Should You Buy A Franchise?

When people think of franchises, they often think of fast food chains that could cost more than a million dollars to start. A McDonald’s franchise, for example, requires a minimum of $750,000 in liquid assets. While signup costs include the cost of construction and equipment, they can range from $1 million to $2 million depending on location. The good news is that once the business is operating smoothly, revenues average around $2.5 million a year.  Is franchise ownership something to consider?

While the idea of opening up a fast food restaurant can be profitable, the cost of entry is what prevents most people from making the leap to having their own business. Unless they are already established business people, it’s difficult to get a bank loan large enough to cover initial costs.

Fortunately, there are many retail franchises available that cost much less and that can become quickly profitable. If you decide to open up a UPS Store, your UPS franchise cost could be covered with a moderate-sized bank loan. You would need from $60,000 to $100,000 in liquid assets. You would then need about $167,000 to $353,580 for the total initial investment. The wide range is based on the cost of the location.

It’s also important to note that the liquid assets are not part of the money you borrow from the bank. You can meet this requirement through retirement accounts, mutual funds, stocks, and bonds. You can also get a co-applicant to help you meet this requirement.

5 Essential Requirements For Franchise Ownership

Franchises work for people who have an entrepreneurial spirit and who are resourceful enough to get the funding they need to get started. They can be less risky and more profitable than starting your own business from scratch because almost everything has been figured out—from product to marketing, and from business processes to everyday operations.

However, not all requirements are financial. You also need to be the right person for the job. You will need to have an entrepreneurial mindset, an eager willingness to learn, enough financial management skills to track your profits and losses, sufficient leadership skills to manage employees, and enough time to dedicate to the business.

Let’s take a closer look at these five requirements.

1. Mindset.

You are not likely to succeed as a franchisee if you are doubtful and overcautious or if you are doing work that does not appeal to your natural interests.

Starting a business is difficult enough, running one from a pessimistic perspective or a resigned disdain for the nature of the work makes it almost impossible to overcome problems that will inevitably arise.

Grit and determination, as well as a natural love and aptitude for the work, are essential for getting through the tough times.

2. Study habits.

Although you will be given as much information as you need to successfully run a franchise, you have to be willing to spend the time to study everything about the business.

If you are someone who is too restless and impatient to sit down and crack open the books, then franchising may not be the right venue for you.

First of all, there is a lot you must know about the business. You need to know the business landscape, your market, and exactly how to apply the standardized business processes you are expected to follow.

In addition, the franchisor will not cover everything and you will have to do some self-study to fill in the gaps. For instance, you may not be taught how to write effective advertising but merely told that advertising is important. While you may be told where to advertise for best results, you might not be coached on how to advertise.

3. Financial management.

You must be good at allocating funds, keeping track of your incoming and outgoing, and paying small business taxes. While you don’t necessarily have to be an astute bookkeeper yourself, you have to be able to understand enough to make sure the bookkeeper you hire is competent.

4. Leadership.

Managing people isn’t as simple as telling people what to do. You have to avoid the extremes of acting like dictator to acting like a fellow employee.

Leaders know how to motivate apathetic people, discipline those who shirk work, and correct those who treat customers poorly.

Fortunately, you don’t have to have natural leadership skills. Leadership can be taught and it can be mastered through practice.

5. Availability.

You will not be successful as a franchisee if you have many other commitments. If you have to run your children to after school events, run other businesses, or enroll in advanced education, this business model won’t work for you. While you can get a semi-absentee business, you will still need to spend a considerable amount of time at your business to make it successful.

Rugged Individualism

You might not be surprised to learn that Gallup polls suggest that as many as 70% of Americans hate their jobs. As some of the hardest working people in the world, this quiet desperation is not due to the nature of work itself but the loss of autonomy. This love for freedom is a national character trait. It is this sentiment that created the American Revolution and opened up the early migration to the West coast. A franchise gives you the freedom to own your own business .

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Cider Costs: What The Apple Is Going On Here?

