Once you get past any anxieties about franchise investment, it’s time to do an honest self-assessment about whether you’re suited to business ownership. What do you need to succeed? I spent 17 years working at the Ford Motor Company, and as part of our process there we evaluated potential dealer candidates using four Cs as a guideline: Capital, Capacity, Character, and Customer Satisfaction. A solid candidate could demonstrate all four. In my work as a franchise consultant, I’ve also found a fifth characteristic—Cooperation—to be key. I use these same measures to help interested candidates assess their strengths and weaknesses. To date, they’ve served as an outstanding predictor of success. How do you measure up?
1. Capital: This first qualifier is the one we all know about, the one that some people allow to loom over the idea of franchise ownership, keeping them from investigating the possibilities. You must have some amount of capital available to invest in a business. For more information about how much capital you might need, click here [LINK TO article 15]
2. Capacity: The second “C” is for capacity. Although you may not need specific industry expertise to invest in a franchise concept, you must have a certain level of business acumen. As a business owner, you must understand people and how to motivate, lead and support employees. Experience in sales and operations management will also support your efforts. It takes strong leadership skills to build a business and develop a reliable staff, and savvy hiring skills will save you from costly mistakes.
When assessing your capacity to run a business, know that business is a numbers game, and you must have a clear understanding of how it works. You can hire an accountant if you don't have a good understanding of financial statements, but you do need to know how to read a profit and loss statement.
Drive and goal orientation are important components of capacity, too. You need to be able to put together a solid business plan and follow it. You should know where you are headed, have a clear path to that outcome, and be prepared to make adjustments along the way.
3. Cooperation: A key component of franchise ownership is understanding that you don’t bear all the responsibility for driving the direction of the business. Your franchisor will have a detailed plan for you to follow—and will need to know you can embrace it in a spirit of cooperation.
Franchisors have to feel confident that you will follow their procedures and systems to create a consistent product and service upon which they can build their brand. That’s the strength of a franchise, and the best reason for choosing to invest in one in the first place—those proven systems are already in place. By the same token, if you’re the “my way or the highway” type, franchising is not likely to work for you.
4. Character: Having good character is critically important—and it’s built over a lifetime and throughout a career. Franchisors expect the people with whom they partner to operate with honesty and integrity. As a franchisee, you will be representing the brand, and franchisors will take a close look at how well you will do that. As famed entrepreneur George Van Valkenburg once said, “Leadership is doing what is right when no one is watching.” Do you have a history of being honest and ethical?
Another key component of character is work ethic. Owning a business takes significant discipline and commitment. You will have to be able to make good decisions and do the right thing when confronted with tough choices. If you have a strong record of hard work and commitment, you’re already a step ahead when you start a business.
5. Customer Satisfaction: The last big “C” is customer satisfaction. Warren Buffett famously said, “It takes 20 years to build a reputation and five minutes to ruin it.” Volumes have been written about customer satisfaction—because it is the key to success for all businesses.
Think about your own shopping and service provider experiences and how those interactions have shaped your opinion of businesses. Everyday transactions can earn your repeat business—or ensure you won’t be back.
Do you have the desire and passion to create a superior customer experience? Franchise companies need to ensure that you will take good care of customers.
Ready to HIRE YOURSELF? I’ve created a worksheet to help you assess your 5 Cs. If you follow this link, you can get started now.
[link: WORKSHEET: Assessing your Five C’s: Capital, Capacity, Cooperation, Character, and Customer Satisfaction]