Remember that perfectly ridiculous old song that you still hear on occasion? It was funny and the words would stick in your head. It was meant to be catchy, fun, and ridiculous. Unfortunately, many people select equally ridiculous names for their businesses. So often it is due to a failure to look beyond tomorrow and where their business might go, how it might diversify, and to think globally not just locally.

Just recently I learned of a high tech company named after a cartoon character that has absolutely nothing in common in any way, shape, or form with the business. While it may be a "cute" name, the owners have done themselves a terrible disservice in choosing their name. The name of the company is equated with something silly or funny rather than a serious high tech product. They have made the branding of their company far more difficult and also the conception that they are a serious company. In addition, the name will not SEO well for a website and it gives no hint as to what the company does.

Here are some things to consider when choosing a name for your company:

Don't pick a name that is cute, a subtle play on words, or a pun if you can avoid it.

For example, if you chose the business name of Hubble's Hotties, is the business related to pornography or prostitution, the best photos taken from the Hubble telescope or someone named Hubble's brand of hot links? A company called Right Cross could sell boxing equipment or different crosses used by various Christian churches. Branding a company and its products or services is difficult enough without adding the effort of trying to eliminate confusion to the task.

Do not pick a self limiting name.

Patsy's Pansies may be a great name today but what happens when Patsy decides to also sell petunias and periwinkles later on? Patsy's Pansies and More is a far better choice because it states that the store sells other plants and perhaps accessories as well. You need to look beyond today and what products or services that you might offer in the future. Because technology makes advances almost daily it may be difficult to anticipate what will be available in the future. In that case, a more generic or all encompassing name may be a better choice. For instance, instead of naming your company Cloud Computing Technologies you might want to choose something like Emerging Computing Technologies. The last name covers any current technologies and any new ones that may come along.

Unless you can guarantee that you will never expand beyond your local market, be leery of using local words or  phrases that might have another meaning elsewhere.

In some areas of the country carbonated drinks are referred to as pop while in other parts they are referred to as sodas. At the same time a soda can be a drink with carbonated water, a flavored syrup and ice cream. So instead of opening a store called Pop's Pop Shop, if you have a thought of spreading beyond your local market, you might choose the name Pop's Soda Pop Shop. In that name you have combined both common terms as well as eliminated an ice cream soda as a possible product that you sell. When considering a name have friends and family in other areas look at your name to make sure it doesn't have an alternate meaning elsewhere.

Think globally about your name. America is a melting pot of cultures and languages which can be found even in small towns. It is wise to consider what a name may mean in another language whether as a common word or slang.

Car manufacturers have run into this many times and ended up scratching their heads as to why a particular model didn't sell well in a specific country or region. Here are 2 wonderful examples. Chevy couldn't figure out why their Nova model wasn't selling in Latin America. The reason was that in Spanish, Nova means "doesn't go." Think that is bad? Rolls Royce was proud of their Silver Mist model but Germans were less than enthused because the name translated as Silver Animal Droppings. To read more about brand failures go to http://brandfailures.blogspot.com/2006/11/more-brand-culture-failures-part-1.html

Are you going to brand your company or primarily your products?

Let's look at 2 examples. Kimberly-Clark chose to focus on branding their products. We all know the names Huggies and Kleenex but may not think about the company who makes them. On the other hand, 7-11 chose to brand their company. Even though their model has changed to 24 hour operations and what they offer in their stores today has vastly expanded everyone knows the company name and what it stands for today. Neither approach is right or wrong but you need to know the difference and what you intend to do with your company name.

We can point to many very successful companies who have created a name that is not a real word at the start; Google being probably the most obvious example. There are probably lots of ones with made up names that fail but no one remembers them.

Created names can fall into several categories such as ones that sound similar to a known word that has some relevance to the industry or product. An example might be Compaq computers. They tried to make their computers more compact than other brands. Google is an example of a completely made up word that has been so well branded that it is now even a verb. There are two main tricks to using a made up word for your company name. The first is to make it a simple but memorable word that is easy to pronounce. The second is that it should be branded along with a specific product or service. Again, to use Google as an example, it was first and foremost a search engine even though today it is so well known it is able to branch into other areas.

Using your name can help brand you but in today's world of the internet and websites, names like Proctor and Gamble or Hewlett Packard would find it hard going in search engines because there is no reference to industry or product.

