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Hobby Store Franchises?

Old 03-09-2008, 07:43 AM
  #26  
Rabbitcreekok
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Originally Posted by Lieutenant Loughead View Post
I'm really not interested in the RC Hobbies name. I'm interested in them telling me what I should stock on opening day, and how much I should charge for the merchendise. I know very little about cars and boats.

Both franchises (RC Hobbies and Hobby Town USA) restrict the hobby shop owner from setting up their own web site. However, they both allow you to use their corporate web sites for your store web presence.

For those interested, the franchise fee is about $15,000 (includes lease negotiation, which could save me $11,000 in setup costs). The royalty fee is 3% for HTUSA, and 2.5% for RCH. Both franchises say their negotiations with the distributors will save you more than their royalty fees cost. (Yes, this could be smoke and mirrors -- who knows?)
Most vendors such as Horizon or Great Planes etc, tell you what you MUST charge for their products, or at least what prices you can advertise. They are very touchy in that respect. Call the Horizon number for potential hobby shop owners and mine that area. See if the franchises can save you money. You will have to carry the major brands and you can do it on your own if you wish.

If you have unique ideas, not being able to sell online could hurt your potential business.

Service is probably one of the best ways to compete in Tulsa. Tom does not offer much service and Hobbytown USA seems knowledgeable about RC Cars but not planes.

Also remember that two shops have closed in the last few years. Wings & Things was a pretty big deal but I think their service attitude did them in.

Check out Atlanta Hobby as an example of what I believe is a successful operation. I know Mike Parsons will agree.
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Old 03-09-2008, 12:25 PM
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Old 03-09-2008, 01:10 PM
  #28  
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Old 03-09-2008, 01:15 PM
  #29  
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Guy,

Sounds like you are going ahead with this plan; correct?

Very cool. I've never known anyone that started their own hobby shop. Only have known people retiring from owning their own hobby shop.

Interesting stuff. Keep us posted on progress please. Have you located a building yet? How big is it going to be? Will you just be selling RC planes or the whole gambit or hobby type stuff?

Frank
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Old 03-09-2008, 04:51 PM
  #30  
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Good luck with your new venture.

If I were to offer any pearls of wisedom it would be these. They are based on 28 years in the hobby, living and shopping at LHS in CA,NV,MA,VT and FL, and even working at a hobby shop when I was in my teens.

Your personality and that of your staff is the biggest asset or liability. The biggest difference between a bricks and mortar store and the internet is the human interaction that can only come from shopping at a local store. Check out the many threads here and on ezone about hobby shops and the one common thing is that someone at the store upset the customer. A great attitude can overcome many other negatives.

The second issue that some LHS fall into is bias. Since your here, I assume you like electrics. Don't overlook the glow/gas guys, the chopper guys, the car guys etc. It's easy to do and I've seen it all too often. Unless your in a large city, you'll need all these folks to make a go of it. Talk to the local clubs and check with the AMA for clubs in your area.

Third is to keep your overhead low. We just had a start up LHS close it's doors. He had decided to open in a popular strip mall to generate walk in business. It killed him. If you get your name out to the local clubs, they will drive to you. If someone off the street needs supplies, they'll look you up in the yellow pages. Some of the most sucessful shops were in the most out of the way places.

Stock the basics. No one will expect you to have all of the lastest kits but they will expect you to have at least the following:

fuel, glue, props (both gas and glow), covering material (stick with one brand and try to stock most of the colors, even if it means only having one roll), hardware, replacement parts for the cars and heli's you choose to stock, rubber bands for wings, fuel tubing and fuel tanks. Think about carrying modeling magizines. I know guys that will drive to the shop just for those alone.

There is nothing worse than driving to the hobby shop and not finding the basics. While everyone will special order stuff, your competing with mail order. If you have to special order, why won't the customer just order on-line and have it delivered to his door.

Hope this helps.

John
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Old 03-09-2008, 05:15 PM
  #31  
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One thing I find very lacking in most hobby shops is a decent line of paints and building supplies. Most of the time it's a small, half empty rack of out dated bottles. Maybe it's because most people are going to ARFs and don't paint but I know I sure look for them.

Just yesterday, I was talking to the manager at one of our local hobby shops. I asked him why they didn't carry more kits like the GWS line and others. He said they used to but they just don't sell anymore (at least in our town). He said the majority of people don't have or want to spend the time to build so it was an unprofitable line to carry. I will say, he is very good about ordering virtually anything I need and his prices are very competitive with on line shopping if you include what you would pay for shipping.

