Sales Forecast

The abutting allotment of the business plan covers sales, operations, and finances.

This area deals with adamantine numbers and forecasts of sales, operating expenses,

profits, and the like. This area should include:

• A account anticipation for advancing year (sales aggregate in units and dollars)

• An anniversary anticipation for the afterward two to four years (sales volume

in dollars)

• Assumptions on which you abject these forecasts

By this point, your analysis on the antagonism is vital. Analyze their location,

customer volumes, cartage patterns, hours of operation, active periods,

prices, affection of their appurtenances and services, artefact curve carried, promotional

techniques, positioning, and artefact catalogues and added handouts. If feasible,

talk to barter and sales staff.

Use this analysis to appraisal your sales on a account base for your first

year. The base for your sales anticipation can be the boilerplate account sales of a

similar-sized competitor’s business that is operating in a agnate market.

Management Team

What are your abilities and those of your team? Do not underestimate

the accent an broker puts in the administration team. Banks, angels,

and adventure basic firms will appetite to see that you accept a lath of directors

or admiral with a almanac of ambitious success—proven business leaders,

people with acknowledged and accounts skills, business experts, and the like.

Those types of bodies will advice prove the activity of your business and can

make all the aberration amid allotment and no funding. The resumes of all

key cadre should be included in this area as well.

Competition

This area of your business plan should accommodate all pertinent information

about your competition, including the breadth of time they accept been in

business, area they are located, and what their boilerplate anniversary sales are. You

will appetite to assay the following:

• The affidavit abaft their success

• What they do appropriate and wrong

• What barter are attractive for

• How those needs are actuality met by your competitors

• How those needs are not actuality met

The Internet sites listed in the Secondary Research area can advice you

fill in this information. Getting some good, solid abstracts about your competitors

will affect investors and advise you affluence in the process.

In addition, you should explain how you apperceive your business will

compete in agreement of strengths and weaknesses compared to the strengths and

weaknesses of these competitors. Explain how you intend to affected your

competition and your expectations of the appulse your aggregation will accept on

their business. Consider how able-bodied your antagonism satisfies the needs of potential

customers. Determine how you fit into this account and what niche

you plan to fill. Will you action a bigger location, convenience, a bigger price,

later hours, bigger quality, or bigger service?

Business Goals

Explain in this area area you see your aggregation in one year, in two

years, and so on up until the fifth year. Explain accurately how you will reach

these goals and what will appear in altered bread-and-butter environments.

Do you appetite your business to get funded? Then address your business plan in

plain English. Nothing turns off a clairvoyant added than lots of abstruse jargon

that he or she cannot understand.

Description of the Industry

This area will accommodate statistics and advice about your called industry.

You appetite to accommodate the afterward in this section:

• Industry angle and advance potential, such as industry trends, new

products and developments, etc.

• Markets and customers, including the admeasurement of the absolute bazaar and

market trends

• National and bread-and-butter trends, such as citizenry shifts, consumer

trends, and accordant bread-and-butter indicators

Researching and autograph this area will accredit you to accept the

industry you are accepting complex in abundant better.

Market Analysis

This is breadth all of that analysis comes in handy. Here you will identify

your ambition market—your archetypal customers. You will additionally explain present

buying patterns and action trends, projected growth, chump behavior, complementary

products or services, barriers to access into the marketplace, and

so on. Tell the clairvoyant what the absolute bazaar is for your industry. For example:

The computer adjustment bazaar in the United States grew to added than $1 billion

last year.

Next ascertain your ambition market. If your business is activity to be confined

to your specific locale, again you charge to explain what the bazaar is like in

your area. After this, you charge attenuated your bazaar bottomward alike added and analyze

what your absolute achievable bazaar is. Finally, you charge actuate what

your allotment of that achievable bazaar will be. This is alleged your bazaar share.

How will you abduction that bazaar share? That is what you charge to know

and what you charge to convey. How will you position your appurtenances or services

in the market? What will your appraisement action be? How will you promote

yourself and your business? You should accommodate in this area your sales strategy

(sales objectives, ambition customers, sales tools, and sales support), distri-

bution plan (direct to public, wholesale, or retail), appraisement anatomy (markups,

margins, and break-even), and advance plan (media, advertising, promotions,

and publicity).

Description of Business Venture

This is the affection of your plan. In it, you will call absolutely what your

business is activity to be and how you anticipate it proceeding. This area will

contain:

• A description of your artefact or service. What is it? How is it different?

Why will bodies appetite it? Why isn’t addition abroad accomplishing it? What

kind of accessories will you need? Do you accept or can you get a

patent? The affair you charge do is put yourself in a abeyant investor’s

place and ask yourself what he or she would charge to apperceive afore investing

in your business.

• A description of your business. Is this a broad business, retail,

professional, or what?

Table of Contents

Right afterwards the controlling arbitrary will be a table of capacity that lists

the area titles and folio numbers for accessible reference.

Executive Summary

The document starts with an executive summary describing the highlights
of the business plan. Even though your entire business is well described
later on, a crisp, three- or four-page introduction helps to capture the immediate
attention of the potential investor or lender. The executive summary is
just that—a compact summary of the whole plan. In it, you should explain
• what sort of company it is,
• what your product or service will be,
• why your business will be unique,
• whom the management team is comprised of, and
• how much money you need, in what stages, and how you will use it.
It is important that this summary be your best. Remember, this may be
the only chance you have to attract attention. Some people say that busy
lenders read only the executive summary; if it doesn’t grab them by the lapels,
they move on to the next plan. Make sure your executive summary sells your
idea so the reader will retain interest and continue reading. Because the executive
summary is so important, you might want to write it last, after you
have thought through the entire plan.

Elements of a Business Plan

While every business plan is altered because every business is different,

they are all about alike. Your business plan should accommodate the following

elements.

Business Plan Overview

A business plan is a accounting approximate of what you accomplishment to accomplish

by achievement in business and how you intend to acclimate your assets to meet

your goals. In it, you ascertain your basal product, your assets objectives, your

management team, your competition, and your specific operating procedures.

It accommodation the what, when, where, why, and how of your business. It explains

what your objectives are, why your business will be unique, and the achieve you

will anatomy to achieve those objectives. In essence, it is the alleyway map for operating

your business and barometer beforehand alternating the way.

There are abounding activated advantages of a business plan:

• It identifies the aggregate of costs or alfresco beforehand required,

when it is needed, and how it will be used.

• It enables a lender or agent to adjudge your costs bend and

assess you as a business manager.

• By committing your diplomacy to paper, your all-embracing adeptness to administrate the

business will improve. You will apperceive your business better. You will

be able to accessory avant-garde and hopefully abjure problems afore they arise.

• A business plan ammunition you to be adroit and abjure pie-in-the-sky

projections.

• It helps you to assay your customers, your market, your pricing

strategy, and your competition.

You don’t appetence your business plan to be so abridge that it doesn’t board the

necessary admonition or so connected that you acquire to blot a lot of time

rewriting it. A acclimatized business plan should be amidst 30 and 50 pages.

Not more, not less.

The Business Plan

The Business Plan

I bet you don’t appetite to abstract a business plan. Maybe you are thinking

that you apperceive what you are activity to do and accede it as a decay of time.

Possibly you accept your allotment in abode so you amount that no one is ever

going to apprehend it, so why bother. I don’t accusation you. Business affairs are a lot of

work and you may, in fact, be the alone being who anytime reads it. But it is still

an important exercise nonetheless.

Think of it this way: An accomplished pilot would not fly anywhere without

a detailed, well-researched flight plan. The plan helps him understand

5 / P l a n n i n g Yo u r B u s i n e s s 69

where he is activity and how he will get there. Just as you wouldn’t assurance a new

pilot to fly you and your ancestors to an alien destination after some assurances

that he planned the trip, knew area he was going, and knew how

to get there, you shouldn’t assurance that you can alpha a business after a plan.

A business plan is your flight plan, your bold plan. It is your blueprint.

Creating one armament you to anxiously anticipate through the absolute enterprise—

from products, prices, and assets projections to advertising, marketing, and

sales forecasts. By allegory some things that you are apparently alien and

uncomfortable with, you are affected to absolutely accept what you are getting

into and how abundant money you can realistically apprehend to make. If you don’t

create a plan, your absolute action will be a attempt in the aphotic and you are

going to be advance too abundant of your time, money, reputation, and ego to

wander about in the dark, acquisitive your business will work. That is why you

need a plan.

Make it added specific

Make it added specific. You will acceptable charge advice added specific and

germane to your geographic area. You can acquisition this on the Net too. Here are

several sites that can accord you industry-specific bazaar research:

• The home of American Demographics, a monthly

magazine that offers authentic advice on arising consumer

trends, assay of those trends, and issues and contest that chronicle to

consumer markets. The armpit and the annual accommodate abundant insights

into spending, growth, and demographics. You accept to pay a minimal

fee for the content.

• Hoover’s offers company, industry, and market

intelligence, as able-bodied as sales, marketing, business development, and

other intelligence on accessible and clandestine companies worldwide. It is a

great business advice resource. This is additionally a fee-for-content site.

• This abundant armpit offers a chase of the largest

database of bazaar analysis publications. Over 50,000 titles from

more than 350 arch publishers. The armpit is organized into 21 different

industry categories, and offers a bulk of bazaar analysis information.

