By Richard Mukheibir, MD of Cash Converters
It is fundamental that when you choose to go either the entrepreneur or franchise route, you do so fully aware of how comfortably you fit into either business model.
There are major differences between the entrepreneur and the franchisee. Recognising them and working with them will prevent you from setting yourself up for failure.
Starts a business completely at his or her own risk, risks include the following:
But you have chosen to be an entrepreneur because you want the personal thrill of making yourself known to your target market and building up a name for yourself and your business.
You’ll recognise yourself as an entrepreneur if you can implement innovations or your own methods of problem solving whenever you see fit. Your bottom line is that you want to control every aspect of whether your business sinks or swims.
If you prefer to limit your risk more, you are likely to enjoy being a franchisee. This is the opportunity to use a franchise’s foundation of knowhow, from accounting to marketing, to build a business for yourself but not completely by yourself. You would enjoy the security of a franchise’s business framework, whereas an entrepreneur wants to devise and build that framework for him/herself.
If you are a natural franchisee, the thought that entrepreneurial new businesses fail at the rate of about seven out of every 10 gives you sleepless nights. Instead, buying into a proven business model reassures franchisee personalities. It reduces risks to within your comfort zone and increases your chances of being successful.
Entrepreneurs will see a franchise as imprisoning his or her creative business vision and will kick against it.
Entrepreneurs value the freedom to make their business dreams come true over the security of working within a franchise. If they find themselves in a franchise environment, they are likely to wreck it themselves.
Successful franchisees are happier following a franchise’s proven methods, developing their new business step by step in accordance with the franchisor’s guidelines.
90% of new franchisees succeed thanks to the support of an established business model, brand and the market knowledge that is part and parcel of a franchise.
The Cash Converters model, for example, works best with franchisees who are hands on, have good people skills and some entrepreneurial flair for sourcing and marketing stock.
A franchise’s business model is what you are paying for when you buy a franchise and it is what makes you as a franchisee more likely to succeed than if you started your own business from scratch.
The franchise’s model should be based on years of experience of the business evolving within market and economic conditions.
Make the most of the support you have bought from them as part of your franchise fee. This will include aspects such as:
Whichever route you choose, it is vital to work hard and always believe in your business.
“Since Peter Forshaw and I co-founded Cash Converters in Southern Africa in 1994, we have been unapologetic about our mission to turn SA pawn broking into a slick, 21st-century business that brings benefits to franchisees and customers alike. Whether you choose to be an independent entrepreneur or to build your business within the greater security of a franchise, belief in the need for your business and its product, as well as belief in your understanding of the market around you, will be key factors in your success.”
You can be too much of an entrepreneur to be an effective franchisee – and you can be too much of a franchisee at heart to be an effective entrepreneur. Make sure you know which one applies to you before you risk your hard-earned capital.
Richard Mukheibir co-founded Cash Converters and personally opened its initial pilot store at Parow in the Cape. The franchise now extends to 75 stores across Southern Africa. Cash Converters was a finalist for the Franchise Association of Southern Africa Franchise of the Year Award in 2014, 2015 and 2016.