What John said above is dead on with personalities. LL, do you remember the conversation we had about one of your local shops and how he would get upset if you even mentioned on line shopping? Whether he likes it or not, he better accept the fact that on line shopping is here and going to get bigger so he needs to work it to his advantage and not stick his head in the sand. Don't forget the credit card purchases too.
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Old 03-09-2008, 05:21 PM
  #32  
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Originally Posted by jonnyjetprop View Post

Your personality and that of your staff is the biggest asset...
Oh my, that's gonna be a problem. :p

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Old 03-09-2008, 05:44 PM
  #33  
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"Well, I saw this online for $5 less....."

Remember that Tom? (OK I know we DIDN'T say it to that guy, but you know we both WANTED to....)
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Old 03-09-2008, 06:12 PM
  #34  
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LL, don't forget location. It never hurts to have a Wiggling Weenie next door either.

For the non Tulsa people, this was right across the parking lot from the LHS.
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Old 03-09-2008, 06:15 PM
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It's too bad we didn't eat there......I blame James...he suggested Wendy's.....

LL, instead of a spa, I would have a restaurant in your store. Yeah, that's what I would do.
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Old 03-10-2008, 02:48 AM
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Old 03-10-2008, 02:52 AM
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Old 03-10-2008, 03:05 AM
  #38  
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He also doesn't sling poo at his customers either....
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Old 03-10-2008, 03:23 AM
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Old 03-10-2008, 07:34 AM
  #40  
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Originally Posted by jonnyjetprop View Post
Some of the most sucessful shops were in the most out of the way places.
You couldn't find a more out of the way place than Hodges Hobbies. On a farm, off a county highway, at least a couple miles off a state highway, & as far as I know they do no advertising! But as Monkey so eloquently stated, in a nutshell I think it's the atmosphere. It's just about the coolest place to hang out if you're in the hobby. Heck, I even asked Mac what fragrance plug in air freshener he used in the restrooms & went & bought it for my business (recording studio) just to make me feel as if I were there! You know the power of smell. With a place like that, word of mouth spreads like wildfire.

I live over an hour away, that's 70 miles in this rural area, & don't get over there nearly as often as I'd like. But even when I've hung around there on weekdays & no event times, there's almost a steady stream of people driving from who knows where just to pick up some things, both big & small. Also, UPS trucks coming & going quite regularly, & that tells you something.

If people hang out around there they're bound to spend some money. I know with many businesses people say that location is everything, but I think Hodges Hobbies is a prime example that location might have absolutely nothing to do with the succes of a hobby shop. Then again, maybe the location in this case IS everything, as I'm sure that Hodges Hobbies could never be anywhere near what it is sitting in town or in a mall!

I wish you the best Lieutenant Loughead!

Again Monkey, as always, well said!
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Old 03-10-2008, 10:17 AM
  #41  
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I'm selling the house and moving to GA.

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Old 03-10-2008, 10:46 AM
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Old 03-10-2008, 11:12 AM
  #43  
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Yes, a place to fly/mingle/meet first and a store second. That just might be the ticket.

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Old 03-10-2008, 04:03 PM
  #44  
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Default I think I might start a FAQ -- some of these discussions are being repeated...

Originally Posted by Rabbitcreekok View Post
Most vendors such as Horizon or Great Planes etc, tell you what you MUST charge for their products, or at least what prices you can advertise. They are very touchy in that respect. Call the Horizon number for potential hobby shop owners and mine that area. See if the franchises can save you money. You will have to carry the major brands and you can do it on your own if you wish.
Right -- however, the "suggested retail price" is rarely the "street price" at the store (or available online). The trick is to find the sweet spot, where your price is competitive with the "street price", but you're still making a profit. The franchise has already done that work for me (which is not to say that I won't do lots of checking on my own, but it takes the pressure off).

Originally Posted by Rabbitcreekok View Post
If you have unique ideas, not being able to sell online could hurt your potential business.
Right -- I never said I would not be selling online, with a web store. That being said, my "unique ideas" would not do well online -- it's an in-store deal only, kind of like how a track would not work well on the internet. :o

Originally Posted by Rabbitcreekok View Post
Service is probably one of the best ways to compete in Tulsa. Tom does not offer much service and Hobbytown USA seems knowledgeable about RC Cars but not planes.
Agreed. I'm very knowledgable when it comes to electric RC airplanes. I'm reasonably knowledgable when it comes to electric RC helis. I have a great deal to learn about cars, boats, and internal combustion engines. :o

Originally Posted by Rabbitcreekok View Post
Also remember that two shops have closed in the last few years. Wings & Things was a pretty big deal but I think their service attitude did them in.
Agreed. Your statement got me thinking -- everyone is telling me to beware of starting a hobby store, because so many of them go out of business... My question to those people is, "How many of those hobby stores that closed were HobbyTownUSA, or RC Hobbies (or some other franchise)?"

