Here are the Essential Steps to This Business Expansion
Many successful home business owners may wish to grow their thriving ventures in a number of ways as turnkey enterprises, dealers, vending machine suppliers, direct or network marketing companies, or through licensing. One of these expansion methods is packaging and selling their businesses as opportunities for other entrepreneurs to purchase; but not as franchises.
All franchises are business opportunities, but not all business opportunities are franchises. Licensed business opportunities differ from franchises in that they are generally more affordable to purchase; do not have royalty fees or operational fees; and are more flexible in their operations. Both structures, however, must adhere to specific regulations. (See “Resources.”)
Owners of franchises or business opportunities provide their buyers with varying levels of training and support to help them succeed.
If you are considering packaging your business into a purchasable opportunity, here are some essential steps you should consider:
Step One: Consider if your business model can be operated profitably by other people and in other locations.
If your business depends on a very specific region’s resources or is best-operated by only you, it obviously will not be operable elsewhere. Being reasonably-priced and having a type of product or service that is exceptional and increasing in demand across the country will also help improve its chances to appeal to prospective buyers and being profitable no matter where it is operated.
Step Two: Strategic planning is next: writing a business plan or business “blueprint,” for this expansion phase, similar to the first one you used to launch your existing business.
Often businesses fail when their owners expand too rapidly or without the right kind of planning. Consult with professionals who are experienced and qualified in assisting entrepreneurs in their businesses’ transitions into opportunities to help you build a solid footing for this type of growth. Ask for these experts’ referrals from successful business opportunity owners; members of associations in your industry; and-or the staff at local offices of governmental business development centers. (See “Resources.”)
If you think you might like to extend your venture into an opportunity or even a franchise, document all your procedures and business’ operational details now as you continue to run your business. It will help you later in providing the important details that buyers will follow to ensure them the same success you have achieved.
Step Three: Consider the legalities.In addition to local and state regulations you must follow, the Federal Trade Commission has rules for business opportunity and franchise owners (“See Resources”).
The FTC’s Business Opportunity Rule requires sellers of business opportunities to give potential buyers a one-page disclosure document. Educate yourself as to all the additional legalities involved with duplicating your business to create an opportunity and then hire legal experts to assist you. Their expertise will assist you in composing writing contracts and licensing agreements; registering in the states or provinces in which your opportunities will be running; and more. It is your responsibility to find out all you must do to fulfill your compliance obligations when offering a business opportunity.
Step Four: Calculate all your current operating expenses and then add the projected costs involved in making your business model saleable.
Realize that the financial costs of expanding into a business opportunity may cost as much, if not more than it did for you to start your business. First, consult with your financial experts to calculate and project if your opportunity will be profitable for you. This is extremely important in preventing you from financial downfall, especially if the figures reveal that it is not worth it to expand. Though you may be disappointed, it is better now to accept the reality of it not working on paper, than going ahead and losing everything, including the business you have now.
If the profitability potential is there, however, then add all the projected costs such as the attorney and registration fees, marketing and advertising campaigns, creating manuals and-or software, assembling equipment or packaging, training that might be involved, and any other expenses you might have to incur. Remember these costs will be in addition to your daily operating expenses of your present business.
Do not neglect this step and take your time to be sure to include all possible costs in your calculations. It will be extremely important in helping you decide if you can afford to grow into an opportunity; if it will be profitable for you; and if you can approach a lender for an expansion loan. Two recommended resources:
*SCORE.org also has helpful business online information, workshops, and a search capacity to find a local office near you.
Step Five: Decide how to launch and market your opportunity.
Before launching your opportunity, do a complete market research as to the publications, online sites, and other media outlets to which your potential buyers have access, so your marketing tactics will get the best responses. Many business magazines like Home Business Magazine® or the New York Times, and others have “Business Opportunities” advertising sections in which you can first advertise your opportunity; and include your web site’s URL for more information. Of course, use all the free social media venues as possible, too, to get the word out.
A well-written press release appearing in your target media outlets is one of the best promotional methods you can use to introduce your opportunity. Include photos with your release to enhance its appeal.
As your opportunities are purchased, encourage referrals and positive testimonials from satisfied buyers to increase your sales. Continue to keep your opportunity in the news through blogs and social events.
Step Six: Strive to stand out from your competitors.
Stay in contact with your buyers to help them succeed, and include their suggestions to improve your opportunity’s business model. Incorporate new industry and technological innovations and trends so your business operates efficiently and stays current.
For tips and encouragement, be sure to network information with other business opportunity owners through membership in your industry and opportunity associations. Their advice can help you avoid costly mistakes; plus you can exchange potential leads and practical ideas.
Experts say that expanding your venture into a business opportunity is actually like starting a new business altogether. Developing the ability to successfully direct and train others to operate your business model successfully; analyzing how to make your opportunity be accepted in different towns, states, or even other countries; and continually consulting with your professional experts to evaluate and monitor your opportunity’s operations and growth are just some of the new components and challenges you will face in creating an opportunity from your business.
It can be a daunting step, but for those who have successfully turned their home businesses into opportunities, they say they are gratified in giving others a more hopeful future doing work they choose and making money doing it. These business opportunity owners not only love their work, they want to see others achieve the same success and profits they have realized with their original home ventures.
If you are considering the possibility of increasing your venture this way, consult with knowledgeable experts,** being sure to take adequate time to consider all the pluses and minuses of going in this direction. Your findings might just reveal that your home business is ready to be the next “golden” opportunity for many other entrepreneurs.
**This article consists of general business information. Consult with business, financial, and legal professionals knowledgeable in your industry concerning any major business ventures you may undertake. HBM