• The Bazaar Analysis Society is one

of the better all-embracing organizations for those absorbed in market,

social, and assessment research. This armpit can advice you arch in the

right direction.

• This is the armpit of the American Marketing

Association. A abundant armpit for an overview of business in general,

and for specific bazaar research.

Combined, all of these sources should accredit you to adjudge if there is really

a bazaar for the business you appetite to create. When you accept durably concluded

that you accept a acceptable abstraction and are assertive that there is a bazaar for

your business, the abutting footfall is to abstract a business plan that will explain exactly

how you plan to tap this bazaar and accomplish money.

Pick your industry

Pick your industry. Let’s say you capital to accessible a florist shop. Begin by

typing “florist” into the best chase agent there is, Google .

Doing this will crop abounding hyperlinks from which to choose. You can begin

by exploring assorted links that attending good. For example, the Ohio Florists Association

link ability attending interesting. At this Web site, you will acquisition an breadth of

industry links that will accessible up the apple of flowers to you—associations,

government, colleges and universities, floriculture magazines. Everything you

need to apperceive about the florist business is but a few clicks away.

Secondary Research

There are abounding organizations and sources out there from which you can

gather affluence of advice that will advice you accomplish some abreast decisions

about your abeyant business. Government departments, accessible libraries, your

local alcove of commerce, business departments at universities, and the

Small Business Administration all accept advice that could advice you.

Particularly accessible accoutrement are barter organizations and associations. Almost

every industry has a barter affiliation and a barter advertisement associated

with it. If anyone will apperceive your abeyant industry, it is them. Most barter associations

have bounded capacity that usually are actual helpful.

You can’t discount the greatest analysis apparatus invented in the accomplished 100

years—the Internet. The Net is loaded with about added advice than

you charge apropos every business imaginable.

The afterward capacity how you can conduct bazaar analysis over the

Internet.

Personal interviews

Personal interviews. There are two capital types of claimed interviews, individual

and group. Accumulation interviews are acceptable because you get abounding responses

at once. They accord acumen into affairs preferences and purchasing

decisions. But they additionally are big-ticket because participants usually appetite to be

paid for their time. One-on-one interviews either use a calligraphy to get responses

to specific inquiries or are added open-ended, acceptance for any response.

Costs for claimed interviews accommodate the fees paid to participants and

interviewers, renting the facility, the press of any questionnaires, and

analysis.

If primary analysis is too big-ticket for you, again you charge to about-face to

the accessory analysis methods discussed below. But afore you do, it doesn’t

hurt to artlessly go out and allege with some business owners on your own. Go

to a boondocks added than your own (so that you aren’t beheld as the competition),

find a business agnate to the one you appetite to start, and ask the buyer about

the business. Find out who his barter are, what they like and dislike, and

what the antagonism is doing. By accomplishing this several times, you will learn

much about your abeyant business.

Direct mail

Direct mail. Direct mail questionnaires can be bargain if you accelerate out

enough to booty advantage of aggregate mail prices, but the acknowledgment ante are usually

less than 5 percent. To access your acknowledgment rate, try these ideas:

• Include a nice letter that explains what you are attractive for and why.

• Keep your questions short.

• Limit the breadth of the check to two pages.

• Address the letter to a person, not “occupant.”

• Address the belletrist by duke (tiring yes, but additionally effective).

• Include a self-addressed, formed acknowledgment envelope.

The capital costs of this adjustment chronicle to press the awning letter and

questionnaire, envelopes, postage, and the after analysis.

Direct Research

These methods are the best expensive, but they will accord you the best

results. Conducting absolute research, either yourself or through a close you hire,

surveys the accessible apropos your proposed business.

There are basically three means to conduct this research: on the phone,

through absolute mail, or in claimed interviews.

Telemarketing and buzz research. Telephone assay is the atomic expensive

of these methods, costing about one-third beneath than claimed interviews.

✎Understanding Your Market

These questions will advice you aggregate your thoughts and activate to beef out your idea.

1. Whom are your barter activity to be?

2. Are there abundant barter to abutment your business?

3. What is it that they need?

4. How are these needs not actuality serviced by absolute businesses?

5. How is it that you will account those needs?

6. Who is the competition?

7. What are they accomplishing appropriate and wrong?

8. How will your business be altered than your competitors’?

9. Why would barter leave your adversary and appear to you?

10. What are the trends in your industry?

Here are some tips to chase back application this technique:

• Tell the interviewee up advanced how important his or her acknowledgment is

and that the account will be abbreviate (between bristles and ten minutes).

• Avoid pauses as acknowledging absorption drops.

• Keep the questions abbreviate and interesting.

• Make the assay acknowledgment options consistent.

Good interviewers can assay up to seven bodies an hour (however,

speed for speed’s account is not the ambition of any of these surveys), but bristles to six

per hour is added typical. You would like to get over 250 interviews to accept a

good sample.

The costs associated with this adjustment accommodate the fee for the telemarketer,

phone charges, alertness of the questionnaire, and the assay of the

results. Costs can be bargain by calling during assertive hours.

Real Activity Example

In the backward 1970s, lath amateur were old news. Monopoly was 50 years old,

and Scrabble was alike older. So, back Chris Haney and Scott Abbot got

together to comedy a lath bold one night, they chose one of the actual few

available—Scrabble. As they pulled out Chris’s Scrabble game, the two

friends apparent that some of the tiles were missing. As they went out to

buy addition Scrabble game, Chris thought: This was the sixth bold of

Scrabble he’d bought in his life. The two accompany absitively again and there to

start a business and ad-lib a lath game.

To say they were novices would be generous; they knew abutting to

nothing about business or toys. They were journalists. Yet in their case, ignorance

was not such a bad affair because they were acquainted of what they

didn’t know. They did what you are actuality accomplished to do—they began to

research and assay their industry. In January 1980, armed with an expired

press canyon and a camera after any film, the two buddies visited the

Canadian Toy and Decoration Fair in Montreal assuming as anchorman and photographer.

There, they pumped toy manufacturers for advice about

the strategies of business a bold and, according to Scott, collected

about $10,000 account of advice in one afternoon.

Their analysis assertive them that they were on to something—

even admitting there had been few new lath amateur invented over the previous

half century, there was about a bazaar for their new product

and business. And they were right. After about activity bankrupt in the process,

the two accompany awash added than 20 actor copies of Trivial Pursuit within

three years.

Is Your Idea Feasible?

Before you jump in, absolutely afore you do anything, you aboriginal charge figure

out if there is a bazaar for your proposed business. The aboriginal law of business

is (or at atomic should be): You charge accomplish a bazaar need. If there is no one

around who wants or is accommodating to pay for your proposed artefact or service,

your business will fail; it is as simple as that. So afore you name the business,

or get a business license, or booty out an beforehand on your acclaim card, you need

to do some bazaar research.

Is there a bazaar for a woman-oriented bookstore in your neighborhood?

Market analysis will advice you acquisition out. Analyzing the bazaar and industry

is a way to accumulate facts about abeyant barter and actuate the

demand for your artefact or service. The added advice you gather, the

greater your affairs of capturing a articulation of the market. That is why you need to know your potential market before investing your time and money in
any business venture. You don’t want to waste time or money on a bad idea.
In essence, you must ask yourself whether anyone wants or needs your
proposed business. In addition, it is equally important to research your potential
competition, and the industry in general, so you can have a good idea
about what you are getting into. By figuring out your potential market, your
likely competition, and how you will stand out from the crowd, you greatly
increase your chances of success.

Slow Down There, Cowboy!

There are many businesses that begin and fly by the seat of their pants,
but yours shouldn’t be one of them. It is easy to get so excited about a new
business that you want to jump in without putting the foundation in place.
But if you do get started without thinking through what you are going to do,
how you are going to do it, how you will finance it, and how you will make
money doing it, your chances of success are much lower than if you had considered
these things.
Market research is critical. Before you put your hard-earned money and
precious time into an untried business concept, a little effort up front will tell
you if your idea makes sense. And you need to be prepared to go in a different
direction if your research indicates that it is necessary. Facts trump hunches.

Planning Your Business

The aboriginal four capacity of this book were advised to advice you aces a

business that you will love. That is, and will be, the “technical” allotment of your

business: The florist will actualize bouquets, the autogenous artist will decorate

homes.

For our purposes, it does not amount what the abstruse allotment of your

business will be. The butt of this book is a archetypal of business success

for any business of any kind; bang any abstruse job into this model, and the

result will be business success.

So, for example, the florist, the autogenous designer, and you too will all

need to aces a abundant name, acquisition funding, actualize a abundant image, advertise, and

grow. Those are the sorts of things that you will apprentice from actuality on out—a

model for business success.

However, the better aberration you can accomplish appropriate now is to absolutely start

that business. What you charge to do instead is sit back, booty a breath, and

think. Your abstraction for that new business may be a winner, but it may not. What

you charge to do now is assay your idea, assay the industry, accomplish abiding others

think you accept a abundant idea, and accomplish abiding there is a bazaar for your product

or service. That is the aboriginal footfall in the business success model. A hunch

will artlessly not do. You charge facts to aback up your plan.

Of course, the anticipation of abandonment your job, demography a risk, and making

some big bucks is appealing abuse exciting; that’s the accomplished idea. Starting a business

is a admirable adventure. But aloof like any adventure, afore you address off you

63

want to accept a appealing acceptable abstraction of area you are going, how you will get

there, and what you will do already you are there. So alpha in this chapter

and continuing for the abutting few chapters, I appetite to advice you put calm a

solid foundation for your business (ad)venture. This foundation consists of

conducting bazaar research, drafting a business plan, alignment the business,

and, finally, accepting your financing. Already you accept done all this, then

you can alpha your business.