Every company name in today's world should have some type of reference to the industry or products in their name in order to maximize SEO for their website. Today Proctor and Gamble might need to start out with the name Proctor and Gamble Home Products or HP with Hewlett Packard Printers. In the world of search engines that we use today, we will look someone up by industry or product when we don't know the name. Smith and Jones will never help you out but Smith and Jones Catering distinguishes you and helps you be found.

Using a name that has gained infamy is not a good idea. If your last name was Dahmer and you were in the food industry, using the name Dahmer's Meats would not be recommended.

Unfortunately, a name can become infamous after you have named your company. Hopefully, you will have branded your company sufficiently well to be able to withstand the negative reflection on your name. Grow a thick skin, though, and be prepared for jokes and odd remarks.

Probably the most dangerous name you can give your company is one that is similar to a well known company. Whether the purpose is to piggy back off the other company's reputation or not, unless you want to spend a lot of money in legal fees, DON'T DO IT.

Years ago, I was an independent contractor in the Legal/Real Estate department of Accor, the French hospitality company that owns Motel 6. On average, the company would file 1 to 2 lawsuits per month against companies or individuals that were using similar names and not just in the US. Because the brand marketing was actually worldwide, they had the right to protect their name everywhere. The same is true of any trademark or logo that you might think about altering for your own purposes.

You can use personal or nostalgic names or logos if they are adaptable to your business.

When I first started my business I used my name but wasn't taken very seriously by many potential clients. While thinking about a name, I ran across a piece of stationary from my father's business. I had always loved his logo which he had created over 60 years ago and was the view from our property just west of Denver. We really did have a large log for a pole with a train bell on the top and we did have that view of the mountains as a background. He called the property Bellwind. He even made the original copper etching for printing his business cards and stationary. The name of his company was Wallace Studios as he was a commercial artist. Obviously that name was not appropriate to what I do. So I named my business Bellwind Consultants. Where it now reads Bellwind on the logo, I removed Wallace Studios and added the name. The original address was where Consultants now exists. My father had never trademarked his logo but I have done so to preserve its uniqueness.

I take great pride in continuing the use of the wonderful logo my father designed and I think he would be pleased at the legacy.

In this handbook, you will find a template for a business plan as is standard in the United States, where, after the Executive Summary, you have information about the company and then about the business and its future. While writing a plan for a Romanian movie company who wanted to establish an office in the US, I was informed that the European standard was to put the company information after the section on the business and its future. Wherever you are located, the order of sections may be different but you will still need the same information.

Top 12 Mistakes in Writing a Business Plan

Although it might seem backwards to start with the major mistakes people make in writing a business plan, I believe they will actually help you to better understand the importance and descriptions of the elements for a plan.

Every business should have a business plan. Unfortunately, despite the fact that many of the underlying businesses are viable, the vast majority of plans are hardly worth the paper they're printed on because they are poorly written or lack essential elements. Most bad business plans share one or more of the following problems:

1. Lack of objectivity. Many of the mistakes exist or can be made worse because of a lack of objectivity. Whenever you are involved with something about which you care passionately, it is extremely difficult to be objective whether you are talking about a relationship or a business plan. When it comes to the business plan, you must be able to step back and look at all parts as if you were being asked to fund the business rather than as the business owner. It is a difficult thing to do so ask others not directly involved to review your plan to make certain that you have done your best to be objective.

2. The plan is poorly written. Spelling, punctuation, grammar and style are all important when it comes to getting your business plan down on paper. Investors are looking for clues about the business and its owners when they read a plan. When they see one with spelling, punctuation and grammar errors, they immediately wonder what else is wrong with the business. With so many people looking for funding, they won't wonder for long because they will just move on to the next plan.

Before you show your plan to a single investor or banker, go through every line of the plan with a fine-tooth comb. Run your spell check which should catch spelling most errors (it won't catch errors such as you type work but mean to type word since both are real words), and have someone you know with strong "English teacher" skills review it for grammar. Do not rely on a grammar checker. Unfortunately, the grammar checker on the most commonly used word processing program is an absolute disaster. It will often turn a grammatically correct sentence into one that is incorrect. Turn off the grammar checker and get out a good English textbook or borrow one from the library. Be certain that you are using the correct word for the situation. I have seen many people write hear when they mean here; your when they mean you're; and there when you mean their.

Style is more subtle, but it's equally important. Different people write in different styles and different investors like different styles. As long as your style is informative, consistent, confident and professional you should have no problem. If, however, it is inconsistent, boring, emotional or sloppy it will end up in the trash. A poorly written plan makes others think the business is poorly planned, your communication skills with customers might be poor, and even your product or service might be inferior because you are not paying attention to the details and quality necessary to be successful.