You see, that's the whole reason I'm thinking of going with a franchise. The franchise will help me NOT make mistakes on early startup. My father (a small business owner) will help me NOT make mistakes, on a daily basis.

...and the franchise really does not cost me that much more.

Originally Posted by Rabbitcreekok View Post
Check out Atlanta Hobby as an example of what I believe is a successful operation. I know Mike Parsons will agree.
Will do. Thank you.

Originally Posted by FlyingMonkey View Post
If you don't have that kind of money, a hobby shop will not provide it...
You misunderstood what I was saying. I'm not saying I think my hobby shop will generate a half-million dollars per year for me. I'm saying I don't have a half-million dollars to invest in a hobby shop -- if I did, I would invest that money elsewhere, so I didn't have to work 7 days a week, 8-10 hours per day.

Originally Posted by FlyingMonkey View Post
I have worked for several small businesses. I have seen what it takes to keep them open, and how easy it is for them to have to shut the doors.
How many of those small businesses were franchises?

Originally Posted by FlyingMonkey View Post
Not to be discouraging, but, you figure what you need for a weekly salary to keep yourself fed and in your house, and a little aside for emergencies. Business costs and associated expenses, add them all up, and that's the profit you have to make every week from selling items in your shop.
LOL -- I thought of that long ago. I'm a project manager, and I constantly play with numbers in spreadsheets. Trust me, we wouldn't be here talking about it, if I didn't believe I could pull it off.

The very first thing I have going for me is the rent. The RC Hobbies "model" says I can spend up to $5,000 per month on rent (not including the extras they charge you). I've got a GREAT location in mind, which costs $2,270 per month. I'm already ahead of the game, to the tune of $2,730 per month.

Originally Posted by FlyingMonkey View Post
Internet prices are so close to the item's costs, that the markup for the brick and mortar shops is marginal. That's the big reason they are hurting. Your entire livelyhood will be dependent on a small percentage of the discretionary spending of your customers.
Hmmmm... I've done some research, and found the markup on some items is 300%. The LOWEST markuped item is a RTF airplane, which I'd buy for $119, and sell for $189 (and the internet price is the same, and the buyer would have to pay $30 in shipping charges).

Did I mention the RC Hobby franchise has negotiated FREE SHIPPING with all the vendors?

Originally Posted by FlyingMonkey View Post
If you don't have that kind of money, maybe operating a hobby shop isn't for you.
Again, if I had "that kind of money", then operating a hobby shop would not be for me. I would retire, and live on a small island in the South Pacific...

Originally Posted by Murocflyer View Post
Sounds like you are going ahead with this plan; correct?
Well, I'm still trying to get over the three hurdles:
  1. Sartup capital -- I think I have this one figured out.
  2. 50% pay cut the first year -- I have a budget that works on paper, but reality is going to take some effort!
  3. Working 7 days per week, 8 to 10 hours per day. This one is the biggest one for me -- I'd have fun at the store, but I'd miss out on a lot of my three kids' activities.
Originally Posted by Murocflyer View Post
Interesting stuff. Keep us posted on progress please. Have you located a building yet? How big is it going to be? Will you just be selling RC planes or the whole gambit or hobby type stuff?
Will do. Yes, I have the location, but it has not been approved by RC Hobbies (he said I know Tulsa better than he does, so it's probably perfect). The store will be 1500 square feet (minimum). 80% of my business will be (IC/electric) RC airplanes, helis, cars, and boats. The other 20% is up to me, and I'm keeping secrets at this time.

Originally Posted by Grasshopper View Post
LL, don't forget location. It never hurts to have a Wiggling Weenie next door either.
LOL -- the location I've chosen shares a parking lot with Pei Wei Asian Diner, Bonefish Grill, and Red Robin hamburgers. My thought is that people will be at lunch/dinner, and see the store... If I can get them in store, I can sell them ice in the wintertime.

Originally Posted by FlyingMonkey View Post
I think another reason why Mac has such a successful shop, is because he doesn't do it for the paycheck. I am fairly certain that Mac was, is, and will be financially stable, regardless of what the shop does.
NOW, you've hit the nail right on the head! When reading all about Mac's, I was thinking, "This guy must be loaded, and he's just doing all this for fun and to keep busy."

