The 2020’s saw a significant change in the way we live and the way we do business and it got me thinking about how this has impacted franchising. The phrase 20:20 hindsight is relevant to the new world we are experiencing. This expression comes from the way people describe good vision. A person with normal, good vision has 20/20 sight. Whilst 20:20 Hindsight is an understanding of a past event and how that impacts on decisions made in the future.
This is particularly relevant when it comes to people’s ability to make decisions about going into business. It’s the combination of being able to look forward with clear vision of what is possible whilst looking back and learning from what has happened before.
We have launched over 40 franchise brands in the past 18 months, and we currently assist over 20 franchisors directly recruit franchisees and we support more than 40 franchisors complete their own recruitment, so I feel we have a unique insight and perspective on the market.
We have seen real estate values skyrocket creating asset rich individuals that are now contemplating what’s next for them, do they semi-retire, retire, stay where they are or do something for themselves with their newfound wealth and this is where they may be considering buying their own business or joining a franchise.
On the flip side we are seeing continuing global uncertainty with higher interest rates, high inflation and global conflicts affecting consumer confidence and ultimately people’s decision-making process.
Here’s what we’re seeing as a result of all of this:
Enquiry rates for franchising have never been higher but decision-making is taking much longer.
This got me thinking, why are people taking longer to make decisions, I realise there are many reasons for this, but I would like to focus on one, Risk which remains relevant in any market.
I sometimes ask myself –Why would anyone go into business?
It takes guts, and it’s all about risk. I believe there are ‘risk-seekers’ and ‘risk-tolerators’. All business owners are risk takers, and while you must be, the key is the calculated risk.
It might sound a little irresponsible to term business owners as risk-seekers because no one should actively seek risk. But there is an inevitability associated with business ownership that involves risk, and some business owners are more comfortable with risk.
Risk-seekers derive excitement from uncertainty. Have you ever driven your car around on empty when you could have just as easily filled up earlier? Do you ever schedule that extra meeting, when in reality there is no possible way you can fit it in? Heaven forbid you might have even run late for a flight or missed one completely, or dare I say it, been late for a meeting.
There’s a pretty strong chance that if you’re a risk-seeker, you like the adrenaline rush. You’ve probably driven too fast, bungee jumped, skydived, been around wild animals, or partaken in other adrenaline junkie type activity.
Risk-tolerators do not necessarily see it as risk. They pursue their goals by understanding, accepting, managing the inherent risks of the decisions that they make.
I have had partners in four of my businesses. I should probably start of by sharing with you that I am a risk-seeker, but I would only classify myself as mid-level and by no means extreme.
This may not be indicative of every business situation, but two of my business partners have been risk-tolerators, and coincidentally, they have both had excellent businesses that have been very financially rewarding. My other two business partners were probably more like me, and while the partnership was fun, it was nowhere near as profitable as it could have been.
The risk tolerant business owner spends more time analysing, understanding, and assessing the risks at hand, learning how best to mitigate them. These risk-tolerant individuals confront fear not with the risk-seeker’s optimism, but with thoughtful analysis, management, and self-awareness techniques.
As an entrepreneur and business owner, you will likely have to deal with some failure. It may be small, like a bad product launch or the risk you took bringing in a key employee who didn’t quite measure up, or it could in fact be business failure.
How to Be Gutsy
Guts give business builders the courage to make things happen, stick with it, and remain confident no matter the impediments they may face.
Guts-driven entrepreneurs aren’t fearless; they just know how to cope with, and maybe even thrive in, uncomfortable environments. They’re the same people who crammed for their exams the night before, and often they thrived in high pressure situations.
Recognise that you already have guts, in that you’re already in business or contemplating going into business; that takes guts.
The guts to endure lets us recognise that failure is not an option, but rather a reality. It’s about remaining strong and resolute; persevere in the short-term to realise your longer-term goals. You will experience failure. Expect it, relish it, and learn from it.
And for those who are risk-seekers, try to take on characteristics of the risk tolerators, or consider getting one of them to join you in your business. Partnerships aren’t easy, but they provide balance and discipline that often the risk-seeker lacks but so desperately needs.
“If you’re not a risk taker, you should get the hell out of business.”
“Take calculated risks. Act boldly and thoughtfully.”
—Ray Kroc – McDonald’s
Traditionally, when people refer to ‘guts’ in business they refer to the courage to make decisions. I want to extend on that to one other meaning as it relates to franchising.
1. Gut Feeling
Have you ever had a feeling in your gut, or felt that something just didn’t feel quiet, right? This is referred to as intuition, a combination of our experiences, instinct, and senses.
Sometimes when you meet someone for the first time, you instinctively sense whether you can trust that person or not.
It has been said that women have better intuition than men, but all of us experience intuition or have those ‘gut feelings’.
Every time that I have felt something is not quite right or seems too good to be true, my intuition or ‘gut feeling’ has proven to be right. Sometimes, I have gone with my gut feeling, and other times I have not.
I believe the situation that you’re in influences whether you make decisions rationally or emotionally. Don’t get me wrong when I say emotionally, because that gives the impression that this may be a bad attribute. Sometimes your emotions just make sense, and you should go with them.
I think I’m a good judge of character, but I am also characterised by extreme optimism. I tend to see the best in people and am quite trusting, but at times I haven’t trusted myself and gone with my gut feeling. I’ve given people or situations the benefit of the doubt.
What I’ve recognised is, when I’m stressed or a little desperate, I can make bad decisions. When I’m under duress, I tend not to be as intuitive, and this is probably the time to be more rational.
I believe we need to trust our gut and use our intuition more, but we need to make sure we do it in times where we have a clear mind, free from stress. If you’re under pressure, don’t dismiss your intuition, but balance it with being more analytical.
Trust your gut instinct; it will usually be right.
Take these two principles into your decision making when it comes to going into business. We know that 1 in 5 independent businesses will fail in the first year and as much as 80% of these will fail in the first 5 years, when you compare that to the success in Franchising with a global success rate between 85-95%.
Based on those statistics franchising just makes sense but use your intuition, do your homework, and make a considered decision based on research and free from emotion. I always say, “Don’t fall in love with a business, fall in love with the business model”.
I have to confide, if you haven’t gathered already, I love franchising, I believe in it, it works.
I speak with some experience as I am currently invested in 6 different franchise businesses and looking at others as I write this article, I don’t just Talk the Talk, I Walk the Talk, because I believe in the power and effectiveness of franchising, I also get to have a close look at them through the work we do.
Not every franchise will be right for you but there is a ‘right’ franchise for everyone, you just need to do your research and trust your gut.