3. There is a lack of focus and clarity. Many business owners in writing their plan fail to distinguish between their core business and their "wish list" of enhancements or tangential products or services. They write the plan as if all were of equal importance. The reader wants to have a clear description and explanation of the essentials of your core business with just a mention of future plans for enhancements or versions for the product or service.

To illustrate: A couple of years ago a start-up company came to me with a 56 page business plan for their prepaid debit card program. Each of the 5 principals had written a section on their "pet" part of the project. Every time they talked to investors, they were rejected because their business plan was so poorly written. They asked me to rewrite it and leave all the elements in there. I did but it was still unfocused and I wasn't pleased with the results. I told them so and asked them to let me rewrite it the way I thought it should be and if they didn't like it they would owe me nothing. I literally reduced each of the "pet" sections to a bullet point and focused on the core business. Not only did that reduce the plan to an acceptable length of 32 pages plus financials but it created the focus and clarity the plan needed. They were then able to choose between several offers of funding for the best deal for the $20 million they needed to start.

If your plan is unclear and unfocused, the assumption is made that management of the business may also be unfocused and it doesn't know what it wants to be when it grows up.

4. The presentation is sloppy and unprofessional. Once your writing's perfect, the presentation has to match. Nothing turns off potential investors more than inconsistent margins, missing page numbers, charts without labels, tables without headings, technical terminology without definitions or a missing table of contents. Have others go through your plan to make certain the presentation is perfect before you show it to any potential investor. You may spend months working on your plan but most investors won't give it more than 10 minutes before they make an initial decision about it. So if it looks sloppy or they can't find a section they are interested in reading they will simply discard it and move on to the next one.

Another thing that can make your plan look sloppy is using uncommon or fancy fonts, too many fonts or a variety of sizes. Stick to the standard fonts such as Arial, Times New Roman, Verdana and never use less than 11 points in size for readability. It is acceptable, for example, to use Arial for the text but Times New Roman to label charts and graphs. Don't get carried away with bold, underlining or italics. Leave those for important section headings or for extremely important points.

Do not overload with graphics, charts or graphs unless they are absolutely pertinent and of good quality. If you use something from another source, tell where it came from. If you have created the chart or graph, explain the source of the data used. I once made an exception to this general rule while writing a business plan for a Romanian movie company that was seeking funding for a 3D animated movie. They were looking outside the normal entertainment funders for investment. In this specific instance I used a lot of graphics to show each major step in making an animated movie in order for potential investors to understand the process and also as a "hook" or lure to get them a little emotionally involved so they wanted to invest.

A sloppy presentation leaves the impression that your business will be run in a sloppy manner and your products might be sloppily made or your service might be of poor quality.

5. The plan has significant missing sections. Every business has customers, products and/or services, management, operations, sales and marketing and competitors. At an absolute minimum, your plan must cover all these areas. A complete plan should also include a discussion of the industry, particularly industry trends, such as if the market is growing or shrinking. Distribution channels should be defined as well. Saying you want to sell to everyone who buys stuff won't cut it. In addition a complete plan should also include an exit strategy or what you plan to do with the business such as sell to a larger company, shut the doors if it is not successful or turning it into a different kind of company. Finally, your plan should include detailed financial projections--monthly cash flow and income statements, as well as annual balance sheets with projections for at least three years. As important as these financials are you also need to be sure that they have a truly good rationale.

Lack of one or more of these essentials will doom a business plan to the trash can.

6. The plan gives too little pertinent information. A business plan is not a piece of fiction. If a reasonably intelligent person can't understand your plan, then you need to rewrite it. If you're trying to be vague on purpose because your business involves highly confidential material, then show others your executive summary first. If they are interested in learning more about the business, have them sign non-compete and non-disclosure agreements before showing them the entire plan. Some investors may refuse to sign and if you feel confident they have no interest in competing with you, then you can decide whether to show them the plan. It is always a good idea to talk with an appropriate attorney about applying for a patent or a copyright and how to protect your intellectual property for your own protection.

7. The plan has too much detail. Do not get bogged down in technical details! This is especially common with technology-based startups. Keep the technical details to a minimum in the main plan. If you want or need to include them do so in an appendix under Exhibits. You can do this by breaking your plan into three parts: a 1 page executive summary, a 10 to 30 page business plan and an appendix that includes as many pages as needed for the details. This is also the place to include a glossary of terms if needed. Now anyone reading the plan can get the amount of detail they want.

