Tuesday, March 29, 2005

A Book You Should Read

For all of you planning to buy a franchise, I think Thomas Sowell's book, "Basic Economics" should be Required Reading. He defines economics as the study of the use of scarce resources which have alternative uses.

Sowell explains that free market economies generally result in the best opportunities for the consumer as well as the most efficient use of resources. For Americans, this is great news–since we have the freest trading in the world and deregulation is making it even more open to trade with few restrictions.

He explains how most of the economy is not a zero-sum game; how exporting jobs brings more wealth to America thru increased stock prices and more jobs(often higher paying jobs) in industries where we excel--like banking, science, medicine & pharmaceuticals; and how a trade deficit is not a bad thing as most of us have been programmed to believe.

Why are homeless people sleeping on the sidewalks of New York City in the winter when abandoned apartment buildings in the city have four times as many dwelling units as there are homeless people in the city? Why are people hungry in Moscow when there are vast amounts of some of the richest farmland on the continent of Europe within easy driving distance?

Sowell addresses price controls and subsidies in detail, both as important political issues in their own right and to demonstrate how prices work by showing what happens when they are constrained. He covers a broad range of topics, from scarcity, the balance of trade, and price controls to minimum-wage laws, competition, profits and losses, and the role of government.

Sowell is clear & concise about a topic most of us don't fully understand but need to in order to vote more competently and manage our businesses and family finances.

Buy it now at Amazon:

Thursday, March 03, 2005

What's a Franchisee Do All Day?

As you're sitting at your computer dreaming of owning a franchise, are you carefully planning your future? Or are you about to make a disastrous mistake?

We often get calls from prospective buyers who ask "What's hot?"

My response is often "NASCAR and the World Wrestling Foundation! Do either of these interest you?"

It's amazing how quickly people connect with my belief that what's right for Jeff Gordon may not be right for you.

You may be sitting there evaluating franchise systems by how strong a demand there is for the product or service provided to customers. Currently, Tex-Mex restaurants are "hot" but if you have no restaurant experience and little experience managing entry level workers, you probably should stay clear of food services.

Home health care is another hot niche, with the longer life spans of seniors. However, if you were a top salesman in a business-to-business environment in your last life, you may not have the patience to assist those who are frail and forgetful.

If you're day dreaming about your future job making large bank deposits, trading cars and buying a home at the beach--YOU NEED TO SNAP OUT OF IT!!

Most franchisees report that they draw less money out of their business the first year than they did the last year they worked for someone else. Their rewards came in the later years.

More critical than how "hot" the market segment may be is how much you'll love your work. In franchise systems where the owner invests less than $250,000 to get started, the owner usually carries 80% of the burden for the company's early success on his or her shoulders. Enjoying your Job Description in the early years is critical, since you may be working 50, 60, or more hours a week.

Unfortunately, many franchise salesmen lead you into believing that preparing bank deposits, paying a few bills and coordinating employee schedules is all it takes to succeed. You must demand to know how franchisees spend their time in the early months of their unit and what they do as they mature. Write up a list of activities and assign amounts of time to each. Then call franchiees and get confirmation that this is accurate. Does this sound enjoyable to you?

If not, it's time to resume your search. For more help, check The Franchise Doctor's Website call us with a question (800 220-8256) or post one here.