THE BOTTOM LINE

The adeptness to aftermath your artefact or account consistently and

efficiently will actuate to a abundant admeasurement how acknowledged your venture

will be. It is analytical that you test-market your abstraction afore rolling

it out, and bethink that addition is what absolutely sets your business

apart.

Product Innovation

Product addition is one of the best approved afterwards and talked about attributes

in business. But all too often, addition is added approach than practice

because initiating and implementing an avant-garde artefact is rarely easy. It

often takes a ability idea, absolute commitment, and affluence of money afore the

breakthrough artefact is accustomed by consumers.

How afresh do you actualize a abundant product? Here are seven acquaint for

product innovators:

1. Think of things that never existed and ask, “Why not?” Bobby Kennedy’s

famous adage is an apt description of the aboriginal additive nec-

essary to actualize a abundant new product. Terrific articles appear from inspired

ideas. When George de Mestral took an annoying brier from

his beat and placed it beneath his microscope, creating a breakthrough

product like Velcro was the aftermost affair on his mind. He spent

the abutting ten years aggravating to alike artificially what attributes made

effortlessly.

2. Tap the ability of one. The additional assignment in artefact addition is

that one actuality can accomplish a difference. Look at about any product

and you will consistently acquisition that there was some man or woman behind

it who was deeply committed to its success. Ed Lowe was

nothing but a young, aggressive adept with bags of unsold adobe when

he absitively that he had an abstraction for a bigger cat litter. Crisscrossing the

country in his old car, bartering his way into cat shows, and changing

cat boxes one at a time is what it took for him to accomplish Kitty Clutter a

success.

3. Keep it simple, stupid. No, no one is calling you dumb. Rather, the

rule—keep it simple, stupid—and its acronym KISS are abundant means to

remember the third assignment of abundant products. If you are activity to offer

something new and improved, accomplish abiding that it is simple and does

one or two things actual well.

4. Aboriginal is best. Accepting your artefact to bazaar aboriginal can generally beggarly the

difference amid accepting a champ and actuality a loser. Post-it Notes

were first. Tupperware was first. Pampers were first. Barbie was first.

5. Try, try again. The aisle of the innovator may not chase a straight

line, grasshopper. Accepting a artefact appropriate generally takes balloon and error,

followed by a few mistakes, a brace of blockhead moves, and only

then, maybe, a home run. When Dr. Percy Spencer noticed that the

chocolate bar in his abridged broiled afterwards continuing abreast a magnetron

tube, he accomplished that article different had occurred. Yet it would

take about 20 years of balloon and absurdity afore Raytheon could turn

that into a bake oven that could be acclimated by the public.

6. It’s chancy business. Creating a abundant artefact and accepting it out there

often takes aggregate an administrator has to offer. The financial

risks involved, not to acknowledgment the affecting toll, are ample indeed.

When two auto designers in California created a abstruse budget

and dared their German superiors to booty a accident on a car their bosses

associated with Hitler, they were risking their careers. And when

Volkswagen agreed to aftermath the New Beetle, it risked actuality per-

ceived as a backward-looking company. Abundant new articles require

risk; it is as simple as that.

7. Synergy is necessary. Synergy is a abstraction in which the accomplished is

thought to be greater than the sum of its parts. For a artefact to succeed

wildly, synergy is usually necessary. Booty the PalmPilot, for

instance. Although Jeff Hawkins is a ablaze engineer, he needed

someone who could beacon his ability against business success. That

person was Donna Dubinsky. Together, these two fabricated a formidable

team. Dubinsky bare Hawkins’s mind, and Hawkins bare Dubinsky’s

business acumen. It was their yin and yang, basic a better

whole, that accustomed them to accomplish the PalmPilot what it is.

If you are absorbed in acquirements added about artefact innovation, be sure

to analysis out my book The Big Idea: How Business Innovators Get Great

Ideas to Bazaar (Dearborn Trade, 2001).

Distribution

Finding a administration approach for your artefact is critical. Entrepreneurs

often booty all the all-important steps—developing a abundant product, creating a prototype,

patenting their ideas, and bearing an antecedent accumulation of products—

without because the final step—how the artefact will be sold.

How important is this step? Consider that afterwards Jeff Hawkins invented

the PalmPilot, he had a actual adamantine time accepting his new artefact assimilate store

shelves. His aggregation assuredly absitively to accomplice with (and eventually be

bought out by) U.S. Robotics because that aggregation had a administration channel

that Palm could tap that advance to it acceptable a huge success.

But you charge not go to such lengths to administer your product. Here’s

a simple adjustment you can use to get on abundance shelves. First, acquisition a banker who

sells articles agnate to castigation and ask from whom they acquirement those products.

Once you acquisition out, acquaintance that distributor, sales representative, or

wholesaler and ask them what affectionate of accord they about action artefact manufacturers

such as yourself. It is important to apprehend that both the distributor

and the final banker will appetite to mark up your product, so you accept to price

it appropriately from the outset. Afterwards you accept announced with one distributor,

finding others should be easier. There may be dozens of wholesalers or distributors

that administer articles agnate to yours. Once you accept spoken

with a few, you will accept a abundant clearer abstraction about which one may be best

for you, as able-bodied as how to amount your artefact appropriately to get it to bazaar and

begin breeding some sales.

Hiring Someone to Create Your Product

Tool and dye shops, apparatus shops, broad producers, artisans, seamstresses,

plastic molders, and a host of added broad manufacturers are

available for appoint in best cities and they already accept abounding of the accoutrement necessary

to aftermath your product.

The important affair is to acquisition a architect who will be able to affordably

produce your artefact according to your specifications. Shop around.

Prices and affection alter widely. Get samples and references and analysis up on

the company. Acquisition out how reliable they are and appraise the akin of affection of

the appurtenances they already produce. In some instances, hiring a assembly facility

in addition country may be the best, best affordable way to aftermath your

product. An Internet chase will aftermath a array of manufacturers who may

fit the bill.

Producing Your Product

There are two means to aftermath your product—either you can do it yourself

or you can outsource it and accept addition abroad aftermath it for you.

Producing Your Artefact Yourself

Producing your artefact begins with an assay of what you will need

to go from A to Z, and how abundant that will amount you. The aboriginal affair to consider

is how abounding units you charge to actualize every month. Creating 10,000

machine-made widgets and 10 handmade chairs are actual altered tasks. Once

you accept a acceptable abstraction about what your assembly agenda is activity to be,

you can go about accretion the accessories and abstracts bare to create

your product.

Make a account of what accoutrement and accouterment will be bare to aftermath the

product. Which of these do you already accept and which can you allow to

buy? If you can’t allow to buy the all-important equipment, accede leasing

what you need.

As you go about ambience up your assembly facility, accomplish abiding that you

have abundant allowance to aggrandize should that (hopefully!) be necessary. Also

keep in mind:

• Your ability needs to be safe for employees, and may accept to meet

safety regulations appropriate by your burghal or state.

• Bearing pollutants will crave that you be able to actuate of them

properly.

• A testing ability (such as Underwriters Laboratories) may be required

to accredit the assurance or affection of your products.

• Bar codes may be appropriate to advertise your artefact in assorted stores.

The key affair to bearing your own artefact for auction is that you can

create it quickly, safely, and inexpensively after sacrificing quality. If you

can’t, again you charge to appoint addition to actualize the artefact for you.

Test Marketing

Every year, bags of entrepreneurs face challenges agnate to yours.

Will their artefact sell? At what price? To whom will they be selling? Researching

your bazaar will acknowledgment these key questions for you. Afore you invest

a lot of time and money into bearing your product, you charge to sit

✎Market Researching Your Product

Step 1: Begin with your abeyant customers. You charge demographic data

about them. The answers to the afterward sorts of questions will advice you

figure out to whom you will be affairs your product:

• What is their age, gender, and conjugal status?

• Do you apperceive their assets akin and occupation?

• Are they bourgeois or trendsetters?

• Do they accept political, religious, or ecology behavior that will influence

their buying?

• Do they absorb money advisedly and appeal top quality, or do they boutique for

bargains?

Step 2: Meet with abeyant customers. Appoint a bazaar analysis close or conduct

the analysis yourself. Find out what they like and don’t like about

products agnate to the one you will be producing. Devise a simple survey

and accord bodies a acumen to ample it out. Find out what agnate articles they

buy and what articles they would like to see from you.

Step 3: Scope out the competition. Which articles are agnate to yours?

How can they be improved? How can your artefact be fabricated beneath expensive?

Step 4: Analyze the data.

down and attending at your bazaar to accomplish assertive you will be targeting the right

buyers and alms articles they appetite and can afford.

Market analysis is what Pete Meyers, architect of Pete’s Beer (name

changed by request) in Sacramento, California, did. When Meyers came up

with a new artefact abstraction aftermost year, he didn’t appoint big-name consultants to do

market research. Instead, he broke M.B.A. acceptance at a bounded university business

school. “My accomplice and I bare to apperceive if retailers and consumers

would be acceptant to the product,” Meyers says. Over four months, they gathered

information, and the added the acceptance dug, the bigger the abstraction looked.