8. The plan makes assumptions with no basis in reality. Business plans are full of assumptions because they are projecting into the future and the biggest assumption is that you will succeed. The best business plans will highlight critical assumptions and then provide a good rationalization for them. The worst business plans have their assumptions buried throughout the plan so no one can tell what are assumptions and what are facts. Target or niche market size, what the market will bear in pricing, customer purchasing behavior, time to making a profit all involve assumptions. Make sure you check your assumptions against benchmarks from the same industry, a similar industry or some other acceptable standard. Tie your assumptions to facts.

A simple example of this would be the number of employees you will actually need and their job descriptions. What can you afford to pay and what are the average pay scales for those positions in your community? Are you relying on standard job descriptions rather than specific job descriptions and do you really need all jobs to be filled by full time employees? These are the kinds of assumptions that must be made realistically before presenting your plan to any investors or lenders.

9. The business plan has poor or non-existent research. Poor quality research can doom your plan before you start. This is an area that requires great objectivity and honesty. Even though it is not part of the business plan, in order to do the budget you need to research licenses, permits, taxes, forms of business, signage regulations, insurance, etc. Your city, county, state and the federal government can provide those answers. If you don't know how to do high quality and comprehensive research ask a friend for help or hire a professional.

The real research comes about when researching your target and/or niche market. Not only do you need to know the demographics of your market, you need to understand when and how they buy similar products or need similar services.

The other area that many owners fail to cover well is their competition. They take the ostrich approach because they don't want to deal with the realities and consequently usually make bad assumptions. Unless you know your competition well, how can you brand yourself by being unique, have appropriate pricing or know what is a reasonable market share you might achieve ultimately? What are the industry trends?

10. You claim there are no risk factors in your business. There is no such thing as a no risk business. That is a common phrase used by scam artists trying to get you involved in some questionable business. You need to take a hard look at what the risks are such as rise in prices of supplies, changes in the economy, strikes, changes in regulations or any number of other things. You should only state major risks and then outline concrete plans to avoid or mitigate those risks. Without this information, a potential investor will think you have not been realistic in planning your business.

11. You claim you have no competition. It is crazy the number of business owners that state they have no competition. Maybe you might not have direct competition in your area but what about competition on the Internet or in a larger town that is an easy drive? Even if you can't find what appears to be indirect or direct competition at the moment, if you are successful, competitors will soon be breathing down your neck and you need to plan as if you were having stiff competition from the beginning. Emphasize your competitive advantages and your branding.

12. The business plan shows little actual planning. A good business plan is a blueprint for your business both in the short and long term. It describes how you will get from one stage to another and the component parts of your business. Just as you wouldn't put up the framing on a building before the foundation is in, the business plan must also follow the logical steps of starting and growing a business. The steps need to be specific and contain pertinent milestones such as production or sales goals and a realistic appraisal of the potential market share you can gain. In addition, the business plan should not be considered a document written in stone. It should be a "living" document that is agile and flexible to adjust to changing circumstances or new research. Just like a blueprint that needs to be adapted because of need for an extra bathroom or more outlets in a room, the plan needs to be able to adjust to new information.

If you find yourself struggling or having insufficient knowledge in an area, hire an expert in that area to help you learn what you need to know or prepare that section. However, be sure that it fits the style of your plan and is in your voice. For a truly professional plan with objectivity and clarity, you can opt to hire an experienced business plan writer with a record of success.

BUSINESS PLAN TEMPLATE

This is a basic template for a business plan. Not every business plan will have every section but the essential ones are identified. Instead of explaining what to write in each section, I have chosen to rely on what questions the different sections need to answer. A section may require only a few sentences or more than a page to cover the important points. Each bold and centered section should start on a new page as these are major divisions.

The plan may be written simply with a change in heading styles to delineate the different sections, as a standard number and letter outline or as a legal style outline such as 1.1. There is no preferred way but my preference is the legal numbering system because it makes for an easy reference to a specific section if you are discussing your plan with a potential investor. You can also use either a left justification or full justification. I prefer full justification because it looks much neater. NOTE: Word Perfect has superior full justification to MS Word as it actually kerns the characters so that they are more even spaced. To create that same advantage in MS Word (in 2003 at least) go to Options and select on Compatibility. Under the Recommended Options select Custom. Below should appear a list. Check the box that says Use full justify like Word Perfect 6.xxx or some other version. This will give you the superior look of full justification that is found in Word Perfect. In addition all margins must be at 1" except use 1.25" for the left margin to have room for binding.

