Edmonton Accounting Firm | Buying Franchises The Right Way
While many business owners go to their Edmonton accounting firm with a franchise offer. Thinking that it is going to be the best way for them to start a business. They may discover that this is not necessarily the case. Because not all franchises are created equally.
Franchises can be very beneficial. With industry Canada saying that 50% of all small businesses in Canada and up failing within the first five years of being in business.
However, some studies have found that only 14% of franchises go out of business in the same amount of time. Which leaves a lot of people thinking that franchises are the best way to go into business for themselves.
And while franchises are incredibly beneficial. Because they have created systems and processes already. For all of the various things that a business owner will need to do in their business.
From the services and products that they sell, to pricing. And things like hiring, making the product, and advertising are already figured out for people. Which allows entrepreneurs to hit the ground running is sooner when they buy a franchise.
However, business owners should not make the assumption. That all franchises are the same. Because once their Edmonton accounting firm looks into the numbers of the franchise. They may find out that the franchise that they are interested in is not necessarily a great option for them.
In fact, Edmonton accounting firm recommends that entrepreneurs consider a minimum of three franchises at the same time. To allow people to compare franchises objectively.
So that they can figure out which one is truly the best deal for the business owner. Not only giving them the best system and location. But also what is giving them the best price for their dollar spent.
The next thing that business owners need to keep in mind. Is that the person that they are speaking to. About getting a franchise is a salesperson that is being paid for every franchise that they sell.
And while they come across as very knowledgeable. They are not a business advisor, because they are not objective. And are not helping business owners make the best decision for themselves.
Instead, they are simply salespeople. That are trying to line their own pocketbook. By selling as many franchises as they can. Therefore, they do not really care what is in the best interest of the business owner.
That means a business owner themselves needs to be looking out for their own best interest. And should ensure that they are not getting pushed into making a decision. That is not the best decision for them to make.
Which is why they should be very objective, and use their accountant to help them look at the numbers. So that they can end up with the facts about whether this is a good franchise opportunity for them.
And if this is not the right franchise. Business owners can be assured by the fact. That there are hundreds of other franchise opportunities that they can access. And make sure that one that they do get is a better opportunity for them.
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Many business owners often think that buying a franchise is a sure fire way to succeed, however find out from their Edmonton accounting firm. That the franchise opportunity that they are looking at is not necessarily the best one for them.
While franchises can be highly successful for business owners. With some statistics saying that franchises go out of business often. Then other small businesses that are not franchises.
The value of the franchise is in the systems that they have already created. So business owners need to look at the franchise systems. To see if they are complete. Or if they do not have systems and processes in place for everything.
If the franchise does not have enough systems. They might be paying a lot of money to the Franchise in the form of royalties. For system that is not complete. This should be one of the things that business owners look into.
However, if business owners want to customize too many of that franchise processes. Edmonton accounting firm says a franchise might not be the right opportunity for that business owner.
Because the value of the franchise is in the fact that they have so many things figured out already. Which will allow a business owner to hit the ground running, with all of the systems and processes in place.
But if a business owner does not want to use those systems. They should ask themselves why do they want to pay royalties for system that they are not going to use. These business owners are often farther ahead to start from scratch.
However, if a business owner does have their heart set on buying a franchise. They should get help from their Edmonton accounting firm. In order to look at the financial data. To figure out if it is a good opportunity or not.
The first thing that their accountant will do. Is ask for accountant prepared financials. Instead of the plain paper financials that the franchise has likely given the business owner.
The plain paper financials are going to have a lot of errors on them. As well as a lot of incomplete information. And if a business owner is going to purchase a business based on the financials.
Their accountant will help them find the right financials to make this decision from. By getting the accountant prepared financials. Their Edmonton accounting firm will be able to look at the information objectively.
And that objective viewpoint. Will help business owners figure out if this is a good opportunity for them. By looking at things like how much money each franchise location is making. And how long each of them have been in business.
As well as considering things such as how much of the owners salary makes up the payroll that is indicated in their financials.
By employing the right professionals. Can help business owners test the reasonability of the financials that the franchise has given them. That can help make the decision if this is a great deal. Or if they need to look for the next franchise opportunity.