Avoiding Small business failure!
“I think that maybe inside any business, there is someone slowly going crazy.”
Joseph Heller Something Happened
According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have faltered. After 10 years, only around a third of businesses have survived. Surprisingly, business failure rates are fairly consistent.
The most common reasons small businesses fail include a lack of capital or funding, retaining an inadequate management team, a faulty infrastructure or business model, and unsuccessful marketing initiatives.
BUT, if you wish to build a business and build wealth, Franchising can help alleviate most of what brings failure to an entrepreneur. Think about it, you’re buying into a proven business model, you have an understanding of the financial capability by reviewing existing operations, and you have a viable management team to work with you to build a business. With that said, due diligence must be completed to determine the strength and weakness of any Franchise organization. In a five-year study performed by franchise consulting firm FranNet, their results showed 92 percent of their franchise placements were still in business after two years, and 85 percent after five years. Though the success rate of independent businesses seems to be more volatile, this isn’t true for all industries.
If you are tired of working for Corporate America, and building wealth for someone else, there are several steps you must take to investigate Franchise opportunities. The list below is just a few of the items that one must look at before moving forward with a concept.
- Does the model fit with your skill set
- Success of existing Franchisees
- The current management team
- Service or Product fit with your community
- Your expectations
There are many more items to check off prior to making a decision to buy into a Franchise model, so one must look for help if you do not have the time nor experience to complete the full due diligence. As most do with looking at real estate, making investment decisions, etc.etc.. Get yourself some help to evaluate what may be a great opportunity for you and your family.
To learn more about starting your own business through Franchising, contact me at Joshco Partners for a free consultation.