Cover

The cover should be plain and simple with Business Plan for and the name of the company and the logo if you have one. Or add the logo and name of company plus any other info like my info on the cover of this handbook with Business Plan centered both horizontally and vertically. You can add Prepared by at the bottom if you want. Do not add a specific date because obtaining funding may take months to obtain and you don't want to have to constantly change the cover. You can put the year if you wish either at the bottom or after Business Plan.

Disclaimer

Here is an example of a type of Disclaimer commonly used when seeking funding for any form of business other than a sole proprietorship. It is one way of dealing with confidential requirements rather than separate agreements. It is not uncommon to have this disclaimer written in italics to separate it from the body of the plan. This is a completely optional page.

This is not a solicitation to buy or sell securities and shall not be deemed an offer of
securities. Such an offer or solicitation will only be made pursuant to an appropriate
private placement memorandum and/or subscription agreement for purchase and sale of
common stock relating to specified securities of ____________ (herein "_______"). This document contains information that is proprietary to _______ and may not be copied, published, summarized or disclosed to others without the prior express written consent of an authorized officer of _______. All information contained herein shall be held in strict confidence and in trust for the sole and exclusive benefit of ________. This document must be kept in confidential files when not in use.

Additionally, this document contains a description of the business and management of
____________, including projections of anticipated future performance and financing needs. While the information has been carefully prepared, neither _________. nor its officers, directors or employees make any representation or warranty, expressed or implied as to the accuracy, completeness or adequacy of the information presented. The material is not intended, nor does it purport to be all inclusive, nor does it contain all the information which may be necessary or desirable.

No legal liability is assumed or is to be implied with respect to this information. It is
subject to corrections, errors, omissions, or withdraw without notice. Further, upon our request, this Business Plan will be promptly delivered to ______ including all copies, reproductions, summaries, analysis or extracts thereof in your possession.

Executive Summary

The Executive Summary is a short 1 page or less about the company, what it does and why, and its target market. This is where you have to impress potential investors enough that they will look through the rest of the plan. I write this last because as the plan is written and research is done, it often changes what you might have originally intended to write or the focus. Other writers believe this should be written first and be a guide to the rest of the plan. There is no right or wrong as to when it is written but it must be a very strong statement.

Table of Contents

The Company

• Company-

Essential. Brief history or reason for founding. Identify the opportunity and recognized need.

• Type of Business

Essential. What kind of business it is and its industry and market segment.

• Company Summary

Essential. Explanation of what the company does, why, and how plus what need it addresses.

• Mission Statement

Essential. Statement of mission toward employees, consumers, partners/affiliates, community

• Current Status

Essential. Start-up, or years in business and profitability if applicable.

• Products

Essential. What products or services and description

• Management

Essential. Officers and brief statement of experience or responsibility

• Equity Offering and Use of Proceeds

Optional. What is the company offering investors (stock, options, share of company, etc.) and what the funds that  are raised will be used for. (Greater detail can be here or in Financials.) Equity offerings must be prepared by an experienced attorney and that needs to be in place prior to making any definitive statement. Or the offering information may be presented in a separate document and that should be stated here if that is the preferred option.

• Sources of Revenue

Essential. How will the company make money? Is there current revenue? Will there be multiple revenue streams?

Business and Its Future

• General

Essential. Office(s) location and contact information. If you don't have an office yet, use your home address or a PO Box that you rent just for your business.

• Nature of Business

Essential. Summary of exactly what company will do or sell

• Corporate Objectives

Essential. Enumeration of objectives/goals

• Uniqueness

Essential. What separates company from competitors. Branding.

• Product Benefits to Customer

Essential. Why will product/service be useful to customer or target market?

• Target Market

Essential. Who is the target customer - age, gender, demographics, income level relative to that market? Are there also niche markets?

• Overall Market

Essential. What is the general market for products/services? Can market be expanded later with additional products/services? What is the market trend?

• Competitive Environment

Essential. Who are biggest competitors? What has allowed them to succeed? What will company do to get market share?

• Competitive Market Trends

Essential. Is it a growing market? Are there new options, new technology that increase opportunities?

• Competitive Summary

Essential although can be included in Competitive Environment if desired. Summary of competition in the market and trends

• Implementation Strategy

Essential. How company will place itself in the market utilizing uniqueness.

