Starting your own business can be quite a challenge. Aside from having to come up with an original idea that customers see a need for, you also have to devote much time and resources towards bringing the idea to life. Moreover, sometimes, people do not have sufficient capital or resources to manufacture a wholly new, original product. Hence, aspiring entrepreneurs are increasingly turning towards reselling and franchising as their entry point into the business world.
When you buy a franchise or become an authorized reseller of a product, you get to go into business without having to create and produce an original product. Instead, you only have to deal with selling and marketing the product to earn yourself a profit. This makes franchising and reselling perfect options for those who dream of having their own business but are not sure where to start or do not yet have the necessary capital or resources to put one up.
Like any other business decision, however, choosing to franchise or resell should be carefully thought through. Here are some important steps to take before you arrive at your final decision.
Know the existing business policies
It is common for manufacturers or franchisors to issue policies that must be followed when selling their goods. For instance, a minimum advertised pricing (MAP) policy can be set by the manufacturer to impose floors on pricing, in order to protect both the manufacturer and other authorized resellers, as well as to preserve the product’s value.
Franchisors may also impose restrictions or standards on things including operational hours, shipping policies, store layout, and many others. It is best to know about any policies imposed by the franchisor or manufacturer before you sign the deal with them, in order to avoid any conflicts or misunderstandings in the future.
Evaluate the costs and benefits
Don’t just take each product at the word of the manufacturer or franchisor. Instead, do your research and find out if the product will generate good business for you or not. Moreover, it is recommended to check the track record and reputation of the manufacturer or franchisor. It is possible that complaints have been made against them or their products before, or that their business is not doing well across the board.
Even if you will not be manufacturing the product, it still costs a good amount to get into reselling or franchising, and there are still costs of maintaining your business. Hence, it is best to weigh the costs against the potential benefits before making a firm decision.
Have a business plan
Franchising and reselling are still businesses that strive to make a profit at the end of the day. Therefore, like any other business, you need a plan going into it. First, you need to be sure that the product is of good quality and that there is a demand for it. Next, you will have to concern yourself with how you are going to market it to generate sales. This is on top of negotiations with the franchisor or manufacturers that you may have to deal with. It is important that you know what you are doing and what you are getting into, so that you may achieve your profit goals and build a business that you can be proud of.
Franchising and reselling may be an advisable first step into business, but that does not mean it comes without challenges. Hence, it is important to do your due diligence in order for you to succeed as an entrepreneur.