Fall and apples go hand in hand here in Michigan, as I know is the case in many other parts of the country.

We have always enjoyed many of the activities that fall brings, and those centered around apples have always been favorite, specifically going to the cider mill and also apple picking.  Both of these things have been traditions of our families for the last few years.

But, we noticed this year that things are just out of hand!

Cider Prices

Who doesn’t love cider and donuts?  I know everyone in our family loves these things.  Still, the price of cider these days is through the roof.  A gallon is now around $8 at most local cider mills!  This pricing came about in kind of a sneaky way.

In 2012, Michigan had an incredibly warm March.  Temperatures averaged low 70’s for roughly a two week period. This was about 30 degrees warmer than normal.  The apple trees started blooming earlier than normal, as is normal with these temperatures.  Unfortunately, when the cold weather came back in, many trees were damaged for the year.

In short, the harvest in 2012 was a dud, and prices of apples and cider went up as the crop was down 75% in many areas.  Prices for a gallon of cider went up from around $5 to $7.

Now, 2013 and 2014 produced bumper crops of apples, but do you think the prices went back down?

Nope.

I really get bothered by these types of opportunistic price increases, but they’re not surprising, and even though I’m sure there wasn’t direct collusion between cider mill owners, I’m sure that they all just decided to put out their prices as they were the year past and see what happened, and unfortunately nobody complained.  And now we’re left with cider prices that are much higher than they probably should be.

And, to top it off, some of the cider mills have gotten greedy.  There’s one local mill (Long’s Family Farm) that actually charges you for plastic cups if you want to buy your cider and sit outside.  Talk about greed!

Picking Prices

Long’s was also our favorite spot to pick apples.  They had a pretty sweet setup where you came in, parked, and took a hayride out to the picking area.  Our family generally got a large bag.  The fun and experience, plus the apples, were worth the $25 or so.

mb-2015-10-appleSadly, it’s not that easy anymore.  They now have a policy where every person that goes to pick apples has to buy their own bag.  Even kids.  So, instead of our family buying one large bag for around $25, we could get four small bags for roughly the same price. The only problem is that you end up with roughly half the amount of apples in four smaller bags as you do with one larger bag.

And, to add insult to injury, it’s been reported that when you go back, if your bag is above the top line, they’ll charge you for yet another bag!  After all, if you’re going to effectively double the price of your product, why not effectively throw sand in their face while you’re at it?

Sadly, our annual visit to this mill and orchard was crossed off the list.

Our Alternative

We found a new cider mill that we tried this year (Rochester Cider Mill).  The prices were around the same, but there’s no getting around that, but it was very laid back.  They had areas for the kids to play, and while you were in there, you didn’t get the sense that they were looking at you with dollar signs in their eyes, as has turned into the case with other nearby mills and orchards.  We loved it!

We ended up skipping apple picking this year.  Hopefully we can resume this at some point, but it will either have to be at a new orchard or if the old place we went to changes their minds.  This year, we have gotten our apples at the grocery store.  It’s not as much fun, but in the end, we’re satisfied with the product and we can justify the prices.  Our goal is to still have fun, just maybe in other ways.  The kids are now old enough that they can help bake pies or make crisp.  Yum!

A Deep History

Many of the mills and orchards in our area is that they are very old, with decades of tradition and history.  That’s all great and it makes for great stories.  However, I can’t help but think that charging for cups and napkins goes against the established traditions.  Was this kind of business what the founders had in mind?  It seems awfully hard to believe.

Readers, do you love apples and fall like we do?  Have you seen your local businesses stay true to their history or has commercialization and profit taken over?  Tell me your thoughts and experiences in the comments below.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

5 Simplistic Ways Small Businesses Can Save Money

Working with a small budget? Need ways to cut back on operational costs in an effort to increase profit? Owners of small businesses don’t have the same financial luxuries of a large organization.  As such they must make economic decisions that will allow them to save money while still providing the same quality of products and/or services. There are essentially hundreds of ways in which you can cut back on your overhead costs.  However, some of them may require a large initial investment or an array of resources you may not have at the moment.

