Independent Business vs Franchise
Amanda: Hi, welcome to the second episode of franchising with purpose. I’m your host, Amanda Lepore with me today. I have the Mikes to my immediate right. Let me introduce you to Mike Powers our Director of Franchise Development here at Griswold Home Care and to his immediate right, we have the wonderful, Mike Magid, Chief Operating Officer.
Later in our podcast today, Matt Murphy, the CEO and President of Griswold Home Care will be joining us. So, looking forward to that stay tuned here as well. Just a high level, recap from our previous podcast on our previous episode. We talked about why someone would consider home care talked a little bit more about the advantages of a franchise system, which we’re going to get into more today. What we talked a little bit about what someone would need to know about franchising and more most importantly why some franchises are more successful than others.
If you missed it is available. Now on iTunes Spotify, YouTube, Stitcher, Google Play music, and my most favorite, www.griswoldhomecare.com/franchise/ , you want to search franchising with purpose
So, today we’re going to go on a little bit of an entrepreneurial journey. If someone myself will, I’ll go on this journey today for our, listeners so you decide you you want to work for yourself, right? There’s a lot of options to consider we have franchising, there’s startups, there’s lots of things going on there. So, Mike, why tell don’t us a little bit about what that looks like, and how someone can identify, what’s really a good fit for them, an independent business vs franchise.
Mike Powers: Well, that’s a great question Amanda. I know there’s many people that are out there thinking about starting their own business today. The question faces them, you know, do I do this on my own? Do I look at other options such as a franchise situation? And you look at statistics that are out there for small businesses today, they could, they could change the way people think when they look at success or failure rates.
Amanda: And as we go on this journey, there’s a lot involved here, there’s a lot at stake as far as investments go. Let’s talk a little bit more about what that looks like, when you’re making that decision right? When it comes down to the dollars and cents of it all.
Mike Powers: Well, yeah, it’s real important. Probably the basic three questions, you know, how much is it going to cost me? How much am I going to earn? And how fast can I earn it? They seem to be three questions that that most people that are going in this situation, or want to go on this venture ask that. We we talked the last time on our first first episode about, you know, why most small businesses fail and it has a lot to do with being undercapitalized. That’s that’s where you see statistics come into play that 25 percent fail in the first two years of small businesses out there. 50 percent begin to fail on that third through fifth year. So..
Amanda: Mike, is that business as a whole, or is that specific to a startup, you know, going on your own or going with a franchise?
Mike Powers: That’s a great question. Most cases, it’s small businesses in general. And that it would include independents versus franchisees. Although franchise members who join a network don’t have to invest the capital in key areas to run their business, such as marketing, or technology systems or, learning, education. All those key aspects of the business, they’re going to have to fund that versus affiliating with a franchise who provides those systems, direction, support, education. All those aspects that that come with that relationship.
Mike Magid: If I, if I could add something that Amanda, I think one of the things, if I was advising you on your journey, in terms of how you go about selecting a franchise system, or doing something on your own independently and going through that process. I think a couple things that stand out to me, or one, a lot of people that go independently will do what they know or what they love. And when you do what you know, what you love, and you, you then add the business component to it now you don’t do what you love anymore now, you’re doing it for profit. You’re doing it for for growth. You’re doing it for equity value, but it takes away the fun of what you love but you’re typically going to go in a direction of what, you know, best.
So, I think if you’re trying to decide, you know, do I open up my own business? Do I go franchising? Understand where your strengths and skills are and what your opportunity areas might be, don’t focus on things that you know best, that you love, because you won’t enjoy that as much anymore. And I think that when you’re thinking about your opportunity to succeed, a lot of folks that get into a business, because they know it, or they’ve been doing it really struggle to see a bigger picture aspect of what it takes to grow that independent business just because they came from the weeds, because they’ve been doing something and then, as an owner, they live in those weeds, and once you invest in the business and your money, and your investment, your retirement is on the line your opportunity to succeed in a business coming from the weeds and not having a bigger strategic plan. Not having the vision of where you want it to be because you’re doing what you know, is very risky. And that’s why as you make a decision between independence or franchising, one of the beautiful things about franchising and I’m partial franchising, I’ve been in franchising a long time, is it you can select any kind of industry or model now I’m not saying you do it blindly and we’ll talk more about that today. But you can select any business model or industry. And if the franchise is successful at the industry, is right, you can succeed whether you know it or not because of the things that Mike talked about you have, you have a great support network.
So you can not necessarily do what you love in franchising, learn to love it, but learn to love it as a successful business owner rather than love what I’m doing get in and stay in the weeds and then try to figure out how do I grow this thing? I don’t just have the perspective independently, and then like I spend thousands of dollars to get consultants to come in and coach me or teach me what I’m doing what I need to be doing differently while I’m running my independent business and I think for the audience and so on this journey with you, that is a very, very critical element that has to be considered when you’re thinking about do I do something independent versus going franchise?
Mike Powers: Yeah. I think just to sum up kind of the bottom line on that is, is that, when you’re developing an independent versus franchise with a franchise, like, any ownership independent ownership of a business there are so many variables. With a franchise system, you get a chance to control those variables where as an independent you don’t, right? You’ve got to develop all these things as you just said, Mike.
Mike Magid: I might add, that’s a good point. The variables are there whether you go independent or franchising, the difference is as an independent, I got to figure those variables out and then I got to figure out the resources are going to help me figure out those variables. With franchising, who have already done this and duplicated the success, when those variables show themselves, it’s as easy as calling your operations manager or franchise company and saying, “Hey, here’s a variable I’m not prepared for. You are. How do I handle this?” And I don’t pay anything for that other than the typical royalties that I pay on the revenue that I generate. So, the variables as Mike said, they’re, they’re going to be there whether you’re an independent owner, or a franchise owner it’s the support around it that makes it either harder or easier to deal with those variables. Depending on which direction you go.
Amanda: Absolutely. So it sounds like, as I, embark on this journey to figure out what’s going to look best for me in my entrepreneurial road map here that you from know, a support standpoint from a fiscal standpoint that franchising really does make the most sense.