If you are considering starting a house painting business, you are better off buying a franchise. Given the sensitive nature of such a project, most people are quite picky when choosing a contractor. By aligning yourself with a renowned brand, you can make waves in the market more easily.
That means you can hit the ground running as opposed to when you start a shop from scratch. However, to make the most of the opportunities that come from riding on the success of an already established brand, you need to take a few proactive measures.
Calculate the Margins
It is easy to fall for the high numbers thrown around by franchisers. However, deciding based on total revenue can be quite misleading. Before sinking your hard-earned money into a business, be clear on the returns.
Ideally, the profit margins on most franchises sit at 10 to 12%. That is the most important figure, as it has a considerable influence on your financial freedom. It dictates how many sales you need to make to achieve your targeted income. That is to say if you aim to make franchisor$100,000 in profit, you need to realize at least a million dollars in sales.
Remember, you need to kick up a percentage of your total revenue to the franchiser for the privilege of trading under their brand. You need to be sure that you are comfortable with expected returns beforehand to avoid running into severe headwinds.
Understand the Fine Print
It is common practice among franchisers to impose geographical limitations on their franchisees to avoid unfair competition. At first glance, that might seem like a great idea, but it comes with grave setbacks.
Sometimes you need more than a few zip codes to generate sufficient revenue for your business to thrive. More so if your assigned region covers a low-income neighborhood. If the parent company has such stipulations, be sure to carry out in-depth market research to ensure there is a sufficient customer base.
Otherwise, you might run into financial trouble before your new business takes off. It could also affect your ability to meet your financial obligations, including servicing any loans that you may have. It will also influence your ability to take on credible help capable of taking your business to the next level of success.
Talk to Other Franchisees
There is no higher source of information about a business than having a conversation with the current owners. With the right approach, you can get them to open up about their experiences. Such an approach offers you rich insights about what it takes to run such a business.
Be sure to talk to previous owners as well. Dig deeper into the reasons they chose to close shop. Such people are more likely to be more open about the shortcomings of the business. Weigh both sides of the stories to help you make an informed decision.
Buying a franchise is the quickest way to get your new painting business to a running start. However, you need to address some crucial factors that underlie success. Only then can you harness all the advantages that come with being part of a larger company.