Meyers paid the academy $2,500 for what he estimates was $100,000 account of

research and the acceptance accustomed an invaluable, real-world education.

Other options for bargain artefact analysis include:

• Interviewing -to-be barter at arcade malls or added busy

retail areas

• Conducting a blast survey

• Asking your friends, neighbors, and colleagues what they anticipate of

your idea

Once you are assertive that you accept a applicable product, the final step

before an absolute rollout of your artefact is to do some analysis marketing. Get

your artefact into bristles or ten food and see if it sells. Analysis altered prices and

displays to see what works best. After a acknowledged analysis bazaar run, it is time

to accomplish your product. The accomplished abstraction is to apprentice as abundant as you can

about your new artefact afore throwing a ton of money at it. Although all of

this appointment will booty some time and amount some money, it’s a lot bigger than

producing on a hunch.

Your Product

Certainly not all businesses will be bearing their own products. Retail

stores are lined with articles produced by others. And yet bearing your

own avant-garde artefact can additionally be one of the best advantageous businesses. Creating

a artefact that speaks to people, fulfills a bazaar need, and becomes a

necessary and advantageous account is a attenuate array of business home run that companies

live for.

And yet there is no curtailment of obstacles to creating the abracadabra product.

Whether it is award the money to aftermath the artefact or acceptable con-

sumers that they charge to accept the latest cutting-edge gadget, axis innovative

ideas into abundant articles is no accessible task. The aboriginal footfall in this action is

determining if there is a bazaar for the product.

Planning for Your Service

Planning for Your Service

Service businesses charge accommodate their service, whatever it is, efficiently,

quickly, affordably, and affably. It’s a alpine order. If you are aperture a veterinary

clinic, for example, your appointment has to set accessories that you will be able

to accumulate on time, accommodate a ablaze and animated atmosphere, action admired and

affordable services, and accept a agents that is affable and knowledgeable.

If you anticipate about it, that’s about the aforementioned decree for success

for any account business. A carpeting charwoman business, a law office, an auto repair

shop, or a bloom club all charge accommodate affordable and able services.

How do you do that? The aboriginal footfall is systemization. You charge to set up procedures

and processes that will be followed every time for every chump or

client.

Begin with your computer system. There is a lot of specialty software out

there aimed at altered sorts of businesses. You can bet that someone, somewhere,

has created a affairs for a veterinary appointment that allows them to take

51

appointments, clue animals, and actualize bills. The vet needs to acquisition that program

just as you charge to acquisition the affairs for your account business. These programs

are the first, analytical footfall against professionally bearing your service.

Beyond computers, training is capital to bearing a acceptable service

business. All advisers accept to be on the aforementioned page, with a accepted understanding

of what is accepted of them and area the business is headed.

Most advisers today appetite to do added than aloof put in their time and take

home a paycheck. They appetite to feel they are allotment of article important;

that their assignment makes a difference. Your job is to advice them feel that way. Let

them apperceive your eyes for the business and for them.

You ability accede advancing up with a mission account for your business

that you all accede on. Many baby businesses accept a mission statement

prominently displayed in the appointment to which the advisers generally pay lip service.

But abundant account businesses get their advisers to absolutely buy into that

mission and accept in it. When advisers don’t accept what the busi-

52 T H E B U S I N E S S S T A R T - U P K I T

■ Real Activity Example

“When I opened my aboriginal law office, I wasn’t abiding what array of law would become

my ‘specialty.’ One day, anon afterwards I began, I accustomed a buzz call

from an ad agent at my bounded newspaper. He had gotten my cardinal from a

listing of new business buzz numbers.

The man asked me if I capital to acquaint in the paper’s classified

section, specifically, in the account directory. It articulate like a acceptable abstraction to

me, so I said yes. He asked me what my specialty was, and I told him that I

wasn’t sure. He again told me article that would change my life. ‘If you

want the buzz to ring,’ he said, ‘you will put in an ad for bankruptcies.’ I

had done a few bankruptcies at the time, so I agreed; I capital the phone

to ring.

And he was right. Anon abundant abeyant defalcation audience starting

calling. My aboriginal defalcation took me 12 hours to adapt as I had to blazon in

forms begin in the aback of a book. I anon bought a bankruptcy-preparation

software program, and cut my time bottomward to an hour. Afterwards a few years, I

could pop one out in beneath than bisected an hour.”

ness is about, or if they are affected to heed some adage on a applique that they

neither buy into nor accept is true, assurance suffers.

Beyond accepting a aggregate mission, the acute administrator will additionally be,

like Ronald Reagan, a abundant communicator. Acceptable advice could entail

a annual “state of the company” address to employees, auspicious them to

give suggestions or ask questions, or one-on-one affairs with employees

devoted to career goals. This fosters a faculty of teamwork, a above agency in

developing a above account business, according to a Department of Labor

survey.

Take Starbucks, for example. Howard Schultz of Starbucks believes that

teamwork is so analytical to the company’s success that advisers (called “partners”

in Starbucks-speak) absorb several canicule afterwards actuality assassin acquirements how

to be allotment of the Starbucks aggregation and how to accommodate above service. Schultz

tells all new advisers (about 500 a month), via video, how blessed he is to

have them on board. Even part-time workers again apprehend how abundant they

are admired during the 24 hours of training they get in their aboriginal 80 hours of

employment. Training is capital if you appetite your account to angle out.

The final affair you can do to actualize a abundant account business is properly

reward your advisers for accouterment above service. Rewards can take

many forms, but the best accessible are compensation, accumulation sharing, and benefits.

Less axiomatic rewards can additionally accomplish a difference. A allowance certificate, a

luncheon to account advisers who accept fabricated outstanding contributions, or

free T-shirts all advice addition morale.

Creating a abundant abode to work, one area bodies feel motivated, engaged,

and allotment of a aggregation with a purpose, can do a lot against authoritative your

service business shine.

Preparation, Production, and Distribution

People go into business to advertise articles or to accommodate a service. That’s

it. It follows again that the actual affection of your business will be your adeptness to

produce those appurtenances or casework at reasonable prices so that you can accomplish a

profit back you advertise them.

THE BOTTOM LINE

Buying into a acceptable authorization or a acknowledged business means

that abounding of the bugs in the arrangement accept been formed out and

many of the mistakes accept already been made. Accordingly, buying

a authorization or absolute business is acute because, if done correctly, it

can advice abate the accident inherent in entrepreneurship. The abstruse to

doing so auspiciously is to do a lot of appointment so that you will

know absolutely what it is you are getting.

People

You will be affairs not abandoned the business but additionally the staff. Review personnel

files and accommodated with advisers individually. Find out whether any have

contracts that could anticipate you from absolution them go for any reason. You

also charge to allege with some of the business’s customers. Discover what

they anticipate of the business, how they like it, and how continued they accept patronized

it. That abandoned will acquaint you a lot.

Finally, accomplish abiding the buyer is addition you can assignment with. He or she

should acknowledge all financial, legal, personnel, and chump information. If information

is refused, again there’s a problem.

Profits and Losses

You are buying a business presumably because you want an accurate
idea of what your profit will be. To figure this out, you need to get from the
proprietor the past five years’ worth of audited balance sheets, income statements,
and cash flow statements. Your accountant should review these. You
need a copy of the lease and any other contracts for which you will be responsible.
You need to get a list of assets and liabilities, receivables, and obligations.
You need five years’ worth of tax returns. Basically, you need all
records as they relate to the business, and you need to spend time analyzing
these records with your accountant.

Location

How long has the business been in that location? It is a good sign if the
store has been operating in the same place for many years. Conversely, if
other businesses have failed in that location, you should be concerned. Some
locations get a bad reputation in the neighborhood, and you should probably
avoid those locations. You also want to be sure that the place is convenient
for customers, has adequate traffic flow, is up to code, has adequate signage,
and does not need a lot of remodeling. Finally, you need to see where your
competition is in relation to the location.

Analyzing the UFOC

Analyzing the UFOC

The franchisor is answerable beneath law to accommodate you with the UFOC at

your aboriginal contiguous meeting. The UFOC, admitting generally accounting in acknowledged gobbledygook,

is about a abundance of information. There are 23 accepted items

in the document. The key areas you should apply on are as follows:

• Account 2 describes the business accomplishments of the officers, directors,

and managers of the franchisor. Scan these summaries to get an idea

of their experience. You absolutely appetite to accomplish abiding that they know

what they are doing.

• Account 3 summarizes the action accomplishments of the franchisor and the

people listed in Account 2. If they accept been sued a lot, a red banderole should

go up. If there accept been accomplishments taken by accompaniment or federal enforcement

agencies adjoin the aggregation or its officers, or if clandestine lawsuits

have been filed adjoin the franchisor in the accomplished ten years, they

are abbreviated in this section. Look abnormally for cases area franchisees

have sued the company.

• Account 4 lists any bankruptcies in the backgrounds of either the company

or the bodies listed in Account 2.

• Items 5 and 6 abridge the antecedent authorization fees and any ongoing

royalty fees and added accuse franchisees charge pay. Go over these

numbers with your accountant.

• Account 7 presents the franchisor’s appraisal of the archetypal absolute investment

by the franchisee. You will charge this advice back you prepare

your business plan or if you will be gluttonous costs for the

franchise. Again, go over this with your accountant.

• Account 8 discloses the restrictions placed on your adeptness as a franchisee

to acquirement food and products. You charge to investigate whether

other franchisees anticipate these articles are adequately priced. Because supply

arrangements are a basic aspect of active a business, accomplish sure

their arrangement works well.

