“Successful people ask better questions, and as a result, they get better answers.”
– Tony Robbins
Having the information you need to determine whether a new business idea is practical begins with asking the right questions.
Starting a new business often begins with a desire to create something unique that we can control instead of spending the rest of our careers reliant upon someone else making decisions that affect our livelihoods.
The spark, the entrepreneurial fire, begins with an idea and a desire to create something. Maybe it is buying a popular franchise and bringing it to your community before someone else does. Or perhaps it is starting something from scratch and shaping it into whatever you want.
Decisions Decisions: Buy a Franchise or Create Your Own Company from Scratch?
A franchise does have the benefit of serving as a tested blueprint for a business model, and these often come with established branding. By “branding,” I am referring to a basic identity or vibe that potential buyers already feel when they see the logo while driving down the highway past an existing location.
When I mention brands like “Chick-Fil-A” you immediately imagine it in your head, don’t you? You can close your eyes and see it, smell it, taste it, and instantly grasp how it will fit in with (and compete against) other businesses.
Your gut tells you how excited people will get when they hear through the grapevine that someone is bringing one of those to your city.
That is the power of operating a franchise. The challenging part is that customers will expect a certain experience when they visit your new store. You’ll be expected to deliver that from opening day.
In addition to hefty fees that reflect the value of riding piggyback off that existing brand awareness, franchises often include a number of strict rules and restrictions as part of the deal so new owners must operate within narrow parameters to protect the established values and identity.
In the case of Chick-Fil-A, franchise owners found themselves facing protestors in front of their stores after the president of the brand issued a public statement condemning same-sex marriage. Don’t agree with him? Tough luck, you’re attached to the brand.
Why Cities Want Established Brands
When I was a newspaper reporter in a small Alabama town, I watched a mayor reach out to big label restaurants, the opening of which would persuade drivers to pull off the interstate and have dinner there instead of 10 or 20 miles down the road — based almost entirely on the logo’s presence on billboards or signage displayed ahead of the off ramp.
The benefit for the town was not only luring folks to potentially explore other businesses but also the sales tax revenue such a brand name store would generate to fund expanded town services. But in order to get them, towns are often expected to offer sweetheart deals like tax abatements that aren’t available to other businesses.
Franchised companies typically require a certain population within a radius because they want to give their label every chance of succeeding. This means that based on where you live and plan to invest your money, some franchises won’t even be an option.
Because of these rules boxing you in, you can more easily get a loan from your bank based on them having an existing impression of the label’s branding and where it fits as a niche among what will be popular with shoppers in your town. A franchise typically comes ready to roll-out and establish dominance within your community (over homegrown startups) since people already associate feelings with it.
Simply buying a franchise can be the best option if you want to stay coloring within the lines and surrendering much of your control.
There is another way
The alternative to franchising is to do something fresh, starting where you are with what you have. Taking your rough idea of what you want to do, sanding down the rough edges, then creating those same brand identity aspects that will form the consumer sentiments inspired by your product and the manner with which you deliver an experience to them.
Starting something completely original involves some costly trial and error, experimentation of what works and what doesn’t. That’s also what makes it thrilling.
This measured risk-taking and innovation of what others have previously done (but finding ways to do it faster, cheaper or better) is how you evolve from just another entrepreneur to someone who is selling franchises to others based on the template of what you made with your hard work and creativity.
Establishing your company MUST begin by asking excellent questions like…
- What is the product or service?
- Why do people want or need it? If it isn’t essential, what will persuade them to exchange their hard-earned money to acquire one of their own?
- What subconscious need does my brand serve… improving safety? Self-esteem? Will it make my customer feel better, wealthier, prettier, healthier, smarter, or more respected?
- What is the “story” of my company, and how do I best tell it so people understand these values and benefits? How do I show this visually rather than trying to express with words alone? What choices of fonts, colors and graphics will define a visual aesthetic that appeals to the precise people I want to target?
- How do I apply these consistently? How often do I need to remind people about my business before it becomes obnoxious and counterproductive?
- How do I establish my company as having expertise, authority, and authenticity? How will I build trust? Expand visibility?
- Where will my new business exist? Does a certain location matter or could this be done from anywhere? Do I need to personalize branding to one place or plan for longer-term success with multiple locations? Is this a virtual business on the internet?
- Where else would someone in my community buy this product or service? How will my company differentiate itself from those competitors? Will I serve the same customer as others? How do I provoke customers to feel as if it will give them heightened prestige to buy from me instead of the other guys? Am I competing primarily by offering a better price? By delivering better or faster service?
- How do I protect my turf and prevent someone else from coming in to threaten what I’ve created? How do I use my competitors to innovate?
- How can I avoid being undersold by someone who is offering the same thing for dirt cheap just hoping to lure my customers away? How do I compete against the Wal-Marts and Amazons of the world who have a scale that gives them a huge structural advantage? How do I turn their strengths into weaknesses?
