Owning a business that has already proven itself in the marketplace can give your entrepreneurial plans a jump-start.
Owning a franchise, with its market-proven business model and managerial support, can buffer you from some of the common worries of business ownership. And, according to findings in Small Business Trends, a 2019 survey by small-business financing company Guidant Financial, this may be an especially good time to consider this form of business ownership. Here are three reasons revealed by the survey.
Franchise owners report high levels of happiness.
Those surveyed rated their happiness at being a business owner at an average of 8 on a scale of 1 to 10 (10 being happiest). Perhaps it has something to do with not having to go it alone completely. “An important part of a franchise purchase is the support that comes with franchise ownership…the ‘all-in-one’ package [that may include] predetermined layouts, marketing materials, training and more,” noted the survey. And franchisees were 28 percent less likely than independent business owners to consider cash a major operational challenge.
The likelihood of profitability is increasing.
Two thirds of franchisees surveyed were profitable. And that was a 9 percent increase over last year. This trend may be making franchisees feel optimistic about their company’s future. “Perhaps due to this growth in profitability,” the survey noted, “there was also 17 percent growth in franchise owners who wished to open an additional location, at 23 percent.” More than half (57 percent) of owners were focused on growing their current location.
Small-business financing is available at lower rates.
While franchisees need to invest in their start-ups just as you would if you started your own dance studio from scratch, they also may have an easier time getting small-business financing for a market-tested business formula. Among the franchisees GF surveyed in 2019, Small Business Administration (SBA) loans grew significantly (by 26 percent) over the previous year, while cash also grew as a popular form of financing, at a 9 percent increase. Loan interest rates have been dropping, too, as the Federal Reserve cut rates three times in 2019. “Programs with already attractive rates, such as an SBA 7(a) loan, now have lower interest rates than have been seen in at least 10 months,” the survey reports. And, it notes, recent adjustments to the SBA’s size standards means that some 90,000 more businesses can gain small-business status—and access to small-business loans to the tune of nearly $65 million. Along with the results of the Small Business Trends survey, these signs all point to a particularly “advantageous time to secure financing to fund [a] franchise purchase.”