New business startup and franchising

New business startup and franchising

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Turn7

Original Poster:

23,498 posts

220 months

Friday 25th July 2014
quotequote all
Im considering going solo after too many years working for other people.

Is there a single resource that will help me understand what I need to know about running my own business ?
I appreciate thats an open question, but Im pretty savyy on the day to day stuff, its more the rules and regs and vat type stuff Im poor on.

Also, whats th considered opinion on buying a franchise as startup ?


Eric Mc

121,768 posts

264 months

Friday 25th July 2014
quotequote all
Talk to an accountant.

Turn7

Original Poster:

23,498 posts

220 months

Friday 25th July 2014
quotequote all
Pretty sage advice I would agree.

Any more basic points or pitfalls ?

Thankyou4calling

10,595 posts

172 months

Friday 25th July 2014
quotequote all
What business are you considering going into. I'm involved in franchising.

singlecoil

33,307 posts

245 months

Friday 25th July 2014
quotequote all
Turn7 said:
Also, whats the considered opinion on buying a franchise as startup ?
The ones worth having are viciously expensive (but worth it).

Turn7

Original Poster:

23,498 posts

220 months

Friday 25th July 2014
quotequote all
singlecoil said:
The ones worth having are viciously expensive (but worth it).
£20K sound too much ?

IATM

3,778 posts

146 months

Saturday 26th July 2014
quotequote all
Turn7 said:
singlecoil said:
The ones worth having are viciously expensive (but worth it).
£20K sound too much ?
I might be wrong but from the last time I checked you are talking a lot more than that.

Turn7

Original Poster:

23,498 posts

220 months

Saturday 26th July 2014
quotequote all
One I'm looking at,but is not set in stone,is Riverford organic veg boxes.

Cost is just under £20k

VEX

5,256 posts

245 months

Saturday 26th July 2014
quotequote all
I think there is a reason it is that cheap.

Show of hands who's heard of them?

Not me.

V.

Turn7

Original Poster:

23,498 posts

220 months

Saturday 26th July 2014
quotequote all
One swallow does not make a summer.

There's an existing area for sale at 19.5k . Been running for 2 years and current turnover is 175k.

I don't currently know the profit involved.

I believe there has been and is a backlash against the supers and people are prepared to pay for a genuinely better product.
And have that product on the doorstep.

bga

8,134 posts

250 months

Saturday 26th July 2014
quotequote all
VEX said:
I think there is a reason it is that cheap.

Show of hands who's heard of them?

Not me.

V.
Yes. I know lots of people who get their boxes. I'm about 2 miles from Riverford right now. They are much better than Abel & Cole IMO.

singlecoil

33,307 posts

245 months

Saturday 26th July 2014
quotequote all
Turn7 said:
I don't currently know the profit involved.
I daresay you are taking steps to find out. When you do you will also want to know every other important aspect before making a decision. Taking the books to an accountant would probably be a good idea too.

Thankyou4calling

10,595 posts

172 months

Saturday 26th July 2014
quotequote all
Without knowing the profit on the 175k turnover it's impossible to say if the price is right.

Most businesses sell on a multiple of annual profit, between 3 and 10 times depending on, ie if net profit is 20k the selling price would be between 60 and 200.

So, get three years accounts ( if available) and go from there.


LooneyTunes

6,780 posts

157 months

Sunday 27th July 2014
quotequote all
Turn7 said:
I believe there has been and is a backlash against the supers and people are prepared to pay for a genuinely better product.
And have that product on the doorstep.
What makes you believe that? General "yeah, supermarkets, hate 'em" sentiment is worth much less than people actually parting with their cold hard cash.

And what makes you believe that a "box" is the way forward? Not a representative sample (obviously) but whilst I pay to have some food products delivered I have never ordered someone else's selection.

If it's an established area then well worth asking about retention rates and the such like (with it being a perishable good, it's easy to see people thinking it's a good idea and then cancelling a month or two later if they don't get through it (unlike wine clubs where people will just keep the stuff in stock)). There's a big difference running a business with loyal, long term, customers vs one where you're facing lots of "churn" (especially if the pool of potential customers is limited).

As a quick sense check, try to understand the split between delivery fee, product cost, and average order value and then do the maths on:
1) Number of boxes you'd need to deliver for the sort of revenue + profit you're looking for; and
2) Average profit per order and per customer; and
3) What happens if business grows / declines by say 5 / 10 / 25% (especially as you'll be loaded with fixed franchise costs).

Then ask yourself why an existing area is available after just two years. Would you be selling up and exiting if it was going well?

If it still look good then worth exploring further but there's not a lot of work to do ^^^ to see if it's worth looking into in more detail.

Turn7

Original Poster:

23,498 posts

220 months

Sunday 27th July 2014
quotequote all
Thanks,some good info there.

This is very early doors right now ,and if I went with Riverfood,I would have my own new area- I inly quoted the area for sale to put some figures on the board.


BoRED S2upid

19,641 posts

239 months

Monday 28th July 2014
quotequote all
Turn7 said:
Thanks,some good info there.

This is very early doors right now ,and if I went with Riverfood,I would have my own new area- I inly quoted the area for sale to put some figures on the board.
I'm sure you would know the area and not just be given it at random but it's still worth doing some research into it some stats on income per household, average price of a house etc... Would be worth having.

Veg boxes are only going to be bought by your upper middle class types a lot wouldn't consider it.

singlecoil

33,307 posts

245 months

Monday 28th July 2014
quotequote all
The veg box idea strikes me as one where a lot of people would try it out, but get fed up with it after a while, the chances of their weekly consumption being closely matched to the box contents are quite low, with either wastage or top-up shopping trips being required.

I would advise anyone thinking of taking over an area (I know the OP is not) to check that sales have not gone into a recent decline (which isn't yet showing up in the figures).

markcoznottz

7,155 posts

223 months

Monday 28th July 2014
quotequote all
Turn7 said:
Thanks,some good info there.

This is very early doors right now ,and if I went with Riverfood,I would have my own new area- I inly quoted the area for sale to put some figures on the board.
The only franchise worth bothering with is one which is very well known. Mcd's is a license to print money and seems totally recession proof, but finding out what each franchisee makes in ROI is like penetrating the NSA. It's not a given for success because some burger kings are really struggling.

Frimley111R

15,533 posts

233 months

Tuesday 29th July 2014
quotequote all
From my experience:

1. How long has that franchise been running? New franchises can change hugely in the initial years and you don't want to be a guinea pig. Why are the current franshisees selling? (Also ask other existing ones). Brand names are only worth anything generally if everyone in the sector or general market knows them and they are associated with quality and service.

2. Beware of businesses doing something which flies in the face of the way most people buy. The theory of boxes of vegetables seems great but as said above, 99.9% of people buy from supermarkets for a host of excellent reasons. If you think there's about to be a seismic shift in the way people do things/buy things then great but I don't think this is. Half or more of your challenge will be simply changing people's buying habits and way of thinking. You've got enough on your plate (sorry) without trying to do that.

3. Have a look around. There are large numbers of businesses for sale on various websites. Think about what you could see yourself doing if you were to start on Monday morning, what would your week be like, what if you were ill or were on hols?