There's no way he can turn a profit with all that overhead. What does he charge you guys to fly at his field? What does he charge you to use his shop? My guess is that it's all FREE, which means he's losing money on the deal.

Again, if I had the money to open a place like Mac's, I wouldn't have to run a hobby shop.

Originally Posted by FlyingMonkey View Post
I was thinking, if this is something you're serious about LL, maybe you should look into selling the place you're in now, and buying a house with a large piece of land.
I actually think this is a great idea, and it's on my "brainstorming" spreadsheet from a week ago. (I actually thought of this previously.) There are two problems:
  1. My wife/mother/three kids don't want to move. (My mother does not live with us, but she made it clear to me that I must be more responsible than to uproot my family.)
  2. After running the numbers, it doesn't make financial sense. I'd have to pay for the land (lease or own), carry liability insurance (in case someone crashed), and somehow convince the local public to drive to my land to fly for money (when anyone in Tulsa can walk to an open field and fly for free). It just won't work.
Originally Posted by FlyingMonkey View Post
I know you mentioned that people aren't lacking for somewhere to fly. But I am going to guess they really don't have somewhere to gather.
You've guessed incorrectly. There is a place I like to call the "unclub", which people gather at to fly. Sunday morning, we had 4 pilots and about 10 airplanes -- three airplanes were in the air at the same time (most of the time). About a quarter mile away, a dad and son were flying a kite, and walked over to see us -- I struck up a conversation with both, and it turned out I knew the family (through two other familys -- networking is a wonderful thing).

Originally Posted by FlyingMonkey View Post
If you provide that, then it gives them a reason to buy from you, instead of somewhere else. It also provides you with the chance to host events. As I mentioned before, Mac's shop is crazy during his events. I bet he makes more money during one of those, than any other time during the month.
Well, as I said, there are plenty of places to fly in Tulsa. I fly some airplanes outside my front door (in my cul-de-sac). If the airplane is bigger than about 10 ounces, I will walk to the empty field next door to my house (there is one house between me and the acreage). If at the office, during lunch, I fly in the acreage just next to the parking lot. I'm telling you, empty space to fly is not a problem in Tulsa.

Also, there are two AMA clubs in town. They host all kinds of events. YES, I could host somethink like SEFF, but I could also do it at one of the established fields...

Seriously guys -- I love the idea of a flying field (or indoor flying / car track), but it just isn't cost effective.
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Old 03-10-2008, 04:47 PM
  #45  
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I hate franchises:
Remember, a franchise is not in the business of selling the product. A franshise is in the business of selling more stores. Yes, they boost your advertising, and they give you a semblence of what to charge. But the prices they set ARE NOT IN YOUR BEST INTREST. They do everything in THIER Intrest not yours. They set the prices, they set the stock, and they do marketing, but they also take away a lot of the store owneres freedom. I don't know anybody who owns a hobby store franchise, but I do know people who own:

Subway,
Quiznose,
Krispy Cream,
Ace Hardware.

All of them hate the fact that they are franchised, Krispy Cream has closed because he couldn't afford the franchise costs, Quizose closed out of spite because the franchiser (Quiznos inc) violated the 1 owner per city rule. and Subway is almost ready to close because Subway franchiser sets the prices which results in near zero prophet. Franchises do not ensure success at all.
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Old 03-10-2008, 05:00 PM
  #46  
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Default The "Unclub"

I love the "unclub"!! I've flown with you guys and smokejohnson several times out there!! But since November my job has me in south Texas near Slowjohns location and I'm here till July. I love the informality of an "unclub" setting, everyone talking to everyone else about planes, what frequency they're on, flying safe and general BS'ing . I'm not against rules and safety, but sometimes the rules (and the attutude in which they're touted) can get in the way of having a good time. I've been to several club sites there and down here and there also seems to be a bias (think gasser) at these locations. Just my 2 cents from a future Tulsan.
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Old 03-10-2008, 05:49 PM
  #47  
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Gregore2992 -- Thank you for posting. I must admit, I have no idea who you are, which (in this case) is probably better to make my point. Let me ask you something -- with the Tulsa "unclub", do you see the need for a hobby store on the outskirts of town, which has an on-site flying field (and probably charges you to use that flying field)?

ConstantCrash -- I do hear what you're saying. I understand the franchise does not guarantee success -- but it certainly helps me from making stupid new-business-owner mistakes.

I'm not sure how a poor pricing structure helps the franchise (not me). With RC Hobbies, I don't buy anything directly from the franchise -- I buy everything directly from the manufacturers.

