Timing, as it is so often said, is everything. The common saying is a simple way of expressing the idea that our actions almost always reflect the conditions in which they occur, and that sometimes those conditions are favourable while sometimes they’re not.
The timing of actions and events is important in nearly every sphere of life but especially so in business, where external conditions are constantly changing, often with big implications for a company’s bottom line.
Timing is also an important consideration for those contemplating a new franchise business. When evaluating a potential franchise investment, it’s vital to assess the relevant conditions and factors that will impact the opportunity not only as you prepare to launch (or acquire an existing business), but also into the years ahead.
What are some of the factors that, depending on the timing, could affect an investment into a franchise business? Let’s take a look at a few of the most common ones.
Interest rates
The cost of borrowing money is an important factor for business at every stage of life, whether they’re just starting out or have been operating for decades.
Various external factors well beyond the control of any individual business owner will change interest rates and drive the cost of borrowing up and down over time but benefitting from a period of low rates can incentivize borrowing for new initiatives while also taking years off the time required to pay back loans.
You can’t control interest rates, but you should always follow advice and trends, staying watchful for opportunities to time your borrowing on more favourable terms.
The overall economy
Interest rates tend to be something of a reflection of the broader economic situation. Rates go up and down to limit inflation or stimulate borrowing and spending, depending on the kinds of outcomes a central bank hopes to achieve.
However, interest rates are still just one of many measures of the overall economic situation at any one time, alongside government policy, unemployment, consumer confidence, housing affordability and a host of other indicators. If you’re looking into a new business opportunity, take the time to consider how any one of these factors, or other economic conditions, could impact the success of your investment.
Industry trends
What does the competitive landscape currently look like in the industry you’re considering? Perhaps franchises in this sector are enjoying a wave of popularity and sales are on the rise. But beware of trends and saturation, when a bunch of similar businesses all set up shop at the same time and crowd the market and make it hard for individuals to stand out. If competition is running hot right now, maybe you’re better off looking for a model that’s more unique.
The real estate market
If the franchise business you’re considering operates out of a brick and mortar building, the price of real estate is going to have a major impact on your costs. Buying or renting real estate is an expensive undertaking, and the best locations typically come with prices that reflect their desirability. Real estate costs, both purchases and rentals, have tended to show steady growth over time, but some periods bring higher demand and increased competition for the most attractive locations. If at all possible, avoid buying when the cost of borrowing is elevated, or when prices are on the rise because of a hot market.
Your personal situation
Time of life is another factor worth thinking about when assessing the merits of a franchise investment opportunity. Are you young and eager, ready to work long hours in pursuit of your goals? Perhaps you have a new partner, or recently became a new parent. What kind of impact might that major change have on your work-life balance as a franchise owner? Or maybe you’re in a mid-life stage or later, with grown-up kids and ample free time to devote to a new passion.
We can’t change the stage of life we’re in. Nevertheless, it’s certainly worth being aware of how those circumstances could impact your franchise investment.
Franchising with The UPS Store
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