Understanding Your Biggest Fixed Business Expense

Posted by Jim Otto

fixedexpense.jpgIn franchising a lot of time and effort goes into researching the best opportunity. If the franchise system that you are looking at has at least some track record and history of performance, you'll discover on close examination that they'll have over performing locations, average performing locations, and under performing locations. The list of reasons that this happens is a mile long. But with "location" as usually being listed as one of the top reasons that a franchise fails, make sure that the franchise that you are buying into has a model for picking a location that has proven track record of increasing your chance for success. 
After you find a space, rent will almost always be one of your highest fixed expenses. So make sure that you sign a lease that is commiserate with the amount of revenue that your franchise produces. A simple rule of thumb is that the lower the margin on your good or service, the lower your lease payment should be. Lease payments on most businesses should be in the 10 to 15% range of revenue once the business has matured. Many franchises and businesses have failed because they were paying unreasonable rent, and unfortunately landlords are unsympathetic to business owners when it comes to obligations that you have assumed when signing a lease.
Shear Madness Franchising franchises Shear Madness Haircuts for Kids salons. We have worked with franchise stores in providing franchisee support (in order to encourage continual growth and franchise success), and have sometimes seen the unexpected happen! When it does, we help by identifying and helping with challenges that might arise for franchisees. Additionally, we work to present options that can help prevent these events as well. As many franchise owners may not have opened a business before, having someone who can advise them is a significant advantage of franchise ownership!

Are you interested in learning how YOU can join the Shear Madness Haircuts for Kids family and run your own successful small business? We are one of the fastest growing kids hair salons in the industry today! If you would like to learn more about this franchise opportunity or small business marketing, great marketing strategies, resources for small businesses, how to grow your small business or how to become a successful owner of your own kids hair salon franchise business, please click below or call 1-888-98 GONE MAD

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