Edmonton Accounting Firm | Are Franchises More Successful
Often, many business owners believe that buying franchises are fast-track to business success according to Edmonton accounting firm. And while some franchises can be a great opportunity for business owners. Not all franchises are the deal that many people believe they are.
One of the reasons why franchises are more successful. Then business owners starting their own business from scratch. Is because they come with systems and processes built in. However, not all franchises have well-defined systems and processes.
So if an entrepreneur is expecting to know how to do all aspects of the business. From sales and marketing, to recruiting and retention strategies. As well as how to put the product together, if the franchise does not have well-defined processes. That can be a struggle.
Therefore, Edmonton accounting firm recommends entrepreneurs look at three franchises at the same time. To make comparing all of the systems much more easy. And to keep entrepreneurs from getting their heart set on one franchise. Only to find out it is not the right fit for them.
The next thing that business owner should keep in mind. Is that the person that is selling them the franchise. Or at least giving them the information about the franchise. Is a paid salesperson. And the more franchises they sell, the more money they make.
While they might seem like a knowledgeable business consultant. Business owners should understand that they are not in it to do what is in the best interest of the business owner. But what is in their own best interests.
Therefore, entrepreneurs should look at the opportunity very objectively. And Edmonton accounting firm can help them do that. One of the first things that they will look at, is how much revenue different locations are going to be generating per year.
And while they might give the business owner the revenue for certain locations. Business owners should ask for other locations, so that they can get a better idea of what the revenue might be at a more average store.
By knowing a better idea on what revenue to expect based on a variety of locations. Entrepreneurs need to focus on making an objective decision. Rather than allowing the salesperson to create a false sense of urgency. To urge the business owner into making a quick decision.
Although it is very common sales tactic to create that sense of urgency. Because it will help them complete a sale faster. But business owners need to keep in mind that the opportunity is likely not going to go away. Because the franchises job is to sell locations.
And even if the particular opportunity that the business owner is looking at goes away. There will still be other opportunities, so business owners should never feel pushed or rushed into making any business decision.
If an entrepreneur is having a difficult time looking at the franchise opportunity. They can always make an appointment with Edmonton accounting firm. In order to get their opinion on if this is a great business opportunity. Or if they would be better off looking elsewhere.
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Franchises can be very attractive as a business opportunity says Edmonton accounting firm. Because there is a lot of value in purchasing a known name. That has a customer base, and products and services that are well-defined.
However, not all franchise opportunities are the great business that many people are expecting. So business owners need to be objective when they are looking at a franchise opportunity. That they are thinking of investing in.
One of the first things that business owners can find value doing. Is contacting other franchise owners themselves. So that they can have an unprompted viewpoint of what it would be like to own a store in the franchise.
When speaking to these franchise owners without their head office around. They are often going to be extremely honest, about what it is like to own business. Or even slightly pessimistic, if they do not want any competition in the form of other franchises.
If after speaking to other owners, they are still interested in pursuing this opportunity. Edmonton accounting firm recommends asking for accountant prepared financial statements. Instead of plain paper financials. Because the ones prepared by accountants will be more accurate.
The plain paper financial information are simply internally prepared, and they are not verified. They might be missing information, or have mistakes in them. And if someone is thinking of purchasing a franchise based on the information. They have the right to ensure that it is as accurate as possible.
Then, a person along with their Edmonton accounting firm can test the reliability of the numbers. By looking at the financial information, reading the franchise agreement. And even applying royalties against revenue. To see if it is a financially viable opportunity.
The accountant will also look into things that are often overlooked such as what the lease is in that location. Common area charges, and even utilities. Because different locations could have different landlords, and different overhead because of that.
They will ensure that buying the franchise makes financial sense. And let anyone know, if they think it is a great business opportunity or not.
They will also help business owners understand if the payroll numbers include the business owners salary. Because often this number is not included in the payroll number. And the more the business owner worked in the business, the more it is important to know that.
That way, a business owner will not end up buying the business. Where they are either expected to pay someone full-time wages. To make up for the time the other business owner spend in the business. Or, they will have to put in that hard work themselves, which may or may not be feasible.
And finally, a business owner really needs to ask themselves. If they are interested in the franchise because of the name. Or because of the processes. If a business owner wants to and up customizing too many processes, a franchise may not be a good investment.
And if a business owner wants to customize so many of the processes. They might find a lot more success living a business from the ground up, where they do not have to be expected to pay franchising fees.