“Shark Tank” star, Kevin O’Leary, offers tips for entrepreneurs
March 13, 2017 8:00 am 2 Comments
In a recent USA Today supplement, “Shark Tank” star Kevin O’Leary offered five tips for aspiring entrepreneurs. He could just as easily have been talking about franchisees. Here are his points. I’ve taken the liberty of adding information of relevance to franchisees.
#1 Keep it simple
Successful franchises are almost always simple businesses. If a concept seems complicated, it probably is. You can quickly determine if a business is simple by attending the franchisor’s Discovery Day. If you leave confused, you know you need to keep searching for another opportunity.
#2 Pivot for success
Not every successful franchise brand makes sense for everyone. Sure, it looks easy – possibly even fun – to operate the business, but if you get the sense that you’re looking at the wrong type of business, stop. Pivot. Look for businesses that make sense for you.
#3 Count your coins
Buy what you can afford, although it’s okay to stretch a little. However, before you invest in a franchise, work with someone (another franchisee, for example) who can help you generate realistic revenue projections. The last thing you want to do is run out of money because it will be the last thing you do in your business.
#4 Know your competition
O’Leary says “an overly competitive space” is a huge negative. Many franchise concepts are trendy. Suddenly, you see copycat brands everywhere. A good franchisor will help you study the local marketplace before selling you a franchise. Make certain there’s a market waiting for your business.
#5 Master your emotions
O’Leary warns against allowing your emotions to make business decisions. Instead, he says, “let the numbers decide for you.” Enough said.
O’Leary’s advice can help any prospective franchisee. There are 3,000 to 4,000 different franchises to buy in North America. Most people look at fewer than a dozen concepts before they buy one.
Perhaps O’Leary would agree to add a sixth tip: Look at a dozen more before you make a purchase decision!
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This post was written by John Hayes
2 Comments
John,
Thanks for the article. One of the best I have seen of the thousands of articles on this topic. Short and sweet advice that gets to the point and makes sense. I felt compelled to comment as I am one of the few (I guess) that has taken the time to look at more than a dozen models (as O’Leary suggests), as I have not really found the right one when analyzing the numbers and realistic revenue and expense projections (net margin), also as O’Leary recommends. The issue is when I use these tips as my guiding light in evaluation, I often come to the similar conclusion that the potential financial performance is marginal at best (mostly home based models) and to really kill it means working excessive hours. Which to me, defeats the intent of why you partly want a franchise in the first place (lifestyle upgrade). And to make matters more difficult, most franchisors take offense to this evaluation approach as O’Leary advises, and label you as not being able to commit when the analysis shows the realistic ROI is probably much less than what they want you to believe (Item 19, etc). Anyways, if you get this, I would love to know your thoughts on my thoughts. Many thanks for the article. It basically validates how i have been doing my due diligence.
Wow! Reason why he is a millionaire today!