The good news is, however, modern technology has made some money saving options a lot easier for small business owners to accomplish. Here are five considerations.

1.  Outsource Instead of Hiring

There’s more to hiring an employee than just paying for their salaries. As a business owner you would also be required to pay employee taxes, insurance costs, and more which can add up on a small budget. Not to mention the costs of office space, furniture, and training for a new employee to start. However, if you were to hire a freelance contractor or outsource certain aspects of your business, you will come off a lot cheaper.

By hiring an individual or company on an as needed basis you’re essentially only paying for the time they actually spend completing work. There is no need to pay for taxes or insurance, and since they have their own location to work from, there is no need to invest in things like office space or equipment. Look at areas of your business that doesn’t require someone to physically be on location on the daily basis. This might mean hiring a virtual assistant to handle clerical tasks, or even a freelance accountant to handle the bookkeeping on a monthly basis. Ultimately it will save you big time.

2.  Consider Switching Phone Systems

If you’re using traditional land lines for your organization, you may want to reconsider this option. There are more innovative phone systems that you can invest in that will essentially cost you next to nothing. Not only that but many of these new phone systems allow users to access the company phone system remotely. There are several options for you to choose from including VoIP phone services or a hosted PBX system. Each has its own pros and cons that should be evaluated, but in the right organization can work well while also saving money each month.

3.  Go Paperless

Going paperless is not only great for the environment, but it can save your company a bunch of money. Gone are the days where forms have to be printed out and correspondence has to be sent by mail. With modern technology you can essentially run all of your business operations online. Here are a few options you might consider when going paperless:

·  Send emails – instead of mailing correspondence out to clients or customers why not send an email? Emails are a lot faster to send and track, and you can also send them out in large batches saving you time and money as there is no need for envelopes or postage stamps.

·  Go in the cloud – when it comes to storing files and other documents, the cloud is the new way to go. All of your company’s data can be stored in one virtual destination allowing as many permitted users to access it from virtually anywhere with an internet connection. Worried about your company information being compromised? Software security software and features have come a long way and will certainly keep your information safe from hackers.

·  Paperless Fax – Need to fax something to a client? There are now paperless fax options available. You receive a legitimate fax number.  You then send a fax virtually to anyone with a telephone number or email address instantly. You’ll receive instant notifications when faxes have been transmitted and received.

4.  Shift Your Marketing to Online

Marketing is certainly an important aspect of any business type. Without effective and continual marketing efforts, your company’s brand essentially falls by the wayside. However, if you’ve been doing a great deal of traditional marketing (i.e. flyers, postcards, mass mailings, etc.) you may want to consider more affordable (and sometimes free) options such as online marketing. Creating an effective website, company social media page, and compelling content allows you to build a strong online presence while still getting the word out about your products and services.

5.  Utilize Free Online Software

Last but certainly not least is the option to utilize free online software for some of your business practices. Investing hundreds of dollars into expensive software can put you over budget. Many times, there are free software options that are just as effective as the expensive ones. For instance there are free online templates, cloud storage accounts, and even email mailing (marketing) accounts.  These allow you to get the job done effectively without spending the unnecessary cash.

Saving money in your small business is all about making informed economical decisions. Take the time to evaluate your company expenses.  Look into the areas in which can be cut such as those described above. By incorporating different ideas such as outsourcing, going paperless, or utilizing online marketing, you will see that cost of operational costs start to plummet allowing you to put the excess money to use in other areas of your business.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

The Downside Of Hiring The Best People

Hiring the best and brightest is probably the goal of many organizations.  As much as we laugh at the workplace doofus (like Wally in Dilbert), we’d ever want anybody working for our company if we were in charge, right?  We’d only hire the most qualified and the most competent and everything would run smoothly.

Unfortunately in the real world, things don’t always work out that way.

