How to Buy an Existing Franchise

EnEntrepreneurs choose to buy an existing franchise for the advantages it offers over starting a new business. An existing franchise has name branding, a customer base and a proven strategy for earning a profit. The strategy includes interior design, products offered, pricing and marketing. Moreover, the licensing company provides education in their policies and procedures, as well as on-site training for the new franchisee. While the initial investment could be steep, depending on the licensing fee, the potential to earn an immediate profit attracts entrepreneurs to the franchising arrangement.

 

 

Step 1:  Research your favorite industry to track recent business trends. If you want to buy a hardware store, for example, then your target market includes homeowners and contractors. If homeowners are spending money on remodeling and repairs, then a hardware store has a better chance of earning a profit.
 

Step 2:  Research the different franchise opportunities within your chosen industry. Eliminate those that do not meet your criteria. For example, some franchise owners must pay the licensing company a percentage of their monthly sales on top of the franchise fee. It can add up to a tidy sum over the years. This money could be reinvested to grow the business if you chose a franchise agreement that did not demand royalties.

 

 

Step 3:  Choose the franchise that you believe is the best fit for your goals. You might prefer to consult with an accountant or attorney who specializes in this field for a professional opinion, as buying an existing franchise is a major investment.
 

Step 4:  Contact franchise owners in your area for their unbiased view of the company. Their input might alert you to potential problems not addressed in the franchise business plan.
 

Step 5:  Visit the licensing franchise corporate website to learn how to submit an application. Some companies have the application available for immediate download.
 

Step 6:  Submit the franchise application and any accompanying documentation.
 

Step 7:  Examine the disclosure documents sent to you upon acceptance by the licensing company. These documents explain your legal obligations as a franchisee. The Federal Trade Commission provides information about disclosure documents.
 

Step 8:  Notify the franchise representative that you are ready to choose a territory. An advantage to buying a franchise is having a protected territory. When choosing a territory, research foot traffic and vehicle traffic as well as neighborhood demographics. For example, putting a dinner theater in a downtown business district might not be the best choice, as these areas are nearly deserted after 5 p.m. and on weekends. However, a luncheonette that serves the workers and delivers to nearby offices could be lucrative.
 

Step 9:  Complete and sign the franchise agreement. Obtain a bank cashier check for the franchise fee. Some licensing companies accept a partial franchise fee and finance the rest. Refer to the disclosure documents for guidance. Sometimes the franchise fee or deposit is non-refundable.
 

Step 10:  Contact the franchise representative or corporate office to arrange for classes and/or on-site training. This is another benefit of buying a franchise as opposed to starting a business without any assistance.
 

Step 11:  Complete the remaining parts of your franchise contract, such as buying inventory and supplies to open your shop. If the existing franchise already has adequate inventory, then check your contract to ascertain whether there is a requirement for an initial minimum purchase, or if you can delay purchasing inventory until a later date.

 

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How to Get a Stakeholder to Buy in on a Project

Stakeholder management requires an understanding of what information stakeholders require.

 

          A stakeholder is any person or group that affects, or is affected by, a particular project. Along the path to completing your project, stakeholders can be partners, resources or roadblocks -- and potentially all three rolled into one. As project management develops as a concept, stakeholder management emerges as an element common to the planning and execution of any project. Stakeholder buy-in, the cooperation or positive participation of a stakeholder, is the preferred condition for any successful project.

 

Step 1:  Identify and list all possible stakeholders. Evaluate the scope of your project to assess what people and departments might be affected by both the project and its favorable outcome. The project manager and team are obviously involved. Employees and unions, if applicable, may be affected. Suppliers, bankers and customers may be other potential stakeholders.
 

Step 2:  Organize your stakeholder list. Some stakeholders have more influence and their buy-in becomes crucial to the success of the project. Establish a hierarchy of stakeholder importance to focus your management efforts.
 

Step 3:  Involve your key stakeholders early in the project. For external stakeholders such as consumers, this may be by way of marketing surveys. Meeting with internal stakeholders may reveal previously unknown roadblocks or opportunities.
 