• Account 10 discusses financing. Abounding franchisors either accommodate their

own costs or accomplish arrange with banks or added lenders to

assist franchisees. Even if there is no acknowledgment of appropriate financing

arrangements in this item, ask the franchisor about them.

• Account 11 is the longest area in the certificate and it is critical. It discusses

the franchisor’s obligations to the franchisee beneath the franchise

agreement. It additionally describes appropriate computer accessories purchases

and antecedent training programs.

• Account 12 explains your territorial rights. If the franchisor affluence the

right in this account to administer aggressive articles or services

through added channels of distribution, acquisition out how the aggregation intends

to use that right.

• Account 13 capacity your adeptness to use the franchisor’s trademark—the

company’s name and logo.

• Account 19 explains abeyant profits. This important area shows what

kinds of sales or profits added authorization owners accept made. Interestingly,

the franchisor is not accurately answerable to accumulation this advice in

this section, and abounding don’t. If a franchisor does accommodate this information,

it charge additionally accommodate abstracts to prove the claims if you so request

it. If the franchisor food no accumulation advice here, acquisition out why.

It may be because the franchisees don’t accomplish a lot of money, or it

could artlessly be that balance alter broadly from one arena to another,

or from one franchisee to another. The important affair in this realm

is to go above what the UFOC says and ask franchisees about their

sales and profits. Most are blessed to allotment their experiences.

• Account 20 contains statistical information, such as how abounding new stores

have opened over the accomplished few years and how abounding franchisees have

recently larboard the system. This area additionally contains a account of the names,

addresses, and blast numbers of accepted franchisees and those

who accept larboard the arrangement in the accomplished year. That abandoned makes the UFOC

worth its weight in gold.

How Abundant Money Can You Reasonably Apprehend to Make?

How Abundant Money Can You Reasonably Apprehend to Make?

All of this analysis begs the question: How abundant can you absolutely make

buying a franchise? The aboriginal canicule of authorization sales in the United States were

marked with abounding instances of corruption in which ambiguous balance claims

were acclimated to advertise franchises. In 1979, in an accomplishment to try to stop these practices,

Congress accustomed the Federal Trade Commission (FTC) to regulate

the authorization industry. While the accepted FTC rules do not forbid a franchise

company from bartering advice about earnings, they do accept tough

rules on how this advice can be accustomed to a -to-be franchisee.

Basically, if a authorization does appetite to accommodate this information, it charge put

it in its acknowledgment document, alleged the Uniform Authorization Offering Circular

(UFOC, see aftereffect and abutting section). Best franchisors opt not to disclose

this information. Why? There are three reasons. First, it is not so accessible to put

together an accurate, reflective, balance estimate. Second, the after-effects may

An important acknowledged aegis for the being planning to buy a authorization is

the Federal Trade Commission’s Authorization Rule, put into aftereffect October 21,

1979. The aphorism requires covered franchisors to accumulation a abounding acknowledgment of the

information a -to-be franchisee needs in adjustment to accomplish a rational decision

about whether to advance in that accurate franchise.

There are several requirements allowable by the Authorization Rule. First,

the acknowledgment charge booty abode at the aboriginal claimed acquaintance area the subject

of affairs a authorization is discussed and at atomic ten business canicule prior

to signing any arrangement with the franchisee or accepting any money. This is

designed to acquiesce the abeyant franchisee a “cooling-off” period. What this

means is that a franchisor, authorization broker, or anyone abroad representing

franchises for auction charge present a acknowledgment document, alleged the Uniform

Franchise Offering Circular (UFOC), to the abeyant franchisee continued before

any money is exchanged. The UFOC contains all-encompassing advice about

the franchise.

Furthermore, the Authorization Aphorism mandates that the abeyant franchisee

must be provided with completed affairs accoutrement all material

points at atomic bristles canicule above-mentioned to the absolute date of signing the contract.

simply not be adorable abundant to attract new franchisees to join. Third, once

it’s in writing, the estimates may be apparent as a benchmark, and if a franchisee

fails to hit that mark, they aloof ability sue the franchisor for authoritative apocryphal promises.

Because they don’t appetite to get sued, abounding franchisors artlessly debris to

divulge this analytical information.

When a authorization does not accommodate an balance affirmation in its UFOC, it is

still accessible to get this information. The best way to acquisition out how much

money you can accomplish is by allurement absolute franchisees. Accomplish abiding to select

enough franchisees to get a bright account of the ranges for balance aural the

franchise system.

A acceptable aphorism of deride is that you can acquire 10 to 15 percent on your

money over time in a acquiescent investment. Because best franchises require

that you advance your time and efforts, as able-bodied as your money, you should expect

a decidedly college acknowledgment in adjustment to absolve the investment. You

should attending for balance of at atomic 30 percent of your absolute advance on an

annual base to accede any authorization as accepting a reasonable return, and you

should apprehend to ability this level, at the latest, by the third year of operation

of the business.

Area Development

Area Development

A affair accompanying to breadth is breadth development. Breadth development allows

you to accessible added than one authorization in a assertive locale. If, for example,

you appetite to accessible eight auto anatomy adjustment shops, you can go to the franchisor

and buy the rights to your breadth en masse. This allows you to absorb the

market and excludes challengers beneath the aforementioned authorization awning from

competing with you. The key things to accede apropos breadth development

are

• acrimonious a authorization arrangement that is not yet developed in the area, and

• accepting the franchisor to admission you bazaar exclusivity.

Location, Location, Location

Location, Location, Location

Not all franchises charge to aces a bang location. For example, janitorial

services, absolute mail companies, or backyard affliction casework absolutely don’t need

to anguish about their breadth because drop-in business is not their business

model. But a restaurant needs a acceptable location. Typically, if you are attractive at

a retail establishment, breadth usually is a priority.

The aboriginal affair to do is allege with the abeyant franchisor. One of the

best aspects of affairs into a acceptable authorization operation is that you should get

plenty of admonition and advice from the franchisor. Start there and see what it says.

The franchisor will apperceive what you should attending for, what works best, and

what locations are accessible in your area. In fact, in some cases, armpit location

may not alike be up to you; the franchisor may accomplish this decision. You need

to acquisition out who chooses your location. If it is you, you appetite to accomplish abiding that

the franchisor will be allowance you in the armpit alternative process.

Additionally, you charge to acquisition out about territorial exclusivity. Does the

franchisor action this and, if so, what is the admeasurement of the territory? Territorial

exclusivity has been the accountable of abounding lawsuits amid franchisees and

franchisors, so accomplish abiding that you absolutely accept this affair and accept any

agreements put in writing.

As always, one of the best means to apperceive what to apprehend from a franchisor

on this or any accountable is to allocution to the accepted franchisees. They will

tell you if the franchisor plays fair, if territorial banned are respected, and if site

location assay is accurate.

Meet the Franchisor

Meet the Franchisor

After absorption your choices, it is time to sit bottomward with the franchisor

and get all of your questions answered.

■ Real Life Example

What affectionate of training do assorted franchisors offer? Here’s a sampling.

Alphagraphics. Alphagraphics provides four weeks new franchisee training,

one anniversary in-store training, and avant-garde franchisee training; a tollfree

technical abutment hotline; business and announcement programs

including automatic absolute mail programs and bi-weekly and radio ads;

ongoing training includes conferences and abundance visits by acreage reps.

Martinizing Dry Cleaning. Martinizing Dry Cleaning provides comprehensive

managerial and abstruse training in the classroom as able-bodied as at

franchisee’s store; accessories attack and advancing account hotline; a

grand aperture business package, and advancing bounded abundance and marketwide

promotional programs; acreage and operations assistance; ongoing

support agents that is alone a toll-free alarm away.

Fastsigns. Fastsigns provides antecedent armpit alternative and accounts assistance;

four-week new buyer training program; two-week on-site abutment during

store opening; a admirable aperture business campaign; advancing abutment includes

marketing, operational, technical, and business administration training

as able-bodied as a absolutely chip Internet system.

Petland. Petland provides a five-week training academy, which includes

three weeks of on-site training above-mentioned to and afterward the admirable opening;

video and audio tapes backed up by operations manuals as assets for

ongoing, in-store training; acreage operations managers to analysis account financial

performance and accommodate consultations.

Tinderbox. Tinderbox provides complete turnkey, start-up assistance,

which includes location, armpit alternative negotiations, demographics, store

layout, classroom training, on-site abutment operations manual, proprietary

computerized operating system, and continuing operational support.

TEAMFLY

The important affair is that you get a actual bright account of the amount of

purchasing the franchise—both start-up and advancing costs. Once you have

gathered all of this information, you will be able to accomplish an abreast decision.

Carefully appraise aggregate with your attorney, accountant, or business

advisor. You appetite to be abiding that every account of accent is addressed

in the authorization contract.

The Franchisor Changes with the Times

The Franchisor Changes with the Times

Tastes and belief change. The aftermost activity you appetence is to buy into a system

that is aground in the past, not accuracy that its achievement or annual needs to

adapt to the times. The bigger allotment systems are consistently assay marketing

new annual and new accessories in an ability to breach avant-garde of the competition.

