Many successful business owners hit a certain point where they need to expand their business. A business that can’t grow runs the risk of imploding.
Unfortunately, expanding a business can be challenging, and for many business owners it leads to more stress, more work and requires more capital.
There are a few options for businesses that want to expand. These include hiring more employees, opening new locations, forming partnerships and finding investors.
Franchising is another option which can be very cost effective and successful. Here are seven reasons why franchising your business could be a good choice for expansion.
Reduced capital costs. When you franchise, you don’t have to pay for the cost of new locations and setting up your new stores. Instead, these costs are covered by the franchisee when they join the franchised network.
Motivated owner operators. Unlike employees, franchisees are owner operators and so have more incentive to work harder and make the business a success.
High returns for minimal risk. Because you have not had to risk as much of your own money, you’ve got less to lose if things go wrong. As long as your business model is sound and your franchisees work hard, you have the potential to make high royalties and big profits, in some cases more than if you were running the outlets by yourself.
You are empowering other business owners. By franchising your business, you are contributing to the growth and development of other business owners, and this can be very satisfying. A well-run franchise creates a win/win situation.
You can expand rapidly. When you franchise your business you can open multiple new outlets within a very short space of time, or even simultaneously. This is very difficult to do with any other form of expansion unless you’re prepared to shell out a lot of cash upfront.
Increase your buying power. When you have a number of locations and more business, this will increase your buying power among vendors. It can mean that you gain a competitive advantage over others, and reduce business overheads for you and your franchisees.
Faster market dominance. Having multiple outlets for your business means that you have a greater market presence and customers will more readily become familiar with your brand name. This in turn helps you become more recognisable and gives you the edge over your competitors.
Not every business can set up a franchise, but if your business does fit the criteria, it can be a low cost and highly effective way to grow your business and expand.