Step 4:  Establish expectations for both stakeholder participation and updating, and stick to expectations. For example, if you commit to weekly reports, ensure you issue weekly reports. Loss of trust will erode stakeholder confidence. Recognize that stakeholder buy-in is not a one-time event and must be maintained.
 

Step 5:  Communicate the good with the bad. Do not focus on only benefits from your project. Describe compromises and potential negative outcomes. An outlook that is too positive can generate suspicion and reserve stakeholder buy-in.

 

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How to Build a Stakeholder Base for Nonprofits

Volunteers are a key element of most nonprofit groups.

 

     A nonprofit organization relies heavily on the relationships it develops with the people and groups in its community. As you try to build a successful nonprofit, you must identify which elements in your community to involve in your efforts: These are your stakeholders. Reach out to individuals, businesses and groups that share common interests and goals and can help you achieve your objectives -- their buy-in and engagement is essential for your nonprofit to achieve its mission. The three main goals of your engagement with your stakeholders are to develop a deeper understanding of problems, create new and better solutions and build more effective organizations.

 

Why Stakeholders Are Important

Most smaller nonprofit organizations rely heavily on dedicated volunteers and community members for much of their day-to-day programming and activities. Most also work on very tight budgets and rely on donations of goods and money from their stakeholders. You may have funding for a few full- or part-time personnel, but without the ideas, commitment and ongoing efforts of your stakeholders, not to mention their financial support, your ability to advance your nonprofit's cause is severely limited. Philanthropic groups and other nonprofits often are viewed as disconnected from what's going on in their communities, so it is essential that you make connections with the people in the community who are affected most directly by your organization's work.

Identify Your Stakeholders

Stakeholders are all the people who have an interest in your organization successfully achieving its mission. Nonprofits have both internal and external stakeholders. The first group includes those who already have made the commitment to work directly with your organization to achieve its goals, such as board members and volunteers. External stakeholders are those in the community who are impacted by your work -- the families who will be served by your food pantry, for example, or the senior care facilities with which you seek to partner to provide activity programs to their residents. The perspectives, concerns and buy-in of both types of stakeholders are important to your nonprofit program's viability.

 

Stakeholder Outreach

Traditional means of reaching out to potential stakeholders include direct mail or calling campaigns, publishing information about your organization or its upcoming meetings in the local newspaper and making presentations to community groups. Consider using non-traditional means as well, particularly social networking sites. An analysis by the Public Relations Review notes that nonprofits increasingly place a profile and basic data on their sites, but as of 2008 are not taking full advantage of the interactive and information-sharing options offered by sites such as Facebook. The appropriate balance of traditional and web-based outreach methods is determined by the ages, professions and media preferences of your identified stakeholders.

Prioritize and Focus Outreach Efforts

Simply announcing your meetings and intentions is not sufficient to build a solid foundation for your nonprofit organization. Once you have identified your potential stakeholders, concentrate your efforts where they are most lucrative. The level of effort needed to inform and motivate your stakeholders can vary from one to another, and you seldom have the luxury of enough time or resources to reach all of them. Focus on priority targets -- those with the greatest level of access, influence and resources to move your nonprofit organization's programs forward. Communicate with your internal stakeholders on a regular basis to keep them informed and engaged. Establish strong ties to key external stakeholders, such as potential recipients of your services, community leaders who can influence local policy decisions and financial institutions known to support nonprofit programs. Do not overlook other nonprofit groups; collaborative programs often can reach more people and build more resources than a single nonprofit on its own.

