Michael Gerber makes some interesting comparisons in his book “E-myth revisited – Why small businesses don’t work”
Statistics for small business: 40% fail in 1 year. Of those who survive 1year, 80% fail in 5 years, and of those who survive 5 years, another 80% fail. In comparison to the dismal rate of ordinary small-business start-ups, 75% of franchises succeed at 5 years.
For turning businesses around, or getting them off the right foot, look at franchises as a model. The reason they succeed is that they are set up so that any unskilled person off the street could walk in, buy a franchise, run all operations in the franchise, and have a fairly good chance of success. The product of franchise companies is a business model, not food, hotel rooms, etc. In order to meet this level of success, franchise companies have clear operations manuals, procedures, consistent sales approaches -every detail of running the business is specified down to dress codes and wall paper.
By asking us to consider the franchise approach, I am not saying to go out and buy a franchise license. Instead, imagine that you want to sell your business as a successful franchise within a finite period of time. If so, what will you need to do regarding your business plan and management in order to meet this goal? That is, if you were going to make your business fool-proof so that any unskilled person could take over as owner after a few years and succeed with it, what will you need to do?