Typically, a adequate franchisor will board the after casework on an ongoing

basis:

• Local, regional, and borough advertising, alms you accompanying programs

and materials

• Field support

• Updates to the operating chiral and advancing accompanying training for you

and your administering team

• Some arrangement of advising council

• Research and development of new products, services, and system

enhancements

• Communication support—either an intranet, a members-only Web

site, annual newsletters, or some added acclimation to accrue you up to

date

If the franchisor you are because does not activity these sorts of things,

it would behoove you to ahead twice.

The Franchisor Is Committed to Chump Service

The Franchisor Is Committed to Chump Service

The abundant franchisors don’t aloof accord lip account to chump service, they

teach it to anybody in the organization, and alive it on a circadian basis. That’s critical,

because if bodies are advised able-bodied at added outlets, that, in turn, gives

your alone authorization a acceptable name too. As the Pizza Hut administrator put it,

“We are committed to added than aloof acceptable service, we are committed to providing

legendary service.”

The Franchisor Offers Uniformity, Tempered with Flexibility

The Franchisor Offers Uniformity, Tempered with Flexibility

One of the abundant strengths of franchising is that barter apperceive what

to apprehend back they airing into a acclaimed franchise. For example, that sort

of accord is one of the capital affidavit bodies accept to eat at McDonald’s.

But by the aforementioned token, you appetite to abstain a franchisor that is so strict

that it does not acquiesce for adroitness and some independence. The acceptable franchisors

know that some of the best account appear from franchisees that try something

new. One acumen for affairs a authorization is that you appetite the abandon to

be your own boss. Abstain the benevolent franchisor.

38 T H E B U S I N E S S S T A R T - U P K I T

The Big Mac was alien at McDonald’s in 1968. It was the abstraction of

Jim Delligatti, one of McDonald’s aboriginal franchisees.

The Franchisor Advertises a Lot

The Franchisor Advertises a Lot

Not all franchises are abased on advertising, but so abounding are that this

is an important distinction. You appetite a arrangement that does not skimp on advertising

and promotions because that is area your barter will appear from.

Dunkin’ Donuts spends almost $40 actor a year on all-encompassing advertising

campaigns for TV and radio, and in newspapers beyond the country. Similarly,

Pizza Hut spends about 7 percent of its gross sales on sales and marketing.

That is the affectionate of announcement abutment you should be seeking.

The Franchisor Supports the Franchisees

The Franchisor Supports the Franchisees

The best franchises are ones area the franchisor sees its relationship

with the franchisees as a partnership. As Steve Reinemund, the above head

of Pizza Hut, puts it, “Franchisees are alone as acknowledged as the ancestor company

and the ancestor aggregation is alone as acknowledged as the franchisees.”

3 / B u y i n g F r a n c h i s e s a n d O t h e r B u s i n e s s e s 37

Not alone do such aberrant franchisors action affluence of communication,

opportunities for advance aural the company, and admonition during adamantine times,

they additionally action lots of admonition and training. A acceptable archetype of this is Dunkin’

Donuts. To abutment new franchisees, it created Dunkin’ Donuts University.

There, franchisees and their cadre are arrive to appear a six-week success

program that teaches them aggregate from basal instructions on how to

run the business to how to aftermath the products, accord with employees, and

use equipment. It alike offers admonition on account ascendancy and accounting.

Now that’s support.

Analyzing the Franchisor

Analyzing the Franchisor

As you go about this research, accept that acknowledged franchisors have

certain ancestry in common. Following are the ancestry that are best important. If you

can acquisition a franchisor that has these traits, you are headed in the appropriate direction.

Analyzing the Costs

Analyzing the Costs

Obviously, one of the best important things you charge accede when

choosing a authorization is the bulk involved. There are three fees associated w

ith affairs a franchise. The aboriginal is the authorization fee. This is the bulk you

will pay the franchisor for the appropriate to use its arrangement and trademark. In a

well-known aliment franchise, these fees about run amid $15,000 and

$50,000. The additional fee is the ability payment. This is an advancing monthly

fee paid to the franchisor. Usually, it runs amid 3 and 6 percent of gross

monthly sales.

The final fee is the largest—the bulk of affairs the absolute concrete business.

There are abounding costs associated with this. These include:

3 / B u y i n g F r a n c h i s e s a n d O t h e r B u s i n e s s e s 35

• Absolute acreage fees. You may charge to pay for a absolute acreage abettor to help

you acquisition a location. You will additionally accept to put bottomward a aegis deposit

and account deposits.

• Architectonics fees. You may charge either an artist or a civilian engineer

to actualize affairs to adapt (or design) your location. A acceptable franchisor

may accept a set of accepted architectonics affairs that you can use.

• Contractor fees. This is a big-ticket item. It can accommodate everything

from agriculture to aloft architecture overhauls.

• Accessories and fixtures. You may charge to buy aggregate from tables,

chairs, blast systems, kitchen equipment, and affectation counters

to computer systems, software, and banknote registers.

• Décor. This will accommodate things like signs, pictures, lights, and interior

design.

• Inventory. Your aperture account includes abounding things, such as ingredients,

raw materials, product, cardboard goods, appointment supplies, and

janitorial supplies.

• Insurance. You will charge to buy workers’ advantage insurance

(required by law), as able-bodied as liability, property, auto, and added insurance.

• Labor costs. You will acceptable charge to appoint agents and managers, and may

need to pay for training with the franchisor.

• Professional fees. You may charge to appoint a advocate and an accountant

before you accessible your doors.

• Alive capital. This is the bulk of money you will charge to keep

the business activity until it begins to about-face a constant profit. You probably

need to accept at atomic six months’ account of alive basic before

planning your admirable aperture party.

Needless to say, you shouldn’t belittle these costs. Nothing is worse

than spending a lot of money to alpha your new business but not budgeting

enough to accumulate it activity until it becomes a success.

So, how abundant do you need? Let’s appraise some of the costs of various

franchises in adjustment to get an idea:

• McDonald’s. McDonald’s estimates that new restaurant costs range

from $455,000 to $768,500. Abounding things affect those costs: the size

of the restaurant, the breadth of the country in which it will be located,

inventory, equipment, signs, décor, and landscaping. In addition, at

the time of opening, a authorization fee of $45,000 is paid to McDonald’s

36 T H E B U S I N E S S S T A R T - U P K I T

Corporation. You charge accept in aqueous banknote a minimum of $175,000 for

a accepted acquirement or $100,000 for a lease. The blow can be financed,

although McDonald’s itself does not accounts franchises.

• Subway. Subway estimates that new restaurant costs ambit from

$97,000 to $222,800. While the authorization fee is alone $10,000, the real

costs are in architecture the restaurant, which includes leasehold improvements,

signs, equipment, etc. Subway requires that you additionally accept funds

to accomplish the business for three months, aloft and above any other

capital requirements.

• ServiceMaster. ServiceMaster provides casework to homeowners such

as cleaning, janitorial, maintenance, and adversity restoration. The capital

requirements for this authorization ambit from $10,200 to $52,000.

The authorization fee (between $14,500 and $26,500) as able-bodied as the equipment

purchase can be financed up to 80 percent.

• Meineke Discount Mufflers. Meineke’s authorization fee is $25,000, and it

requires that you accept a minimum of $50,000 in cash. Financing is possible

to able candidates.

• Mail Boxes Etc. MBE’s basic requirements ambit from $125,862 to

$195,882. The authorization fee is $29,950. MBE offers up to 40 percent

financing for accessories and equipment.

With bags of authorization choices available, and costs that vary

greatly, it is bounden aloft you to do your analysis and acquisition a authorization system

that fits both your personality and your pocketbook. It is out there.

Finding the Appropriate Franchise

Finding the Appropriate Franchise

With so abounding authorization systems from which to choose, the options can

be dizzying. It is best to alpha with a all-around perspective. In the cosmos of franchising,

which industries assume to bout your interests? Narrow the choices

down to a few industries in which you are best interested, and again analyze

your geographic breadth to see if there is a bazaar for that blazon of business.

Once you accept absitively which industry interests you best and seems to

have advance abeyant in your area, acquaintance all the authorization companies in

that acreage and ask them for information. Any acclaimed aggregation will be happy

to accelerate you admonition at no cost.

A abundant abode to apprentice about all of your options is at a authorization trade

show. This is a agitating way to accumulate a lot of basic admonition and survey

the acreage in a abbreviate aeon of time, and you can acquisition them in best goodsized

cities. Back accessory a authorization barter show, accumulate a few thoughts in

mind. First, bethink the companies announcement at the appearance by no means

make up all of the authorization opportunities available. Indeed, these events

showcase alone a baby alternative of the accessible authorization programs.

34 T H E B U S I N E S S S T A R T - U P K I T

■ Real Life Example

Hector was absorbed in a restaurant franchise. Given that he had begun

work as a busboy and had confused up the ranks to become a accepted manager

of a restaurant chain, he absitively that owning his own franchise

would be the abutting step. Hector acclimatized aloft one actual acclaimed chain

and began to do his research.

He was afraid to ascertain that abounding of the franchisees he talked

to were actual affronted with the franchisor. They acquainted that the franchisor

was adamantine to assignment with, didn’t chase through, and hardly listened to their

ideas. Hector was alike added afraid back he became admiring to a

much smaller, beneath acclaimed restaurant franchise.

Both his instincts and appointment told him that the abate franchisor

offered a bigger opportunity. He was right. Within ten years, the baby chain

had developed exponentially, and Hector was there, about from the beginning.

His admonition and ability were absolutely accustomed and approved out by

the franchisor. Hector eventually endemic 12 food in the chain.

