While there are several books dealing specifically with business finances, including A Guide to Financing Your Small Business and A Guide to Small Business Finances, any consideration of business growth has to encompass at least some discussion on financing options such as mergers, acquisitions, joint ventures and franchising. This entry will focus on franchising which is often suggested as a quick growth mechanism. It is usually financed by the franchisee and thus becomes an infusion of cash to your business while offering the opportunity to rapidly increase your market share by offering expanded services into new geographic locations with little or no investment from your company budget.
This opportunity does not come without challenges, however. While your basic business may or may not be heavily regulated, franchises have intense legal requirements and thus are suggested as appropriate as a long-term growth option. Here are management questions that need to be carefully analyzed before committing to a franchise program:
- What legal fees and considerations are necessary before you can offer a franchise?
- Is there a demand for your product that will be continuous enough to support a franchise?
- Does your business have customer appeal?
- Why would someone want to become a franchisee of your product or service?
- How will you control the quality of your product or service being delivered by the franchisee?
- What is your comfort level with someone else representing your product and service?
- Which functions are you willing to delegate to the franchisee?
These are just a few of the considerations you should be discussing with your legal counsel and other advisers as you try to determine the feasibility of franchising.
Check out the book Rule of Thumb: A Guide to Small Business Growth for other ideas on small business growth