Based on proven business models, franchises offer potential business owners considerably less risk when it comes to starting up a small business. Statistics indicate that in general 80% of all SMEs fail in the first two years.
It is common knowledge that the failure rate in the franchise sector is normally only between 5% and 11% at worst during recessions, which is relatively low compared to many other industries. It is not surprising that many budding entrepreneurs continue to invest in this booming sector of the market.
In 2012 the growth rate in the franchise industry was 21% and with the recent emergence of global players such as Burger King, Domino’s Pizza and Pizza Hut, the prospects for the sector are even rosier.
However, even these lower risk business ventures come with challenges and even with the support of a franchisor, owning your own business is not for everyone. So what exactly does it take to succeed as a franchisee in South Africa?
Having worked with successful entrepreneurs and franchisees and kept abreast of research findings over the past five decades, there are in my opinion definite character traits that successful franchisees and entrepreneurs exhibit. The only differentiator is that while franchisees are happy to follow models and take instruction, this is not the case for entrepreneurs.
Rather than follow predetermined processes and strategies, entrepreneurs are determined to do things on their own terms. They tend to be fiercely independent and unwilling to compromise. If this describes you, the franchise route may not be for you.
Being aware of the general character traits of a franchisee can be extremely helpful when deciding whether you’re cut out to be one, or highlight possible areas or weaknesses you may need to work on.
Research and talk to the experts
Given South Africa’s unique local culture and market conditions, referring to locally conducted research is often most useful. One research paper in particular identifies the four most developed entrepreneurial traits that, I believe, are shared by franchisees in South Africa as:
- Competing against self-imposed standards
- Dealing with failure
- Drive and energy levels
- Goal-setting and perseverance.
And while my list is more comprehensive, my top traits are:
- A burning desire to succeed
- Courage of your own convictions
- The ability to convincingly sell your ideas or products to others
- Creative / innovative
- Have integrity
- A dominant character
- Strong leader
- Able to take the good with the bad
- Able to sniff out market gaps and take the initiative to do something about it.
In my experience if you have a high incidence of the above-mentioned characteristics, then you can feel reasonably confident that you have the right kind of disposition to succeed as a franchisee owner.
Listen to your inner voice of reason
However, conducting this exercise requires objectivity and honesty. If you have a very low incidence of these character traits, then think twice, you may not be cut out to be a franchisee.
Work on your weaknesses
The good news is that scoring on the low side does not mean the end of the road. Instead of putting your dreams on hold, assess both your strengths and weaknesses and develop and commit to your own improvement plan. Remember success in any venture takes hard work.