Edmonton Accounting Firm | What To Look For When Buying A Franchise
When people have a dream to become business owners and do not have an idea on what they like to do says Edmonton accounting firm. They often turn to franchises as a way of accomplishing that goal.
And there is absolutely nothing with buying a franchise. Eight can be an extremely effective way at helping people become entrepreneurs. However, they should keep several things in mind. Before they simply grab any franchise opportunity that they see.
Hoping that is going to work out in their best interest. Because while many business owners have a lot of success with franchises. Not all franchises will work well for all business owners.
For example, there are some that have written up in the franchise agreement. That the business owner will take no more than three weeks of vacation per year.
For the business owner that wants to be a business owner. So that they can eventually spend more time with their children and family. This may not work well for them. Because they may not be able to take whatever time off they want.
Another reason why not all franchises work well for everyone. Is because the people have the idea of living the business quickly, and selling it very quickly after a few years. And some franchisees have an agreement that says. They will not sell it for a minimum of five years.
Therefore, business owners need to be very objective when looking at franchise opportunities. Which is where hiring Edmonton accounting firm can be very beneficial. Not only will they help be an advocate for the potential business owner.
So that the person selling them the franchise cannot push them around, or bully them. As they are known to create a false sense of urgency. And put undue pressure on a person in order to make a decision to purchase.
And in addition to that, hiring an accounting firm. Can help ensure that they are looking at the opportunity objectively. By looking at the franchise agreement. Calculating royalty against revenue. And look at the financial information directly. To determine if it is a great business opportunity.
One thing that accounting firm will help business owner do. Is it figure out if the owner’s time is accounted for fairly in the payroll numbers given to them by the franchise.
Typically, they are not going to end up with a good payroll number, because the business owner, and even their family are working in the business for free. Or at least at a reduced rate.
Therefore, a business owner does not have a good representative number of how much money it is going to cost to keep that business running. Therefore, their Edmonton accounting firm can help them make this determination.
So that they can decide if they like to buy this business. Even though it looks like business owners are going to have to fund a lot of it through their own hard work.
Looking For The Edmonton Accounting Firm To Help You?
Buying a business can be very exciting says Edmonton accounting firm. And often, people look at buying a franchise as a lower risk then starting their own business.
And while this is not always necessarily true. Statistics do show that franchises succeed more often. And while there is inherent risks associated with any business that a person runs. If business owners want to minimize their risk. Buying a franchise can do that.
According to industry Canada, they did a survey to find out how many small businesses in Canada succeeded, and how many failed. What they discovered was shocking because not only did 15% of entrepreneurs fail in the first year of owning their business.
30% failed within their second year of business ownership. And 50% failed by their fifth year. While another study shows that only 14% of franchises failed within five years.
However, before business owners go out and purchase the first franchise that they see. They need to understand, that not all franchises are created the same. Some can be far more expensive to purchase than others. And what makes a franchise effective. Is not the name that they are purchasing.
But it is the system that they are going to follow to be successful that is what is going to help them succeed. And if they purchase a franchise that does not have well-developed or well-defined systems. They may be struggling just as much as any other business owner would.
Therefore, by hiring an accounting firm. Business owners can be far more likely to succeed in business. By purchasing a franchise that is the best for them.
One of the first things that Edmonton accounting firm is going to do. Is look at the financial information given to them by the franchise. And while they are probably going to give the plain paper financials. These often have a lot of mistakes. Or contain a lot of missing information.
And will request the franchise gives them accountant prepared financials. And for multiple locations. So that the business owner can see not just what their best stores are doing in terms of revenue.
But what the average revenue is likely going to be. Giving them a realistic idea of what they are going to be able to accomplish with this business. By looking at this information, business owners can start to understand. Especially when looking at the monthly royalty fees. If this is going to be a viable business or not.
And ultimately, looking at all of the systems and processes that come with the franchise. Can help an entrepreneur understand if they are better off starting their own business. Particularly if they do not like the systems and processes that come with the franchise.
While it can be very exciting time to become a business owner. Hiring Edmonton accounting firm. To ensure that they are making the best decision for them. Can help entrepreneurs of the business that they own. Instead of dreading the job that they have just bought themselves.