover monthly expenses.
Distribution is the key to any business and it starts with finding customers. Many brilliant business concepts have fallen by the wayside, for lack of an effective sales and marketing strategy. Ralph Waldo Emerson is often credited as saying “Build a better mousetrap and the world will beat a path to your door.” This is simply not true and any entrepreneur can attest to that. Acquiring new customers can be the most difficult, costly and time consuming activity for business owners. Franchises have already perfected the sales and marketing component of the business, which makes initial growth much easier.
Best selling author and futurist, John Naisbitt has called franchising “the most successful marketing concept ever”. In a franchise, you not only have an established product, but a field tested distribution strategy and an experienced business partner guiding you. Of course, there are other benefits in a franchised business model, but the goal of any business is to create profit and that is a lot easier when your sales are robust.
Have a question about business opportunities? Send it to email@example.com. Dan Brunell is President of Dearborn West, LLC, an international business opportunity brokerage headquartered in Temecula, CA. He can be reached at (951) 587-6929 or on the web at www.dearbornwest.com.