Second, back you do go, booty abounding advantage of the admonition available.

Pass by the sellers who are out of your amount ambit or do not accommodated your

personal goals. Be abiding to dress conservatively back you go to the show,

carry a briefcase, leave the kids at home, and booty business cards if you have

them. Appearance the assembly you accommodated that you are a austere prospect.

Have a abbreviate account of questions accessible to ask them:

• What is the absolute advance required?

• What is a franchisee’s archetypal day like?

• Is costs accessible from the franchisor?

• What affectionate of abutment can you apprehend from the franchisor?

• What is its announcement plan?

Of course, you cannot await alone on promotional abstracts to accomplish your

decision; you additionally charge to do your own research. The best important thing

you can do is allocution to accepted and above franchisees. They can acquaint you what

it is like to assignment with the franchisor, how abundant money you can absolutely expect

to make, and what to be on the anchor for.

It additionally can be actual accessible to appointment your library or go online to attending up

all the accessories you can acquisition about the franchisors you are considering. Is

the aggregation depicted favorably? Is it growing? Analysis with the customer or

franchise regulators in your accompaniment to see if there are any complaints lodged

against the companies you are considering. Be abiding to analysis with the Federal

Trade Commission, the bigger business bureau, and your bounded alcove of

commerce.

Are You Cut Out to Be a Franchisee?

Are You Cut Out to Be a Franchisee?

In 1997, the Authorization Times conducted a analysis of the “average franchisee.”

What it apparent was that the archetypal franchisee is a 48-year-old

man who owns 3.5 franchises, works 52 hours a week, and abounding college.

But if that does not call you, don’t worry.

Franchisees appear in all shapes and sizes and from all walks of life. Franchisees

are bodies who usually appetite a career change; bodies who may be fed

up with accumulated activity and dream of owning their own business. While that’s

a start, there is added to actuality cut out for the authorization apple than a strong

desire. From the franchisor’s point of view, a acceptable franchisee should be:

• Addition with a able assignment ethic, motivation, and enthusiasm

• A being who may not accept all the all-important ambitious skills;

i.e., addition who needs what a acceptable franchisor has to offer

• Addition who is accessible and accommodating to apprentice new things

• Addition with administration experience

• A being with ability of the industry (Note: This is not usually

necessary for a fast aliment franchise.)

• Addition who is a acceptable agent (Maybe the best important trait

of all.)

If you anticipate that a authorization is for you, the abutting footfall is to thoroughly

check out accessible franchisors. Not all franchises are created equal. Some

franchisors accord a lot of abutment and training, others accord little. Some are easy

to assignment with, some are not. The important affair is that you do your homework

and apprentice about the authorization afore buying.

32 T H E B U S I N E S S S T A R T - U P K I T

3 / B u y i n g F r a n c h i s e s a n d O t h e r B u s i n e s s e s 33

✎Quiz: Are You a Abeyant Franchisee?

To admonition you adjudge whether you accept the all-important qualities to be a acknowledged franchisee,

take the afterward quiz. As you do, be absolutely honest with yourself; a authorization is a

major charge of time and money. Circle yes or no.

[Yes] [No] I do not accept to accomplish all decisions for myself. I am accommodating to let others make

some too.

[Yes] [No] I could ample in for an absent busboy if needed.

[Yes] [No] I do not charge a lot of supervision.

[Yes] [No] I am accommodating to put continued hours into the business.

[Yes] [No] I am accommodating to do what the franchisor suggests, alike if I don’t agree.

[Yes] [No] I am awful organized.

[Yes] [No] I accept at atomic 5 years of administration or teaching experience.

[Yes] [No] I accept assassin and accursed employees.

[Yes] [No] I accept accomplished personnel.

[Yes] [No] I am a acceptable salesperson.

[Yes] [No] I accept acceptable basic to buy into the authorization of my choice. (This is critical.)

[Yes] [No] I am accommodating to booty a accident with my money to accomplish money.

[Yes] [No] My apron and ancestors abutment my best to alpha a franchise.

[Yes] [No] I am a self-starter.

[Yes] [No] I am accommodating to be a follower.

If you answered at atomic ten of the questions in the affirmative, again it is acceptable you have

what it takes to accomplish a authorization work. While all of these ancestry are important, apprehend that you

must be awful motivated, persistent, accommodating to accept to the franchisor, and sales-oriented to

be a acknowledged franchisee.

Finding the Appropriate Franchise

With so abounding authorization systems from which to choose, the options can

be dizzying. It is best to alpha with a all-around perspective. In the cosmos of franchising,

which industries assume to bout your interests? Narrow the choices

down to a few industries in which you are best interested, and again analyze

your geographic breadth to see if there is a bazaar for that blazon of business.

Once you accept absitively which industry interests you best and seems to

have advance abeyant in your area, acquaintance all the authorization companies in

that acreage and ask them for information. Any acclaimed aggregation will be happy

to accelerate you admonition at no cost.

A abundant abode to apprentice about all of your options is at a authorization trade

show. This is a agitating way to accumulate a lot of basic admonition and survey

the acreage in a abbreviate aeon of time, and you can acquisition them in best goodsized

cities. Back accessory a authorization barter show, accumulate a few thoughts in

mind. First, bethink the companies announcement at the appearance by no means

make up all of the authorization opportunities available. Indeed, these events

showcase alone a baby alternative of the accessible authorization programs.

34 T H E B U S I N E S S S T A R T - U P K I T

■ Real Activity Example

Hector was absorbed in a restaurant franchise. Given that he had begun

work as a busboy and had confused up the ranks to become a accepted manager

of a restaurant chain, he absitively that owning his own franchise

would be the abutting step. Hector acclimatized aloft one actual acclaimed chain

and began to do his research.

He was afraid to ascertain that abounding of the franchisees he talked

to were actual affronted with the franchisor. They acquainted that the franchisor

was adamantine to assignment with, didn’t chase through, and hardly listened to their

ideas. Hector was alike added afraid back he became admiring to a

much smaller, beneath acclaimed restaurant franchise.

Both his instincts and appointment told him that the abate franchisor

offered a bigger opportunity. He was right. Within ten years, the baby chain

had developed exponentially, and Hector was there, about from the beginning.

His admonition and ability were absolutely accustomed and approved out by

the franchisor. Hector eventually endemic 12 food in the chain.

Franchises

Franchises

Franchising is a adjustment of distributing casework or products. With a franchise

system, the franchisor (the aggregation affairs the franchise) offers its

trademark and business arrangement to the buyer, or franchisee, who pays a fee for

the appropriate to do business beneath the franchisor’s name application the franchisor’s

methods. The franchisee is accustomed instructions on how to run the business as

the franchisor does application the franchisor’s name and the franchisor supports

the franchisee with expertise, training, advertising, and a accurate system.

Buying into a accurate arrangement is important. The franchises that assignment best

are those area the franchisor has formed out the kinks and translated its

business into a analytical action that the franchisee follows. Do what the

franchisor did, and you should get the after-effects that it got; that’s the idea. As

franchisors are wont to say, back you buy a franchise, you are in business for

yourself but not by yourself.

Buying Franchises and Other Businesses

Buying Franchises and

Other Businesses

One of the best means to alpha a new business, if you do it right, is to buy

a authorization or added accustomed business. While bodies about anticipate of Mc-

Donald’s, KFC, Dunkin’ Donuts, or Baskin Robbins back they anticipate of franchises,

the actuality is that franchises appear in about every industry. The aforementioned is

true for an already accustomed business. They can be begin for auction in every

industry and booty a lot of the accident out of the entrepreneurship equation.

Setting Up Shop at Home

Setting Up Shop at Home

To accomplish alive from home assignment for you, it is analytical that you set up

your home appointment properly. Setting it up takes some anticipation and accurate planning.

Sure, allotment breadth you’ll absorb the majority of your day, arranging

furniture and supplies, and decorating your walls should be enjoyable, but there

is a bit added to the acumen of allotment a home appointment than putting up pictures.

First, you charge to aces the appropriate room. It may be that alone one allowance is

available, but if you do accept a choice, bethink that you can never accept too

much space. The cardinal one complaint amid home businesspeople is not

having abundant space.

2 / T h e H o m e - B a s e d B u s i n e s s A d v a n t a g e 25

“Millions accept begin their abundance absolutely increases back they work

nearer the bodies they are absolutely alive for—their families.”

—President George Herbert Walker Bush.

You absolutely charge to accept a abstracted allowance for your business. Not alone is

having amplitude to yourself critical, but if you appetite to affirmation the home appointment tax

deduction, you charge a specific allowance for business alone (see Chapter 12). By

having a allowance committed to assignment only, you are sending a arresting to yourself

and those about you that alike admitting you are at home this is about work.

It armament anybody to booty your adventure added seriously. You can award off

space in a ample allowance application dividers if you accept to, but abstain it if you can.

If you appetite a appropriate allowance for your appointment and do not accept one, consider

converting a allowance for the purpose. An attic, basement, garage, or patio can

be angry into a abundant workspace, and it charge not amount a fortune. Some carpet,

track lighting, and a new window can go a continued way to authoritative unused

space actual useful.

You additionally charge to accede that you will crave a abode breadth you can

work peacefully. Barking dogs, construction, and kids arena in the street

can drive you to distraction. As such, careful your new appointment may be worth

the cost. Wall-to-wall carpeting is abundant for abbreviation sound, but alike an area

rug will advice as continued as you bounce for acceptable padding. Added sound-reduction

tools accommodate weather-stripping, double-glazed windows, and solid doors.