- What special touch can I add to make the experience memorable?
- How do I make people aware that my company has opened? How do I convince them to give it a taste or try-out the product or service in the first place?
- What are my goals? How will I define and measure success? How will I best recognize and make adjustments?
- Where will I get the initial money to start my business? If I must borrow it from someone else, what terms will be involved in repayment of that money?
- Can I be successful without compromising my ethics? Without violating laws and regulations? Without endangering myself or others?
- What’s the minimum length of time needed for my business to exist to penetrate my marketplace? How long am I willing to put time and money into my business before it is no longer worth the effort?
- What is the worst that can happen if I try and fail?
- What resources and tools will be needed to pull off successful marketing campaigns? Can I afford to manage such campaigns myself or is my time better invested by focusing on running the day-to-day operations? Who possesses the expertise and experience to most effectively generate leads and/or build brand loyalty?
- What monetary value will people put on the product/service? How will overhead to run the business affect what must be charged to break even or make a profit? Am I factoring in taxes, tariffs, shipping costs, and location-specific rent that will need to be paid?
- Will the people most likely to want my product or service be able to afford it? Is my pricing strategy flexible enough to adjust if my competitors take actions to compensate for my introduction to the market? Are any of my expenses going to be variable based on supply & demand? Seasonal factors? Trade factors?
- What “specials” and deals will I need to build into my pricing to create added incentive? When will these need to be offered to stimulate purchases during slow times and in the leadup to introducing a critical new product? What payment arrangements can you offer to the most price-conscious customers to give them the flexibility they need to justify purchasing your product or service?
- How can I create the illusion of enhanced value for the customer? Can I increase the perceived value by offering Buy One Get One Free or bundling my products/services?
- How can I incentivize customers to act now before it’s too late, playing on the consumer’s fear of missing out?
- Does a subscription business model work for your product/service? How frequently does my product need replacing? What value can I offer across a period of time to make it worthwhile to subscribe or hire by retainer?
- What tools will I used to keep track of business revenues? What systems and reporting will I have available to analyze traffic to my website or whether my advertising efforts are producing the desired effect? Is my goal by advertising to drive website visits? Get more phone calls? Or increase store visits?
- How do I keep someone who buys from me engaged to return as a repeat shopper? How do I create incentives for them to buy more and buy regularly? How do I convince them to help promote my company? How do I avoid losing their loyalty?
- How do I reach out to compatible brands to cross-promote for mutual benefit?
- How will upcoming holidays and events like back-to-school affect any promotional campaigns I’ll need to develop and execute? How far ahead of those will I need to begin preparing? What assets will be needed to pull off such campaigns?
- What challenges and obstacles am I not yet anticipating?
- Have I identified any entrepreneurs who can mentor me? Are there existing businesses in other cities that I can imitate and use as a template for getting started?
- What lessons can I learn from the failures of others?
- Have I done the basic research to determine whether my community is large enough to support my business? Will there be enough demand for what I offer to make enough sales to pay the bills every month?
- What can I do to give back to my community for choosing to help my business grow? How can I be a good citizen and apply my resources to help the community, using the goodwill generated to improve my image as a preferred vendor? How can I make people feel like I’m not just another person trying to sell them something, but actually a friend they trust and will feel loyalty toward?
- Will I need a website or can I just rely on Facebook to promote it?
- What sort of tone/voice will my social media marketing need to convey to best reach the kind of buyer(s) I am targeting?
- How much money will I be able to invest in advertising my business? How do I optimize my website so it ranks highly when someone on the Internet searches for the things I sell?
- If my business were to become a franchise, what rules and restrictions would I need to define in order to preserve the essence of what I’ve created?
- How and where do I find a keep good help who will reflect well on my company and be trustworthy?
- How do I best communicate my goals to employees and convince them to buy-in to my mission statement?
- What can I realistically do by myself? What can I affordably outsource to freelancers to do on my behalf?
These are the kinds of questions I ask during a branding brainstorm session with an entrepreneur client who wants to make certain he or she achieves clarity of vision.
I can appreciate anyone who is fired up and wanting to get to work building something cool, but the strategy should be put before execution so the processes involved will satisfy clearly-defined goals.
Asking the right questions — the hard questions — may produce answers we don’t want to hear. But knowing what you are walking into up-front reduces the likelihood of unwanted surprises.
As I listen to an entrepreneur articulating his or her idea, my mind is creating a mental inventory of the tools and strategies he or she can use to make things happen. I’m playing a bit of devil’s advocate and challenging them to consider possibilities they may be overlooking in their rush to get their exciting new idea started.
Learn more about the freelance services I offer through my digital marketing consultancy, Stiefel Creative. I’d love to put my skills and experience to work helping you build something to improve your future and enhance the community.