Small Business Success Or Failure Ratios Must Be Taken Into Consideration

Despite what many people think not every franchisee succeeds. Usually when a franchisor fails it is either problem with management, marketing, lack of hard work, or lack of working capital and cash flow. Sometimes, the reason franchisees fail is due to lack of support from their franchisor. Nevertheless, the success rate of franchisees is nowhere near 100%. Some franchises will succeed, while others will not.

If you are going to invest in your own business, and take the risk and buy a franchise, but you have to consider your real chances of success, and the potential for failure. One way to do this is to find out the number of terminated franchises, or the number of franchises that have gone out of business, as a percentage of how many franchisees are in existence total. This can provide you a ratio.

Think to yourself, if you are willing to invest your real money, and all your time and effort it will take to build your business on that level of risk. For instance if 68% of the franchisees are successful, but 32% have failed, then your chances of success are only two-thirds. Are you seriously willing to take that risk?

Now many franchisees are very optimistic when they first purchase their franchise, and they believe that they will follow the system and work harder than everyone else, plus they believe in themselves and consider themselves better than the franchisees that have failed, which have come before them.

Whereas, this might be true, it might also be overly optimistic and incorrect thinking. At some point during the franchise purchase decision, you will have to look in your mirror and decide if you really have what it takes, and if you are willing to take that risk. If not don’t buy the franchise. Please consider all this.