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I Ditched My Stock Portfolio And Put Money Into a Franchise. Here Are The 4 Steps I Followed.

Opinions expressed by Entrepreneur contributors are their very own.

It’s been two years since I traded my comfortable company job to pursue a lifelong dream of proudly owning a restaurant. At the time, nobody knew there can be a worldwide pandemic, however I used to be positive of 1 factor: I’d make my dream occur in any respect prices.

I had spent practically a decade working my approach up from quick meals, minimal wage jobs to high-ranks in company America. Still, I could not shake the dream of proudly owning one thing that was fully mine. I first discovered the artwork of investing throughout my time with Chipotle, the place I started my profession washing dishes. Over eight years with the corporate, I rose in ranks and finally turned the director of operations, the place I out of the blue acquired a strong quantity of inventory choices. I used to be approaching 30 and felt I had a option to make: play it protected and accept job safety? Or do I wager on myself and take a danger?

I took a leap of religion and resigned from my place at Chipotle, the place I left behind a great portion of my portfolio. I instantly dove into the rising world of e-commerce, and began my first e-commerce enterprise — a watch model. Later, I partnered with a software program start-up to guide their gross sales crew, and by the point I left, I used to be their VP of shopper success.

At this level, I had diversified my portfolio fairly a bit, and having not too long ago began a household, I as soon as once more returned to my dream of proudly owning a enterprise.

Related: 4 Basics for Making the Move From Corporate Job to Entrepreneur

I started researching how small companies tailored through the pandemic. Retail was dying, however e-commerce was thriving. Movie theaters collapsed, however eating places by no means missed a beat. Food, espresso, supply providers. I assumed: a restaurant? I knew that my desires of proudly owning a restaurant have been starting to manifest, however I had minimal expertise in espresso.

I knew that I wanted some steerage earlier than placing collectively an investor’s package deal for my very own idea, so I related with the proprietor of my favourite native espresso store.

I cold-called him with a easy query: the place do I begin?

To my shock, he introduced me with the choice to purchase into the model. He had simply begun to license present places as the corporate was rising exponentially, and he wanted the working assist. For a $50,000 buy-in plus the price of construct outs, I’d have my very personal Red Bicycle Coffee.

Related: NBA Star Jimmy Butler Has a Side Hustle as a Coffee Mogul

I knew that with my expertise and Red Bicycle’s model energy, I may construct on a robust basis, save on huge advertising efforts and speed up years of analysis and growth – bypassing the numerous obstacles {that a} new idea faces early on.

Once once more, I made one other leap that paid dividends. Shortly after the acquisition of my first Red Bicycle location, the market got here tumbling and confronted historic lows. Still, even in current financial turmoil, small companies show to be the driving drive of financial progress. I strongly encourage anybody on the fence so as to add a small enterprise to their portfolio of investments.

Let’s discuss concerning the sensible steps wanted to efficiently buy a franchise or present enterprise.

Related: 3 Reasons to Quit Your Corporate Job and Become a Restaurant Franchisee

1. Assess your pre-qualifications

Assess your skills together with your monetary advisor or accountant. Don’t overextend your self and just remember to have sufficient working capital to maintain your new enterprise working if issues go off observe. Factors to debate embody timing, proposed location, expertise, funding or money obtainable for funding, targets and pursuits, administration and exit technique.

In my case, I knew I may purchase into Red Bicycle Coffee, however I wasn’t ready to purchase into McDonald’s. It’s necessary to do not forget that Rome was not in-built at some point, and to construct an empire, it’s good to begin the place you are financially comfy. Keep your finish aim in thoughts and should you plan to make an exit inside three years, make it possible for is included in your marketing strategy. Similarly, should you plan on opening a number of items, the identical recommendation applies — plan accordingly.

Related: A Billionaire Who Operates More Than 2,400 Franchises Knows These Types of Franchisees Make the Most Money

2. Prepare for the franchise utility

Once you have accomplished your due diligence on financials, location and administration, begin making ready for the franchise utility course of. Most franchisors require a certain quantity of capital to get began, this ensures that you can be profitable and that their investments are in good arms.

For me, this was one other benefit to purchasing right into a smaller, native model. My utility was private and interview-style moderately than prolonged and time intensive.

3. Deep dive into the franchise disclosure

You would not purchase a automobile with out figuring out the specs, the identical applies to your new enterprise. Make positive you ask for the franchise and licensing disclosures to raised perceive the positive print and technicalities of what you are in for. If it is a smaller enterprise or model, ask for P&L’s and different monetary reviews. Understanding these paperwork will guarantee that you’ve readability on the monetary state of the enterprise, the challenges and the phrases of your new enterprise relationship.

Keep in thoughts, buying a widely known franchise will depart minimal flexibility or artistic enter — it is a plug-and-play. If you intend to be extra concerned within the day-to-day operations, you will wish to perceive the restrictions and parameters.

Related: 7 Tips for Investing in Your First Company

4. Take all of it in on discovery day

This is perhaps a very powerful step. This is the place you get to tug again the curtains, meet the crew, perceive the operations and be taught extra about what you are signing up for. Here, you’ll obtain extra details about the assist obtainable to you, actual property procedures, design, building and native or nationwide advertising assist. Take all of it in, you are one step away from being a enterprise proprietor.

Related: 10 Fears You Must Overcome When Starting a New Business

Final ideas

My bigger aim has at all times been to realize monetary freedom and construct generational wealth. Diversifying my portfolio outdoors of the inventory market has given me stability in unsure and unprecedented financial occasions. Being a franchise proprietor has been extraordinarily rewarding, but in addition very demanding. There are a number of choices for diversification, so take the time to judge your present way of life whenever you buy a small enterprise, as it’s possible you’ll have to be extra hands-on initially earlier than it turns into passive revenue.

In addition to proudly owning and working my cafe, I’m additionally captivated with mentoring others on their journey, be happy to attach with me immediately by way of social media and be taught extra about my journey with Red Bicycle.

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