There are reasons why businesses fail in the first 5 years and why franchises succeed. It all boils down to one important reason: What is your system for properly servicing people?
Servicing people might look like a simple aspect of the industry but it is the very foundation of your business. It is critical for owners, may it be a start-up business or franchise, to know the level of service they are providing to their customers.
Why do businesses fail?
All people know that starting up a business is very hard. Why? Because you are starting from scratch to build up your business. From start to end, you need to organize and systematize everything, which can be quite the hassle.
Running a business is not for the faint of heart or people who crumble easily. Entrepreneurship is essentially risky, successful business owners must possess the ability to reduce specific risks while simultaneously bringing a product or service to market at a price point that meets the consumer’s demands.
These factors can make or break your business. If you cannot properly set up the business, you will fail before you know it. Even though there are skeletal models for your business, there are still a lot to consider. These steps are very vital as it will determine the success or downfall of it.
Why do franchises succeed?
Why are franchises more likely to succeed than starting up a business? It is because there is already a working system specifically made for the business. It has been stable and can continue running successfully even with a different management.
That is the big difference between a business and a franchise; both can be successful, but there is a higher margin of success for franchises to do better.
It is a proven idea that franchises have a higher rate of success in comparison to a startup business because the amount of success has already been achieved by the one who franchised, we also have high-brand awareness, and the organizational system has successfully been accomplished.
Instead of starting from scratch, you are just continuing the already working system and incorporating your provisions in the business.
These are some of the reasons why almost 80% of businesses fail and 75% of franchises succeed. You need a clear sense on what are the risks you are willing to take and what are the pros and cons of each one to determine what kind of business you are going to start.