Retail is the franchise sector’s golden child, recording an almost 28 per cent increase in median sales turnover from 2013 to 2014, compared with just a three per cent rise for non-retail franchises.
By all accounts, retail franchise sales growth will continue. More than 80 per cent of franchisors expect franchisees to achieve record revenue and profit in 2014/15. When this is combined with Australians’ growing desire to have more flexibility in their work life and control over their financial future, it’s not surprising many in retail are taking a close look at franchising.
Having been in the industry longer than I’d like to admit, I’ve answered the six questions I’m asked most frequently by people considering starting their own business.
Starting a business is risky, what happens when I run into trouble?
Many people want the flexibility and independence that comes with being your own boss. However, the widely reported statistic that one-third of small businesses fail within the first two years can be daunting, especially if you have dependents to support.
Franchising is a great option for those who wish to minimise this risk. As a franchisee, you have a whole network of people to turn to – the other franchisees. They have a vested interest in your business success and, whatever problem you’re facing, one of them has likely experienced it.
Here at Bedshed, we’ve been a franchisor for more than 30 years. We’ve seen tough trading conditions over this time and what we’ve noticed is that franchised networks traditionally remain strong when independents are struggling, to the point that there are very few in operation. This strength is partly due to the experienced executive team that supports franchisees and acts as an ongoing business mentor.
How will I secure the funds to start my business?
Many franchise models are accredited by major banks, which means they know the business is a good bet and are more likely to finance you – for example, Bedshed has accreditation for Westpac and Bankwest. Vendor finance may also be an option.
At Bedshed, we’re confident the right people will be successful in our franchise and that’s why we will help finance them to get started if necessary.
I’m worried about the financial outlay. What advice can you offer?
There is a significant outlay when buying a franchise, but the exact amount will depend on the franchise model you select.
I’d suggest doing your research thoroughly to ensure you’ve factored in all the initial costs and have a full picture of all the costs required – sometimes there will be additional outlay for training or marketing purposes. More positively, make sure you understand the return on investment – the initial cash output will pay back dividends, so be clear on the projected return on your payment.
I don’t want to be chained to my store – will I be working all hours, and what about overseas travel?
As with starting any business, you’re going to need to work hard when you first set up your franchise, but you’re working hard for your own financial benefit rather than for someone else. Many of our franchisees tell us this makes all the difference to how they feel about the effort they’re putting in.
Taking overseas holidays may be a challenge to begin with, but business travel could be an option – Bedshed subsidises the cost for franchisees to join overseas buying trips.
I don’t know much about marketing. How will I generate business?
Marketing can be a key challenge when you’re starting up a small business. At the beginning you need to bring in customers, but marketing is one of many competing priorities.
As part of a franchise, you benefit from a professional, national marketing program and support when you need it.
Ok, I’m serious about starting a business. What next?
Well done! Making the decision to start a business can be the hardest part. If you’re considering a franchise, the next step is to determine which one is right for you. This is incredibly important – you want to be involved with a franchisor that supports you and mirrors your values, and with which you can have a long and fruitful working relationship.
Here are some things to look for:
Management strategy – ensure a clear strategy is in place for growth, one that aligns with where you see your business going.
Foundation and history – ensure the company has a solid foundation and check its turnover and future projections: you want to put your money into a healthy business.
Training and support – you might be experienced in retail but not in the art of owning and running a business. If this is the case, make sure sufficient support is offered and the appropriate training is in place to give you the best possible chance of success.
Always spend time doing your due diligence. Once you’ve decided where to put your money, it’s time to talk. Other franchisees, solicitors and accountants are great people to get practical advice from as you make your franchising dream happen. Then make it happen, and reap the rewards.
Bedshed is one of Australia’s largest specialist bedding and bedroom furniture franchises with a network of more than 30 stores across the country. A robust industry in Australia, franchising takes a lot of the risk out of starting your own business. Bedshed has grown steadily since it began in Western Australia in 1980 and is currently expanding on the eastern seaboard.