Buying a Business or a Franchise? Part 1
Category : Web Stuff
At StudioIMI, we have acted as sales agents for small to medium-size franchises to individual owners. We have represented more than a dozen franchise organizations over the past ten years, in various capacities. Our franchise involvement includes supporting a global tutoring organization with over 200 locations, in various capacities. We provided many owners with new, SEO-rich websites, original blog content, handled most social media campaigns and created and maintained ad-word campaigns and SEO sites. We understand the psyche of franchise operations and what it takes to make a success of it.
According to a recent Bloomberg article, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. This is a staggering number! The take-away from this is that business ownership is tough. There are so many varieties of businesses to consider and the dream of owning your own company can be a great thing as long as detailed analysis and due diligence is carried out before an offer is made. I have also been asked to consult in Parksville, BC and across North america to individuals who are looking to buy a business. Their searches may be a result of an employment change, health issues, an inheritance or a necessary change of lifestyle.
What amazes me, are the number of times that a prospective buyer does not receive “audited” financial records from the current owner.
To me, this is usually a show stopper. What are they hiding? Why do they not have financial statements to insure buyers, there are no serious issues? I recently was involved in a potential business sale in the Parksville area where the owner could not provide financials. We strongly recommended against this acquisition. The owner was looking for someone to take over and blindly accept unproven numbers, potential liens and litigation against him. It was just a terribly risky situation. You should run from these owners… fast! You could lose your entire investment, whether it be $50k or $500k or be embroiled in a lawsuit.
Franchises on the other hand, depending on the stats you look at, have an 80-90% chance of success. However, it still requires a comprehensive review of the brand, the local results and what the future will hold. In a lot of cases, a successful franchise may have expanded too quickly, they may be under-staffed, they may be expanding so much so as to dilute the brand. A prospective buyer shouldn’t be swayed by the slick sales staff of the franchise who sometimes act like they are selling timeshares. Talk to current owners yourself, not just the hand-selected ones they recommend. You will collect a lot of data and you can then begin to make knowledgeable decisions and negotiate from strength.
We have also been involved in acquiring businesses to add to our own existing portfolio. As a diversified corporation, our strategy has always been to recognize opportunities to supplement our offerings (growth by acquisition). We have added a few subsidiaries over the years. Some survived and became part of StudioIMI and some, became redundant and we closed them down. We currently have another business (www.showmethewifi.com) that started up in 2017 to reasonable first-year success and will continue to operate into 2018 and longer.
If you have any questions about buying a business or a franchise and how StudioIMI may be able to help, please call us. We love to speak with prospective new business owners and to build long-term relationships. Our goals are always to provide straight forward solutions that give you the best chance at success in business. get the facts and discover “what you don’t know, you don’t know”.
Please contact us for more information about Business Coaching and Consulting in Parksville, BC: