Evaluating Potential For Franchise Profit
As you go into business for yourself, one question is likely to weigh on your mind above all: what's the profit likely to be? While it just isn't possible to ever be certain of what the return will be on any investment, there are always steps that you can take to maximize your chances of being successful in stable industries like the tax preparation business and in more volatile and unproven investments like startups as well.
Check Industry History
If it's an established industry, you should be able to look back historically and see how it has fared. Keep in mind that immediate records aren't necessarily the best to cross-reference. Economic conditions may be at fault for poor performance; a seeming dip during a serious economic downturn might actually be an indicator of strength if performance was better than the average elsewhere. If you're working with specific companies like Jackson Hewitt, H&R Block, or Liberty Tax, franchise profit information from their current locations might be available.
Consider The Current Economy
A depression or recession is simultaneously risky and full of potential for a new venture. If you hit it exactly right, you can get everything set up at the lower prices available, and then take advantage of the upturn to take off. But if you time it wrong and take too many risks, you could end up suffering from the turmoil. The key is to position yourself just right, or to have enough careful planning that it isn't a problem for you to experience slower than normal growth at the beginning.
Investment Vs. Expected Return
Keep in mind that pure profit isn't the only factor. You could be making thousands a day, but if your initial outlay doesn't balance it out, you're not going to get the returns you're hoping for. That's why it is important to do a classic cost-benefit analysis. How much are you going to invest? How much do you expect to get back? How long before the business really takes off? Of course it's never possible to guarantee any of this information, but the more research you do, the more likely you are to have a more accurate estimate.
Never trust any company that tries to guarantee you a certain return. The more reliable ones won't do it because they know that franchise profit can be variable and depends on a number of factors, including ones that are beyond anyone's control. All that you can do is complete your research and get as much information as possible to make an informed choice.
Check Industry History
If it's an established industry, you should be able to look back historically and see how it has fared. Keep in mind that immediate records aren't necessarily the best to cross-reference. Economic conditions may be at fault for poor performance; a seeming dip during a serious economic downturn might actually be an indicator of strength if performance was better than the average elsewhere. If you're working with specific companies like Jackson Hewitt, H&R Block, or Liberty Tax, franchise profit information from their current locations might be available.
Consider The Current Economy
A depression or recession is simultaneously risky and full of potential for a new venture. If you hit it exactly right, you can get everything set up at the lower prices available, and then take advantage of the upturn to take off. But if you time it wrong and take too many risks, you could end up suffering from the turmoil. The key is to position yourself just right, or to have enough careful planning that it isn't a problem for you to experience slower than normal growth at the beginning.
Investment Vs. Expected Return
Keep in mind that pure profit isn't the only factor. You could be making thousands a day, but if your initial outlay doesn't balance it out, you're not going to get the returns you're hoping for. That's why it is important to do a classic cost-benefit analysis. How much are you going to invest? How much do you expect to get back? How long before the business really takes off? Of course it's never possible to guarantee any of this information, but the more research you do, the more likely you are to have a more accurate estimate.
Never trust any company that tries to guarantee you a certain return. The more reliable ones won't do it because they know that franchise profit can be variable and depends on a number of factors, including ones that are beyond anyone's control. All that you can do is complete your research and get as much information as possible to make an informed choice.