Personal Experience: My Dentists Office

I have been going to the same dental practice since as long as I remember.  Since I’m 40 years old, that’s at least 35 years or so.  For most years, the practice was owned and practiced by one dentist.  He always did a great job, and was on the cutting edge of many technologies that are now standard, but were not at the time.  On top of that he’s a really nice guy.

At some point, he brought someone in to expand the practice.  At first the second dentist was an associate, and after a number of years she became a partner in the firm, with some level of financial interest.

The original dentist eventually had a health problem and had to eliminate his ability to practice.  He still ran the practice and operates as the primary stakeholder, and in order to fill the gap in patient care, another dentist was hired as an associate.

That dentist was awesome, and became the primary dentist that my wife and I both saw, as well as my parents.  After several years of being in the practice, he left.  A replacement associate was hired, and he became our dentist, and saw both of our kids as well as everybody mentioned above, meaning there were a lot of our family member that were now developing a history with him.  He was also very good at what he did.

We just got an e-mail from the dental office that he is also leaving.

At this point, there is some great concern about the rotation of dentists and whether or not it makes sense to stay with this particular practice.

On the one hand, the managing partner seems to hire great dentists.  We’ve never had anybody yet that we feel uncomfortable with or that doesn’t seem like they know what they’re doing.  The hope is that the next associate to be brought in would meet the samemb-2015-02-teeth standards.  Of this there would be little doubt.

On the other hand, he seems to hire only great dentists….that tend to leave!  My wife and father both said to me, in independent conversations, that it doesn’t seem to make sense to develop a history with a particular dentist, only to have them leave and have to start all over again.

The dentist that just left has other family members who are dentists.  While it isn’t clear, it’s a safe bet to think that maybe he’s going to go there.  Did I mention that the family office is only a couple of miles from our house?

It makes for an interesting proposition.  We’ve developed loyalty and comfort with this office, but with the high standards that they develop, they could actually be presenting us with an option that might be in our best interests to go elsewhere.

Great Associates Don’t Want To Be Associates Forever

I’m only speculating here, but my guess is that the associates themselves see the opportunity as one to develop their skills and cement their reputation as great dentists, after which, it only makes sense for them to go where they can have more opportunity, prestige, and control.

The history of all three associates (they did announce a replacement has already been hired) seems very similar.  They graduated dental school and worked at what I call a dental ‘chop shop’ for a few years.  This is the standard clinic with many dentists that advertises on park benches and late night TV commercials, and often has very incompetent dentists, but likely also serves as a way for new graduates to get their feet wet, and to stand out, at which point they become associates at a reputable practice.

However, after they prove their mettle at the next level, it only makes sense that they want to take it to the next level again.  The bottom line is that the dentists I’ve mentioned have all been the third name on the door, but likely know that they’re talented enough at what they do to be higher up.

So, they go for it.

As they should.

Look, I don’t blame them one bit.  It’s a tough sell to tell them that they should stick it out and maybe somewhere down the road they can get a piece of the pie themselves, not when they know that the opportunity is out there.  On the other hand, it’s hard to blame the managing partner.  He founded the practice, ran it by himself for a number of years, and even though he’s no longer actively practicing, the reputation that he’s built and maintained both by his hard work and by his astute recognition of top talent, has allowed the practice to presumably remain profitable.  Does it make sense for him to ‘give that up’ to try to keep the associates happy?

It’s a fine line to walk, and it makes it abundantly clear that hiring the best and the brightest certainly has its advantages, but also opens the door to other questions and problems, many times if they’re not handled right could actually hurt business.  Say my family and my parents all left the practice, that’s certainly not going to send the practice into bankruptcy, but if there are enough people that have those thoughts and act upon them, it could very well create a financial situation with negative implications over the long term.

Interesting thoughts.  As we ponder what to do with our dental future, I’ll keep you posted.

Readers, what do you think of our dental office situation?  Have you ever seen any impact where the best and the brightest talent created unwanted problems?

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.