[This article was written by Craig Middleton.]
If you have a startup, it can be hard to know which direction to go sometimes. However, one pivot that you might want to consider is becoming a franchise. You can enjoy a lot of benefits from franchising such as the ongoing fees you receive and the scale at which you operate. But you need to know the signs that it’s time. Here is how to know when to turn your startup into a franchise.
Your Finances are Improving
When you look at your books for small business bookkeeping you might start to notice that your sales are through the roof. This could be a great sign that it is time to become a franchise. If your sales are that good, imagine if you took your strategy and applied it to a broader market. Entrepreneurs everywhere would be looking to buy into your system so they can make money with more certainty than other opportunities. So always pay attention to your finances, because they tell a story that you want to listen to.
You Keep Hiring More People
Your business is either growing or dying. If you are hiring people, then your business is growing and this is a great sign that it could be time to franchise. It means that there is enough demand for your services that more locations could actually add to the profit. You can always have some over your current employees open up the new locations if you can’t hire enough new people yet.
You Have Consultants Recommending It
Business consultants are a valuable resource. They can point things out that you might not have noticed about your business initially. If they start mentioning the option of a franchise, then you should take their advice. They have seen numerous businesses and are giving you the advice for a reason.
You Have Offers to Buy Your Business
Getting an offer to buy your business is a huge compliment and confidence boost. However, it is more than that. You can sell it sure, but it might mean that you could actually make more money by franchising it. After all, if someone has enough to buy your business they would have enough for franchise fees.
You Have Systems in Place for Automation
It is much easier to franchise a business when you have automated your processes and workflows. If you have these systems in place, then you are ahead of the curve. It will be a much easier process to turn it into a franchise.
You Want More Economy of Scale
When you buy things in bulk, you save a lot of money. Finances are crucial for startups as you try to bring in more profits than expenses. Expanding into a franchise could actually improve your profits due to getting better deals on core products you need and use.
You Want Exclusive Agreements
It is hard to negotiate with suppliers when you only have a small startup. If you want to get better exclusivity agreements, they will want to see more volume on your end to protect their risk. This could mean it’s time to have more stores and gain leverage in negotiations.
You Serve a Broad Market Vertical
The more broad your market is, the easier it will be to franchise. You can still have successful franchises in certain niches, but you open up your potential customers when you are in a general space. If you have a broad market vertical, it is great news if you want to go the franchise route.
In today’s business world, every niche is more competitive than ever. As a startup founder you have to make smart decisions in order to grow every day. Sometimes, you reach a point where you are ready to franchise. In order to know when the right time is, review the information above and use it to make a decisions that could bring more profit and success your way.