Profit - The Goal and More Than Margins!

Written by David Bancroft


Small business owners, executives, and managers are always being challenged to maximize performance. Yet so many strive forrepparttar all important increasing sales without consideringrepparttar 106833 best way to achieve what keeps all companies in business . . . PROFIT. Profit or net income before taxes are what every business should be striving for whether you are a small Internet based company or a multi-billion revenue corporation. And while sales are relative torepparttar 106834 size of budget, profit isrepparttar 106835 true measure of success. Even Internet IPO success stories . . . like Amazon.com will be short lived, if profitability is not achieved before investors' patience become critical. The stock price can go just so high if there is notrepparttar 106836 means to pay dividends. Eventually,repparttar 106837 treasure chest that is being robbed to pay Peter will become empty. (BTW - I am not suggesting that Amazon will not maintain its success story. It is just a fact of business life thatrepparttar 106838 bottom-line must be black more than red for any business to remain solvent.) The same applies to a small business . . . if it does not haverepparttar 106839 profits to provide salary increases and basic benefits for its employees let alone for growth. Unfortunately many good entrepreneurs fail to see how these two aspects can be so intertwined that even a very profitable small company can quickly see itself slip away when employees are not rewarded forrepparttar 106840 profits they generate. It is not justrepparttar 106841 margin of a product and/or service, but how a company might save money through vendor selection, policy development, or other means. Moreover, incentive programs, affordable benefits, and other humanistic programs can produce profits above their cost because of employees striving to do their best forrepparttar 106842 company. (Yes . . . an oversimplification that is limited byrepparttar 106843 size ofrepparttar 106844 company andrepparttar 106845 financial ability to provide. However, one must start some where to build towards greater success and profits along with retaining good employees.)

The Franchise Alternative

Written by Elena Fawkner


ANY new business involves risk. The proportion of new businesses that fail within their first two years of operation is much higher than those that succeed. Whether you can affordrepparttar risk of your business failing depends on your own individual circumstances. If you are continuing in full-time paid employment and your business is something you start in your spare time for a little extra cash to see how it goes before quitting your job, then you are more likely to be able to affordrepparttar 106832 risk of that business ultimately not succeeding.

But what if you've lost your job, taken a package, and are looking for a business in which to investrepparttar 106833 proceeds of your package? All of a suddenrepparttar 106834 risk of your new business failing looms very large indeed.

One way of reducing that risk is to consider buying a franchised business.

WHAT IS A FRANCHISE?

Simply put, franchising involvesrepparttar 106835 owner ofrepparttar 106836 business which is being franchised ("the franchisor") granting torepparttar 106837 person who wants to offerrepparttar 106838 products and services ofrepparttar 106839 franchisor ("the franchisee") rights to use its trademarks, business names, associated intellectual property, know-how, business systems, training systems and operating manuals in exchange for monetary payment inrepparttar 106840 form of an initial franchise fee/purchase price and/or ongoing royalty payments which are typically calculated as a percentage ofrepparttar 106841 franchisee's turnover.

ADVANTAGES OF A FRANCHISE

-> Proven system

The franchisor has already donerepparttar 106842 work of establishing a system forrepparttar 106843 business being offered for franchise. This system provides you,repparttar 106844 franchisee, with a roadmap to follow, hopefully to success. The franchisor has already tested and refined all aspects ofrepparttar 106845 business and has created a "business success formula" forrepparttar 106846 franchisee to follow. This means that you are sparedrepparttar 106847 trial and error of working out what works and what doesn't and are therefore freed to focus on "workingrepparttar 106848 system", hopefully generating profits within a short period of time.

-> Avoid many start-up problems

Starting a business fromrepparttar 106849 ground up requires a lot of time and effort just gettingrepparttar 106850 basics in place. These include major undertakings such as developing a reputation inrepparttar 106851 market place, obtaining finance to fundrepparttar 106852 new venture and overcoming competitive threats, as well asrepparttar 106853 more mundane such as what business licenses to obtain and what insurance cover to purchase. The franchisor will have already done a lot of this work. For example,repparttar 106854 franchisor will already have developed a reputation forrepparttar 106855 business inrepparttar 106856 market place, will have identified competitive threats and opportunities, incorporating ways of meeting them withinrepparttar 106857 franchise system and will usually have already established relationships with service providers such as financiers.

-> Existing name and reputation

As stated above, you do not need to invest significant time and effort into getting your business known inrepparttar 106858 marketplace asrepparttar 106859 franchisor will already have done this forrepparttar 106860 benefit ofrepparttar 106861 group as a whole.

-> Support when needed

You are not on your own when things go wrong. Got a business problem? Contact your franchisor for assistance. The franchisor will have employed many different specialists within its organization who are there just to assist franchisees successfully operate their businesses. In my 14 years of experience in franchising,repparttar 106862 most successful franchisees were those who were not afraid to ask for help when needed. The most unsuccessful were those who thought they knew it all or, for whatever reason, refused to ask for help when they needed it.

-> Group buying power

Depending onrepparttar 106863 size ofrepparttar 106864 franchise network,repparttar 106865 group should benefit from being able to negotiate favorable buying prices because of their ability to generate volume sales forrepparttar 106866 supplier.

-> Group advertising

By contributing advertising fees into a group fund, individual franchisees are able to benefit from much greater advertising exposure than they could afford if each franchisee had to market their business on an individual basis.

-> Greater knowledge base

The franchisor is likely to have invested in market research forrepparttar 106867 benefit ofrepparttar 106868 group as a whole. This meansrepparttar 106869 group has a much greater knowledge of their market(s) than doesrepparttar 106870 local "independent" competitor. The results of this market research can be put to good use inrepparttar 106871 group's advertising and marketing programs.

DISADVANTAGES OF A FRANCHISE

-> Restrictions on autonomy

Because you're buyingrepparttar 106872 rights to participate in a proven "system",repparttar 106873 franchisor will be concerned that all franchisees adhere torepparttar 106874 system and not operate outside it. After all, if franchisees are free to adhere torepparttar 106875 system or not as they see fit, there is no point in buying into a franchise at all. For this reason, forrepparttar 106876 benefit ofrepparttar 106877 system as a whole, franchisors will generally impose strict controls on things such asrepparttar 106878 quality and types of products and services that you may offer for sale,repparttar 106879 types of local advertising you may undertake, methods of dealing with customers, ethical conduct andrepparttar 106880 like.

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