The small business segment in the UK is growing at an exponential rate. According to the Department for Business, Energy and Industrial Strategy (BEIS UK), there were around 3.5 million private sector businesses in the year 2000, which has increased to 5.7 million in 2018. This number is expected to rise further this year, which, thanks to increased competition, will make it difficult for new companies to grow as easily as they have done in the past.
If you’re a growth-focused entrepreneur who wants to commit to expanding your business without worrying about the rising competition, you need to look beyond general management tactics.
So how does franchising come into play here? A franchise can help ensure that your venture’s growth rate doesn’t slow down in the coming months. In this post, we show you exactly how, along with why you should consider it as a way to grow your business.
1. No Need to Block Your Funds
Most young entrepreneurs find it incredibly challenging to expand their businesses after a certain point due to a lack of funds. Since expansion often requires a new office, recruiting new employees and additional advertising, they don’t always find themselves in a position to take that extra step, which results in their business not being able to grow to its full potential. With franchising, this problem can be fixed immediately.
If you have a promising business, you can switch to the franchising model and save yourself from the unnecessary financial burden of growing your business in other ways. This will help you grow your business nationally and internationally without blocking funds.
Let’s take a look at a travel business to see how the franchising model works. If you run a travel consultancy that plans unique trips for your clients and helps them create amazing memories with their loved ones, for example, you might want to tap into new client bases in other parts of the country. However, this would require you to first create a substantial presence there. Establishing a travel franchise in the UK would allow you to shortlist deserving partners and appoint them to run company franchises in their areas.
Franchisees must pay a franchise fee— this is their investment to open a store and hire staff, and gives them the right to use your brand name and marketing materials to grow their business. While you must provide a certain level of support in exchange for this fee — some businesses offer training and support getting bank loans or finding suitable premises — this is a promising method of raising extra capital you can invest back into your business to grow it further.
2. Benefit from a Self-Motivated Management Team
One of the most significant problems today’s entrepreneurs face is hiring employees who are hardworking and as passionate about the business as they are. You might manage to retain employees who seem engaged and driven now, but you may struggle to encourage them to continue to work at their best — especially if they don’t feel valued within your organisation. This results in a productivity slump, which not only affects the bottom line of your business but also leaves you frustrated and overworked.
On the other hand, if a franchisee has given their life savings into setting up a franchise of your business, they will possess self-motivation to see it succeed. Very few people will invest such a huge chunk of money — franchise fees vary, ranging from four to six figures — and let their business fail. Having motivated franchisees dedicated to their — and by extension, your — success can help take your business to a new level.
3. Limited Risk
When you opt for the franchise model, you share your financial, operational and managerial risk with your franchisees. Whatever happens at a particular unit is the sole responsibility of the franchisee. This can help you negate risk and focus on other growth opportunities with a composed mindset. Of course, a healthy franchise model is one that provides its franchisees with the support they need to make the business a success. Do this and you’ll only serve to attract new investors to your business, allowing you to benefit from consistent growth in the long term.