In 2010, The Boston Consulting Group evaluated the internet’s effect on the economy of the top 20 global economies.
The UK topped the list, with the internet accounting for 8.3% of the country’s GDP. Internet businesses are thus proving a popular type of franchise opportunity.
We asked online franchise owners what it takes to successfully run a business in this sector, so that potential franchisees can determine whether they are suited to internet businesses and, if they are, how best to run a franchise.
James Gough joined Martin & Co as one of the letting agency’s first raft of online agents, while Michael Malloy opted for the traditional office-based route. We asked James, Michael and the company’s MD, Ian Wilson, to give their tips for success.
An opening for an online business involved less capital outlay and made it a much more viable business for me
James Gough, Martin & Co home-based franchisee
FranchiseSales.com: James, Why are you running an online franchise and not a small business?
James Gough: Firstly, the lower investment cost. I wasn’t originally going down the franchise route because I thought the start-up costs were too high.
However, an opening for an online business involved less capital outlay and made it a much more viable business for me.
FS: What type of person makes an ideal franchisee?
Ian Wilson: I have found that true entrepreneurs do not join franchises as they are pig-headed and are going to do their own thing come what may.
And Joe Average does not want to run a franchise either. They just turn up every day and collect their pension at the end.
The ideal person to run a franchise is the person in the middle. They have ambition; they want something that they don’t yet have and they’re going to reach for it, but they want help as well, and they can obtain support from a franchisor.
FS: How did you make sure Martin & Co was a sensible career move?
JG: I talked to other franchisees in my surrounding area. I recommend potential franchisees should ask other franchisees about their business, to see how it is going.
Always talk to the people who have just gone through the franchise process and are having a harder time and see if the franchisor is there for those people.
FS: How about tips for running a franchise?
Michael Malloy: Franchisees must work in the business, at least at the beginning; they can then subsequently bring in people to work for them.
People think that this is a ready-made business and that you can go straight in and start making money, but that isn’t the case. You are your own boss, ultimately, so if you don’t put in the hours, you aren’t going to make the money. It takes a lot of self-discipline.
You need to look at your website’s Adwords, the [quality of] the website itself and your franchisor’s SEO strategy. Unless the franchisor is supporting you in the first year, frankly it is going to fail. You need to be straight to the top of Google and you need to be noticed.
FS: What’s it like working from home as an online franchise owner, James?
JG: Working from home online creates issues. My wife expects me to be a full-time house-worker when I am trying to run a business, but in turn the flexibility that working from home provides is really helpful.
For example, I can work all hours and it doesn’t feel that bad at all, although it can be quite disorientating not having other people around.
FS: Is there a risk of cabin fever when you run an online business?
JG: Not with my business, as you are out and about at meetings and people are always calling. You won’t just sit at home, although I find myself being overly talkative during viewings!
FS: Do you have an exit strategy?
JG: I have made a long-term plan, as I certainly do not want to exit this business in five years. Although I am online at the moment I do intend to move to an office when my cash flow will support it, as I don’t currently want to strain the business too much.
For example, I will start with an initial office, but I think my territory could support multiple offices.