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Expanding Your Home-Based Business--Through Franchising

Expanding Your Home-Based Business--Through Franchising
by Pamela Smith

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"EXPANDING Your Home-Based Business--Through Franchising"

"I have as much business as I can handle--and then some. If only I could clone myself! If only I had a larger kitchen table!"

Do any of these statements sound familiar? To a successful home-based entrepreneur, they just might. So how do you expand your business?

Let's assume you've been through several years of development, and apart from occasional glitches and bumps, your business is growing steadily. It's time to determine your growth strategy. Depending on the type of business, you will determine if it is time to

(a) take this business out of the home into an outside office space, and hire more people;

(b) obtain factory space to produce and sell more "dog cookies" or "aromatherapy soaps," or

If you serve clients and have referrals for more, and just need a few more bodies to do the work, option "a" might work for you... if you can tolerate additional overhead. With a product that is really taking off, some variation on option "b" is your best bet, probably.

With a restaurant or retail store, option "c" is often the first one that comes to mind. But as a home-based business, can you effectively "open new locations?" (I mean, how many homes do you have?) With businesses that have the characteristics necessary to be operated from home, your most likely expansion bet is to pass on your expertise to another person who will essentially duplicate what you're doing, in their own home.

Many entrepreneur-minded folks decide to work at home for the obvious advantages, and because what they do just doesn't require the "office" or "store" customer interface to be successful. Many businesses run from home involve YOU taking your service TO THE CUSTOMER, instead of them coming to you. This creates a low-overhead advantage that, combined with a solid, proven operating system, can be very competitive in the marketplace.

This means that would-be entrepreneurs who want to go into business for themselves, but lack the "formula" or "system" for how to do it, may be willing to pay an upfront fee for your expertise and your "business format"--and an ongoing royalty for the right to use your trademark, and for some continuing advice from you. If they can do this with lower start-up costs than a retail location, it makes your franchise that much more desirable!

STEPS TO TAKE: First, examine the feasibility of franchising what you have. Is what you have "duplicatable?" Can someone else be trained to do what you do? Can it be overseen from a distance and still be successful? Are the start-up expenses and return on investment reasonable for someone else to invest in your venture?

There are costs associated with developing a franchise, and they are not small... this is not something you do lightly. However, as with any expansion, the costs are an investment in the future growth and success of your business. Best of all, the costs can be "contained" through your participation. The more of the development process you are directly involved in, rather than just handing it off to someone else, the more you can save.

A good way to save money both now and in the long term is to PREPARE YOUR OPERATIONS MANUAL. It's an essential requirement for a franchise system, and a time- and cost-saving tool for ANY business. Establish the benchmarks for how you want things done; set the guidelines for quality in your business. The more complete your manual, the less modification required to make it "franchisee-ready."

WHAT ABOUT DISADVANTAGES? When you franchise your business, you have to be prepared to accept a two-way communication stream, receiving input from your new "business partners," the franchisees. For entrepreneurs accustomed to making all their own decisions, this is difficult. You also are changing directions at a nearly right angle--where before you were a "caterer" or "pet- sitter extraordinaire" or "fill-in-the-blank"--now you are a franchisor, and you have a whole new product to sell: your franchise. This is not an easy adjustment! The good news is you can hire professionals to ease this transition.

As with any expansion plan, be certain to put together a solid team of advisors, including a qualified consultant. You'll eventually need an attorney and a CPA to do your audited financial statements, but that comes later--don't expend resources needlessly before it is time.

BOTTOM LINE? Franchising is certainly not the only option for expansion, but you should include it in your considerations. While there are certain "hoops" to jump through in order to get there, some of those hoops protect you and your investment, and that's always the bottom line.