  

 

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20 Questions Before Starting A Business

So you’ve got what it takes to be an entrepreneur? Now, ask yourself these 20 questions to make sure you’re thinking about the right key business decisions:

1. Why am I starting a business?
2. What kind of business do I want?
3. Who is my ideal customer?
4. What products or services will my business provide?
5. Am I prepared to spend the time and money needed to get my business started?
6. What differentiates my business idea and the products or services I will provide from others in the market?
7. Where will my business be located?
8. How many employees will I need?
9. What types of suppliers do I need?
10. How much money do I need to get started?
11. Will I need to get a loan?
12. How soon will it take before my products or services are available?
13. How long do I have until I start making a profit?
14. Who is my competition?
15. How will I price my product compared to my competition?
16. How will I set up the legal structure of my business?
17. What taxes do I need to pay?
18. What kind of insurance do I need?
19. How will I manage my business?
20. How will I advertise my business?
21. 
    

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How To Write Off Start Up Costs On Your Taxes

 

Did your business incur expenses before you were technically “open for business”? Did you know that you can write off some of these expenses against your business as soon as you are operational?

Read on for tips and information about deducting startup costs, plus advice about when you may not want to immediately claim these deductibles.

What Are Deductible Startup Costs?

The IRS defines “startup costs” as deductible capital expenses that are used to pay for:

1) The cost of “investigating the creation or acquisition of an active trade or business.” This includes costs incurred for surveying markets, product analysis, labor supply, visiting potential business locations and similar expenditures.

2) The cost of getting a business ready to operate (before you open your doors or start generating income). These include employee training and wages, consultant fees, advertising, and travel costs associated with finding suppliers, distributors, and customers.

These expenses can only be claimed if your research and preparation ends with the formation of a successful business. The IRS has more information on how to claim the expenses if you don’t go into business.

You’ll notice that equipment purchases are not listed here. It’s very likely that you purchased equipment before opening your business; however, these are not considered startup expenses and instead can be written off through depreciation, with different rules for different assets. Learn more from the IRS about depreciation.

Other Startup Deductibles – Organization Costs

If you choose to incorporate or organize as a partnership while you are still setting up your business, you can deduct or amortize certain costs incurred. These include the cost of state incorporation fees and legal fees, organizational meetings, and salaries for temporary directors. Partnership deductibles include legal, accounting and filing fees related to developing the partnership agreement. These costs must have been incurred before the end of your first tax year in business. They must also be chargeable to a capital account and amortized over the life of the corporation/partnership. Read more about requirements and exclusions on IRS.gov.

How Much Can You Deduct?

If you started your business in 2011, had startup costs of $50,000 or less, and incurred startup and/or organizational expenses after October 22, 2004, you can deduct up to $5,000 in business startup costs on your 2011 tax return. If those startup costs exceed $50,000, the $5,000 first-year deduction is reduced dollar-for-dollar by the amount your expenses exceeded $50,000. Furthermore, if your start-up expenses exceed $55,000 or more, you won’t be able to claim the $5,000 deduction for the first year.

For example, if start-up costs are $51,000, the deduction is reduced to $4,000. If start-up costs are $55,000 or more, the $5,000 deduction is completely phased out. Read more at IRS.gov.

What is Considered the Startup Phase?

What constitutes a startup expense as opposed to a traditional business operating expense? Basically, you are in startup mode during the development and planning phase of your business. As soon as you are operational (either open for business or conducting transactions), your costs are considered to be the expenses of an operating business.

How to Claim the Deduction

Tax law used to require you to proactively elect to claim startup expenses when you processed your tax return. However, in August 2011, a new tax law was issued that automatically assumes you will make the election, if you are entitled to do so. If you forget to claim this deduction in a previous year, talk to your accountant about how you can catch up with missed deductions.

Keep Good Records!

Be sure to keep good records from the get-go and back up your expense deduction claims. SBA offers the following guide which includes tax recordkeeping tips.

Talk to Your Accountant before Startup Expense Deduction

You can see from these examples that if your startup costs are going to exceed $50,000, then your deductible is reduced, and completely wiped out if you exceed $55,000 in expenses. So it may not make sense to take the business startup deduction in the year you start your business. It all depends on the individual situation. For example, if you don’t expect to make a profit for many years or you want to reduce your tax liability, you might want to forgo deducting startup expenses when you become operational and capitalize or amortize them. Talk to a tax advisor or accountant about the best options for your business.

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