Plus, the franchise DOES have a vested interest in seeing my store succeed. 2.5% of my profits goes back to the franchise -- if I don't have a good month, they don't have a good month.

If either parts violates the franchise agreement, the agreement can be terminated. I would suggest that the Quizzno's franchise owner SUE Quizzno's, for breach of contract -- then close his store.

Here's where I am:
  • I believe I can succeed in business (or anything I do).
  • I understand I have little to no business experience.
  • I am willing to sign a 10-year agreement with a franchise, to learn the system.
  • I learn by doing, not reading about it. Tell me what works, and it gives me someplace to start.
  • After 10 years, or the failure of the franchise store, I will have some business experience, and open my own store.
Yes, RC Hobbies will tell me what to do with 80% of my business -- but the other 20% is all mine. That's quite enough responsibility for my first run at it. :o

**********
I'm starting to see a cycle of conversation here. Let's end the cycle, and start something different -- you post questions you want me to ask the franchise, and I will post the answers here.

Who knows? You might think of a question I did not think to ask!
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Old 03-10-2008, 06:45 PM
  #48  
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LL,

The days I flew there I had a Slowstick. I theink you're right about the flying field and the Tulsa area. I think that customer service is the way to gain a keep new customers, as several have stated in this thread. This coupled with the "want it now" mentality and with the type of "stores" in the Tulsa area, I believe that you'll do well. I do buy alot from the internet but if I could go to an actual store and get the same stuff, have friendly staff help out and gain more knowledge in the hobby then I'm there!! The flying field could also be a step to take in the future if enough people ask for it.
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Old 03-10-2008, 06:46 PM
  #49  
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Default IMHO your biggest hurdle

LT
I have posted replies in a couple of your other threads that were, shall we say, short and to the point. This is straight up and from the heart.

"Working 7 days per week, 8 to 10 hours per day. This one is the biggest one for me -- I'd have fun at the store, but I'd miss out on a lot of my three kids' activities."

Your father may be different, but I have never known a successful business owner who worked those kind of hours. Maybe 8 to 10 hrs in the shop for their first week on "vacation" after two years in business. I don't have any hard figures but my thinking is successful start up owners are putting in double those hours for at least the first 3 to 4 years.

Good luck on your endevor.
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Old 03-10-2008, 07:06 PM
  #50  
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asautt speaks the truth on these matters, working for yourself and making your entire living off of it, you will put in more hours then you can imagine. People look at it from the outside and think, well, that looks like a nice relaxing way to make a living, it's grueling work, many many hours where you get no direct compensation, and in the end, sure you have accompolished this goal, but the glamor and how you feel in the end is different then you think.

I look at you guys with the 9-5 jobs, knowing you get weekends off, benifets, a regular steady paycheck, job security, and there are many times where I envy your position. You might have to deal with some negative situation from time to time, but you get to go home afterwards, the business owner must address every single loose end and do it tactfully. You have unreasonable clients, suppliers that drop the ball, books to labor hours over, lease rates changing, merchant processing headaches, fee's galore that seem to always come out of the woodwork when it's least convienent. The list goes on and on, and you are not thanked in the process.

Then there is one major hurdle that often difficult to overcome. When you don't want to give it your all, when you want to take a break, yet you don't have that luxury as a business owner, you must remain self motivated when that is the last thing you want to do and then the worry's, are you going to make enough sales to cover next months lease, taxes, wages, utility payments, etc. etc. etc.

There is another factor I see business owners make mistakes with all too often, they become afraid to take risks, and the risks they do take are not tactful ones. I had a boss that turned down a million item per year account because he was afraid to buy the equipment to accomodate the order since he didn't know if the account would continue each year with their orders. Standing from my perspective as an employee, I'm thinking, go for it, yet he's thinking liability if they don't come through. I had my own frustrations in my own field that I'm presently running the company now, but it was the same story. Do you have what it takes to lay it all on the line, to take that gamble, to not keep yourself up worrying at night over these matters? Most people don't. In fact, most people have no business being in business for themselves, they simply don't have what it takes, and it takes alot more then just positive thought, or following some cookie cutter system. Stuff will happen, it will all blow up in your face, be prepared for it and be prepared to think in the back of your mind, if I put in this many hours working for someone else, if I put up with this amount of stress working for someone else, I would get paid a great deal more then I do now...

If your background is not very, very strong in managment, you have even more hurdles to overcome as well. I'm giving it to you straight here, there is another side of this coin the franchise sellers do not want you to know about, this is because they want to make their commission....
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