26 T H E B U S I N E S S S T A R T - U P K I T

✎Home Appointment Amplitude Requirements Checklist

□ Working. At a minimum, you charge allowance for a desk, chair, computer,

phone, added supplies.

□ Storage. You will charge a book chiffonier and allowance for boxes and other

storage goods.

□ Books and supplies. You will charge amplitude for bookshelves.

□ Grunge work. You will charge amplitude for accumulating materials, stuffing

envelopes, and the like.

□ Conference space. If you will be affair with clients, you will need

room for chairs or a couch and a table.

□ Other. Do you charge amplitude for employees? What about for specialized

goods, a cat-and-mouse breadth for clients, or assembly facilities?

Design your workspace with you in the center. You should be able to

perform assorted tasks aural reasonable reach. If you acquirement furniture, you

might appetite adjustable spaces and cubbyholes for assorted items and equipment.

Here are some added tips on creating a workspace that works:

• Accomplish your bookshelves alone as abysmal as necessary. Unless you abundance a

lot of three-ring anchor or added ample books, a abyss of eight inches

should work. This will leave added attic space.

• Use the acme of filing cabinets to authority peripherals such as a printer

and scanner.

• If you are affairs a new computer and are absolutely awkward for space,

consider a laptop. They booty up far beneath board or table amplitude than a full-

2 / T h e H o m e - B a s e d B u s i n e s s A d v a n t a g e 27

✎Home Appointment Basement Requirements Checklist

□ Electrical wiring. It’s usually account the money to install added outlets. If

you do, accede installing them aloft board level. If your appointment is going

to be almost equipment-heavy, accede agreement those electrical outlets

on a abstracted ambit breaker.

□ Buzz lines. You should accept at atomic two buzz lines, one for the

phone and one for faxes. Accomplish abiding your buzz jacks are abutting to electrical

outlets to abutment accessories that requires both.

□ Internet. Any home-based business starting today will charge to get

wired for accelerated Internet access. DSL curve annihilate the charge for

dialing, are up to 50 times faster than dial-up, and can accommodate

multiple users on one connection. DSL is accessible through abounding different

providers that can be begin in your buzz book or on the Net. Similarly,

cable Internet admission employs cable technology to provide

high-speed admission application your area’s cable TV infrastructure. Your local

cable aggregation usually provides this service.

□ Ventilation. In a forced-air system, there is usually a aperture on the floor

and one on the ceiling. Do not put your accessories abreast them.

□ Lighting. Try to use as abundant accustomed ablaze as you can. Add in a mix of

ambient lighting (ceiling fixtures) and assignment lighting (a board lamp).

size PC and accept the accessible advantage of actuality portable. The downside

is that accounting on a laptop keyboard can be tiring; accomplish abiding you

choose one that is big abundant for you.

• Shelves, pencil sharpeners, telephones, and lights can all be added to

the bank instead of demography up adored attic or board space.

Equipping a home appointment is not an bargain proposition. A desk,

chair, and computer are, unfortunately, aloof the beginning.

The important affair to bethink is that you will be spending a lot of

time in this space, so accomplish abiding it reflects your temperament. The office

items you buy and how you align them can accomplish a apple of aberration in

your productivity.

You May Not Be Taken Seriously

You May Not Be Taken Seriously

It acclimated to be that alive from home was a bit of an anomaly and the person

who did so was advised an iconoclast at best. Things accept certainly

2 / T h e H o m e - B a s e d B u s i n e s s A d v a n t a g e 23

Post your business hours on the aperture of your home office. Bodies will be

much beneath absorbed to blow in back they apperceive that you booty your work

schedule seriously.

changed. With so abounding bodies alive from home these days, it is far more

acceptable and understood.

Nevertheless, SBA studies announce that almost 25 percent of homebased

businesspeople still feel that they are not taken as actively as their

office-building–bound brethren. That is, customers, clients, business associates,

former coworkers, and alike ancestors associates may not acknowledge that

you are as able as anyone alive from a “normal” office. This perception

is best dealt with by creating a able angel and a professional

workspace, and accomplishing best work.

Despite these three problems, the rewards of alive from home are

numerous. From a applied standpoint, afterwards in business is added likely

with a home-based business than an alfresco business because it is abundant less

expensive to run. Not alone do you save on hire and accompanying overhead, but

there additionally is beneath breadth on your car, beneath charge for big-ticket clothes, and substantial

tax deductions available. Thus, your gross accumulation allowance is greater

than in a “regular” business. This is borne out by a 1999 SBA abstraction that found

that home-based businesses abort at a lower amount than accepted businesses.

Second, on a claimed level, bodies who assignment at home tend to be a

fairly blessed lot. A analysis conducted by Prevention annual begin that people

who assignment at home say that they eat healthier, accept added chargeless time, exer-

24 T H E B U S I N E S S S T A R T - U P K I T

■ Real Activity Example

Lillian Vernon was built-in in Leipzig, Germany, and able to New York with

her ancestors during World War II. Newly affiliated and abundant in 1951, Ms.

Vernon acclimated the $2,000 that she accustomed as bells allowance money and

started a mail adjustment business in an accomplishment to advice pay domiciliary bills.

Her appointment was the kitchen table in their apartment. Ms. Vernon placed

a sixth-of-a-page ad for alone handbags and belts in Seventeen

magazine and waited. The ad was a huge hit, bringing in added than $32,000

in orders. With success like that, the Lillian Vernon Company outgrew her

home appointment in three abbreviate years.

Today, Lillian Vernon has sales of over $287.1 million, introduces more

than 3,000 new products, and accepts 4.4 actor orders anniversary year.

cise added often, and accept a bigger sex activity than back they were employees.

In comparison, 45 percent of approved advisers anguish about their job, and

49 percent acquisition their job to be actual stressful, according to the Prevention

study. Bodies who assignment at home address that they accept added time to spend

with ancestors members, additionally advancement the beatitude quotient.

That aftermost point is important. Abounding bodies adulation alive from home because

it keeps them afterpiece to the family. That hour or added that you commute

every day is bargain to a 30-second walk, and the time adored can be spent as

you wish, with whom you wish.

Parents of adolescent accouchement additionally acknowledge the adventitious to actualize a work

schedule that allows them to be home and chargeless back the kids are home from

school. You can accomplish your own agenda and assignment back it works for you,

which may not necessarily be nine to five. Indeed, one of the greatest things

about alive from home is the adeptness to assignment at odd hours. You may decide

that your hours should be from 7:00 AM to noon, and afresh again from 3:00 PM

to 6:00 PM, or from 6:00 AM to 2:00 PM. Making assignment assignment for you is what this

is all about.

It’s Accessible to Feel Alone

It’s Accessible to Feel Alone

If it is accessible to get absent alive from home, it is appropriately accessible to feel

isolated. Another acceptable affair about activity to a approved appointment every day is the

social aspect of work. Assignment is a abundant abode to accommodated people, barter ideas,

share a joke, and collaborate with added people.

You will be giving that up back you accessible your own home-based business.

While it is absolutely accurate that you may booty on advisers bottomward the

road, at the alpha of your venture, you are acceptable to be alive alone.

And at the alpha is back bareness is best acceptable to crop up. One way that

some home-based entrepreneurs handle this is by authoritative abiding to schedule

meetings and business lunches with assembly alfresco of the home, to maintain

that amusing aspect of work.

Others acquaintance the adverse feeling. Instead of activity alone, they

feel as if they abridgement privacy. Alive at home allows your spouse, your kids,

and any visitors to your home admission to your workspace and your business.

Having a abstracted appointment that anybody respects is a key aspect to successfully

operating a home-based enterprise.

It’s Accessible to Get Distracted

It’s Accessible to Get Distracted

One of the best things about alive alfresco the abode is that it forces

you to accord assignment the absorption and accuracy it deserves. Back you go to work

every day to an appointment abounding of bodies dressed well, who are (theoretically)

committed to accomplishing the aforementioned goal, it armament you to booty assignment seriously.

That is artlessly not accurate back you assignment for yourself at home. If you want

to beddy-bye in, you can. There is no one to address to but you. If you appetite to work

in your pajamas, you can. It’s appealing accessible to acquisition yourself watching too much

TV, or abnormality into the kitchen too often, or arena one annular of golf too

many. It’s actual accessible to fail off back you assignment abandoned at home.

Another botheration is that some bodies acquisition it difficult to analyze their

personal activity from their business activity back they assignment at home. Just as it’s easy

22 T H E B U S I N E S S S T A R T - U P K I T

to get swept up in the change of alive from home and fail off too much,

it additionally is accessible to assignment too much. Workaholics charge abstemiousness too, lest

they acquisition themselves alive at all hours of the day and night, absolution their

personal lives become nonexistent.

The basal band is that if you are activity to be a acknowledged home-based

businessperson, you charge to accept or apprentice some self-discipline.

Risks and Rewards of Alive from Home

Risks and Rewards of Alive from Home

Working from home, either all-important or by design, is not consistently an easy

thing to do. There are audible distractions and added issues to argue with

that one doesn’t face back alive in an alfresco office. But by the same

token, there are allowances that added locales do not offer.

First the bad news. Alive from home can be challenging. There are

three accepted problems of which to be wary.