Perfect match

It is essential you consider all the relevant factors before making a decision that could change your life. Carl Reader advises on picking a franchise

The first thing you need to consider is whether the franchise opportunity is right for you. This might be a simple decision, if for example the franchise operates in an industry that you do not wish to be involved in.

However, some deeper thought is needed around whether you have relevant skills and experience that would be required to make your franchise a success. Although you might not have been directly employed in the industry that you wish to establish your franchise in, you need to honestly appraise whether you have the transferable skills from any previous career that would be required to make your franchise a success.

Once you have determined that the franchise is a good fit for you, it is time to then consider your plans for the business, and whether it is a suitable fit for the territory that you are looking to operate in. This will involve some detailed competitor analysis, and truly understanding the unique selling points of your proposed business when compared to the competition. You should also prepare a SWOT (strengths, weaknesses, opportunities and threats) analysis to ensure you have fully considered all areas.

Financing a franchise has recently been a stumbling block for many prospective franchisees, and again a self-evaluation process is required so that you understand how much you can afford to put into the business.

Consider all available sources of finance, including high street banks, franchise finance brokers, and even friends and family. In addition, you should consider whether you have any equity in your own property, or savings that can be put towards the new business. It might be that your financing requirements need some creativity, by perhaps splitting the total finance required between leased asset finance, bank funding and personal capital.

When considering your financial status for a franchise, ensure you at least have a contingency plan in case the franchise is not as successful as you originally hope. If you do not have a partner that can financially support you, should the business not be a success, I would recommend having a savings fund available for your own personal expenses.

The considerations made in respect of how the business will suit you, the local area, and the finances will make up a fundamental part of your business plan, which is a vital document to help your understanding of whether the franchise is viable for you.

A key component of the business plan is the financial information, which demonstrates the projected profitability and cash flow of the business. Ensure you take professional advice in relation to these to ensure you have prepared these correctly and included all relevant items, as a small mistake can often lead to highly distorted figures.

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