Business Franchise Australia and New Zealand 45minimal equipment, it’s likely that the
main costs will be the initial franchise and
training fees. For many mobile franchises
this will probably come to less than $50,000.
However, these headline numbers won’t be
your only costs. So, before you borrow the
money or invest your redundancy pay, take
some time to properly understand the costs
to get into business.
For instance, to get your mobile franchise
started you’ll need to buy or lease a vehicle,
and purchase any equipment needed for
your business. You’ll also need advice from
a lawyer and franchise accountant and
the costs to set up your business trading
structure.
lower running costs
Mobile franchises tend to have low expenses
whereas the owner of a fixed location
business has significant monthly outgoings.
But even in a mobile franchise you have
expenses to pay.
What will it cost you to run your mobile
franchise? Whilst there will be costs, you
won’t have the weekly and monthly expenses
of rent and staff wages. Still, it’s important to
have a good think about what it will cost to
keep the business going.
And it is a business, so you’ll really should
run it like one. This means cleaning and
maintaining your vehicle, wearing a uniform
or appropriate work wear, equipping yourself
with necessary technology to get the work
done, paying for advertising and marketing,
and proper bookkeeping and accounting
help. There’s also the royalty fee!
It’s a very good idea to work out these
expenses before you start off in business.
That way you know what sales you’ll need to
achieve in order to pay the bills.
time is money
In a mobile business, your business income
will largely be determined by the hours you
are able to charge people for. Be realistic
about the hours you can work and the
amount you can charge.
In most mobile businesses you are selling
your time. Time really is money! Your
income will be dependent on two key
factors: how many hours you work and what
you are able to charge for that time.
Contrast this to a location based business
where - in most cases - what you sell is a
physical thing or a service delivered by
other people. Your wages and profit are not
directly related to the hours you work.
“time really is money! your income will be
dependent on two key factors: how many
hours you work and what you are able to
charge for that time.”Kate groom | co-founder | the FrANchise AccouNtANts
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This business model means a mobile
franchisee must think carefully about how
they use their time. Questions such as “How
many hours can I actually charge people
for?” and “What hourly rate is appropriate?”
become really important.
Let’s say you think you can charge $80 an
hour as a bookkeeper or handyman. If you
bill 38 hours a week, 52 weeks a year, that’s
more than $150,000 in business income.
Sounds great!
But how many hours will you actually
invoice in a month? What about the time
you’ll need to spend on marketing and sales,
and business management? What if you are
sick?
This should lead you to consider questions of
how much money you need to make, what
is realistic, and how you’ll need to operate
the business to achieve these goals. These are
important considerations when you’re mobile
and working alone... because your time is
money!it takes time to build up your
sales
When you start your mobile franchise you
probably won’t have any customers. In
contrast, most fixed location franchises have
some income from customers from day one.
Be realistic about what you can make from
your mobile franchise at the start.
When you buy a mobile franchise you’ll need
to accept that the first few weeks or months
may not see much revenue. This stands in
contrast with retail business where there is
almost always good revenue from the start -
but remember the owner has a lot more debt,
wage costs and overheads to pay.
In almost every mobile business we know,
it takes time to build up a customer base
and start generating sales income. In fact,
in some franchises it can take six months or
more to start to see revenue coming in.
This is one reason we think mobile
franchisees need to enjoy the thrill of the
sales chase! Which then raises two reallygood questions to ask the franchisor: “What
will you do to help me get customers?” and
“How long has it taken existing franchisees
to reach $X in monthly sales?” ($X is your
initial monthly sales goal).
This leads to this last point...Self-motivation is vital
Without self-motivation, you’ll really
struggle to make your mobile franchise
work. If you don’t put in the effort, there
won’t be many customers.
Almost everyone in franchising will attest
to the importance of the owner working in
the business. But a retail business can (and
should) tick over if you’re not there all the
time. However, in a mobile franchise you are
the product. If you’re not working, there’s no
income.
So, in a mobile franchise you need a high
level of self-motivation. This is the internal
drive that comes from wanting to build a
business and the desire and commitment to
put food on the table.
It’s you who has to talk yourself into pulling
back the covers and getting on with it each
day. And if you’re not that kind of person,
it’s likely you’ll find your franchise business
quite a challenge.
Even if you are highly motivated, we think
it’s important to have clear goals to work
towards. This means financial targets and
plans for your sales and marketing activity.
Add to that a way of checking your progress
against your plans and you’ll be well on your
way to creating a solid business.Kate Groom is a co-founder of The
Franchise Accountants Network and
Smart Franchise. Kate spends her time
understanding the accounting and
bookkeeping needs of franchisees and
developing practical, affordable ways to
help them.
Contact Kate via:
http://www.franchiseaccountants.net.au
http://www.smartfranchise.com.au