Several years ago I found myself unemployed for the first time in my 30+ year career. After the initial panic and rearranging of finances so that day to day expenses could be met, my partner and I started talking about options and decided that we would look into franchising. Franchising offered the promise of “being your own boss”, “90% of franchises are successful”, “building for retirement”, and “doing something fun”.
Being my own boss was definitely attractive since I tend to have definite ideas of how things should be run. I was also still on the rebound from the shock of unemployment. Little did I understand at the time, what being your own boss really means. You’ve got it all… the good, bad, and the ugly. There is also the mind switch from working in the business to working on the business. Give this some thought if you are thinking about starting your own business whether it is a franchise or an entrepreneurial venture.
As for the “90% of franchises are successful”, that may be true overall or may have been true in the past, but I would now take this with a grain of salt as opposed to “with statistics like those, how could we possibly be in the bottom 10%?” A franchise is a great way to get a head start on your business, but it is not a sure thing. You must be willing to follow the franchisor’s formula as closely as possible to help ensure your success. Looking at success rates within your prospective market niche is also a must.
As we looked into franchise options the next hurdle was choosing a business. The internet was a logical place to start and we did take a serious look at a fitness offering. Being on a successful fitness program at the time, this seemed a logical fit for the “fun” portion of the equation. It also appeared to be a real growth industry at the time. We met with the regional manager, went over the “Uniform Offering Circular” and met with a couple of franchisees.
At the same time, we got hooked up with a franchise consultant through FranChoice. This was probably one of the best moves we made during the process. The consultant talked to us about our backgrounds, work style, financials, etc. and then presented several options for franchises. He also told us about a program through Guidant Financial whereby I could parlay 401(k) funds into capital for the business venture. Shortly after starting our discussions with the consultant, we found a red flag with the fitness franchise… no “Discovery Day”! This is like a day long interview at the franchise corporate headquarters with the executives of the franchise. If a franchise doesn’t offer “discovery day”, be very suspicious.
We worked with our franchise consultant and went through the process of discussing our lifestyle, what we wanted out of the business, etc. He provided several concepts that may have worked out better than the one we chose, but rather than really look at the business, we looked with our hearts and emotions.
After doing a phone interview and a “Discovery Day” visit, we were off and running with a commitment for one location under our belts and an option for a second location. Little did we know what a ride we were in for.
Franchising can be a viable option when you find yourself unemployed, but several lessons learned need to be remembered:
I’m a great fan of The Div-Net, a blog on dividend and value investing. Not being as knowledgeable about the topic as I want to be, I find the posts there to be quite educational.
However, in a recent post titled “How much money do you really need to achieve financial independence?” I found something to which I objected. Who gets to define financial independence?
It seems silly, but there are a number of concepts we take for granted. Retirement is one of them. We’ve been sold a concept of retirement. It’s not an entirely objectionable one, but it does ignore some factors.
Retirement for most people is an end to work. A chance to get out of the rat race. However, this concept ignores several important facts.
1. Some people like work: it might seem crazy, but often times people don’t mind their jobs, or even might like them. Work provides a reason to get out and socialize with others. It gives you a feeling of achievement, and lets you spend the hours of your day in a way that lets you feel reasonably content.
2. Work makes money: Saving for retirement can be a challenge. Working into your retirement can help make that challenge less stressful.
3. Work comes with benefits: Insurance, sick leave, and everything else can cost quite a bit. If you have a workplace that can provide them, this can aid your retirement plan immensely.
Really, the only mandatory thing is that you must plan for your retirement, and planning for your retirement includes defining exactly what you want your retirement to be. Will it be working full-time, part-time or not at all? Will you start your own business or travel the world? These are the decisions that define your personal financial independence, and everything else must follow them.
As a society, these concepts are framed and taught to younger generations. We are taught that diamond rings are necessary for engagements, that weddings need to be catered and that retirement needs to be without working. These traditions benefit the companies that fulfill them more than they benefit you. If you do something, do it because it means something to you, not because a commercial told you to retire at a certain age.
Question these conceptions. You might be looked at a little oddly by people all around you, but it is far better to plan your finances around things that are meaningful to you, rather than just another method of “keeping up with the Jones”.