Every Profitable Franchise or Home Business Must Avoid This Mistake

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Author: David Kajganich

Article source: http://www.articledeshboard.com/. Used with author's permission.

You probably have heard that buying a franchise is really just buying a job. While that is generally inacurate, I do agree that it may be true in some cases. However, that is usually because the business was either not presented to the prospect properly or it was not set up to succeed from the very beginning. There are several factors you must consider to determine if you are buying a job, or if you are really on your way to operating a profitable franchise or home business.

The term break even point gets thrown around so much that it becomes part of our language without proper meaning. THIS HAS TO STOP. You are NOT in business to break even! You are in business to be profitable! The real hazard to the break even calculation is that most people do not do them properly! Most franchisees or home business owners do the basics. They take into consideration the loan expense, labor expense, cost of goods, rent or mortgage expense, training costs, etc. and then calculate the amount of sales needed to cover these costs. Then, that sales amount is compared to the rest of the company, chain or industry to determine if it is reasonably attainable. Unfortunately, what the franchisee does not realize is that the sales amount they are considering is too low. Too many times, a decision is based on that figure.

That is the wrong way to enter into a business. You should still take all of that into consideration and do a traditional break even analysis. However, there needs to be another step. You must establish, up front, the profit you expect to make to be satisfied that the opportunity is worth it. You must consider ALL of your risk, short and long term liability exposure and your investment costs. Then, it is absolutely critical that you put your expected profit amount into your break even calculation. In a lot of businesses, this will dramatically change the amount of sales you will need to generate to meet your NEW break even point, which now includes YOUR PROFIT! It may cause you to look at the opportunity differently, more realistically and with more scrutiny.

You need to make sure YOU get paid first, and that does not mean a salary. If you are only looking at your business from a standpoint of what you need to generate to meet your expenses, you are setting your sights too low. Is your goal really to operate your business at a break even level? Operating a business at or near break even is excruciating and difficult. You MUST analyze your business opportunity and add YOUR PROFIT into your break even analysis. It is the only way to determine if the opportunity can meet your income expectation.

I urge you to make sure you do this when analyzing every opportunity you consider to make sure it is truly a profitable franchise or home business opportunity. If you find that the amount of sales you now must generate are out of line with the concept you are looking at, then you are probably looking at buying a job, one with very high risk and the potential for not being profitable at all.

A successful entrepreneur and franchisee for over 16 years, David Kajganich continually seeks lucrative opportunities that are in the early stages of success. This has led him to the direct sales and network marketing industry, where without the high risk and costs of most businesses, the income potential is tremendous and the opportunity is available to all. A company with true vision and tremendous income potential has emerged. Your future awaits! www.NoFranchiseNeeded.com