• Marketing Strategy

Essential. Overview of marketing plan and specifics

• Sales

Essential. Sales goals, how to attain them, customer retention

• Advertising and Promotions

Essential but can be incorporated into Marketing Strategy. Plans for where and how to advertise and to whom advertising will be directed

• Representative Network

Optional because you might not have a network. Others that may be involved such as partners, affiliates, ISO's etc.

• Channels of Distribution

Essential. How will product/service be distributed? Retail, Internet, organizations, other companies? This must be well thought out and detailed because all channels is not an effective approach. That would be like throwing spaghetti on the wall to see what sticks.

Management Team

• Management

Essential. Officer Resumes

• Advisory Board

Optional. Brief resumes of any advisory board or company advisors if there is no board

• Board of Directors

Essential only if a corporation. Brief resumes of Board of Directors.

Financial Projections and Proformas

• Budget

This should be a detailed budget for the year including such things as rent, utilities, supplies, payroll if any, professional fees, permits and licenses, formation expenses and taxes of all sorts. If, however, the business is a sole proprietorship, income taxes are not included because they are filed as part of the owner's 1040.

• Cash Flow

This is a projection for the first year of the outgoing and incoming cash for the company. Do not attempt to force it to appear that there is a significant profit to make it look good. Investors and bankers are smarter than to fall for that. Be realistic about when there might begin to be a profit and it is not uncommon for the first year to be unprofitable. Investors are looking for pertinent expenditures and that you have planned to have sufficient capital to be able to survive until profitability is achieved. Making a profit may not appear until you do the longer term projections.

• Income Projections

These figures in a spreadsheet format should be realistic with a good rational that projects out for at least 3 years but no more than 5 years the costs and income during the growth of the company. There used to be a rule of thumb of 20% growth per year. In bad economic times that may no longer be realistic. Check out industry figures as well as growth percentages in your industry for your area. In most cases Balance Sheets can be used instead of Income Projections. It doesn't hurt to prepare both because some lenders or investors may require both.

• Balance Sheets

Balance show the assets and debits of a company and the difference between the 2 figures to make them balance is the owner's equity or profit. These should be created for the same period of 3 to 5 years as the income projections.

Exhibits

Ancillary research that supports claims in plans. This can include a glossary, technical data, any application for patent or copyright information, other research, charts, and or graphs.

To many budding entrepreneurs, the idea of investing in a turn key operation with marketing support as well as other benefits is extremely appealing. However, just like withany other kind of business opportunity there are good and bad franchises to begin with and ones that will work well in your area and ones that will not.

Some experts have suggested that franchises are the best choice for the older entrepreneur because they do not require the long hours and the additional stress that come with a conventional start-up. We view this as questionable advice if it means using your nest egg or retirement funds to purchase the franchise. It also assumes that seniors want to take it easy, don't have the stamina or interest to put in long hours and that is not true of many seniors.

What is a franchise?

Franchises come in every size, shape and form and in almost every industry from restaurants to tax preparation offices to janitorial services but they all have certain things in common. A person or small group starts a company. They become very successful in their market. They start to expand, opening new locations as they are able. W

hether it is recognition that they have developed a great business model they could share, a desire to grow their brand more quickly, or a growing demand for their product or service, they realize that their business could grow more quickly by offering to sell franchises to others. On occasion, a business will actually be started with the intention of creating franchise opportunities.

A franchise should not be confused with another type of business where a number of individually owned businesses join under a "flag" of some sort for the benefits of professional advertising, group discount purchasing, and maintaining a certain standard of quality. Two good examples of this type of banding together are Best Western motels and Servicemaster service companies. The businesses remain independent but derive benefits of branding, advertising, and the expectation of a certain level of expertise and quality from the business.

What are the benefits of owning a franchise?

Purchasing a franchise can have many benefits over starting your own business. You get what has already proven to be a successful business model. Your purchase of a franchise usually includes extensive training, aid in selecting a site for the business, and participation in professionally done large marketing campaigns. In most cases, it is a turn key operation with ongoing support and experts to turn to with questions. Provided you have selected your loca

tion well and follow the business model, your chances of success are higher than if you started your own business. You are likely to realize a profit in a shorter period of time than with an independent start-up.

If the franchise is a well known name, then you have the advantage of instant brand name recognition and the type of advertising in multiple media that the independent small business owner could never afford. Some franchise companies allow some freedom to provide a product or service that is special to your area and others do not. Some will allow you to do your own local advertising with approval and others will not. Your success will still depend on many factors but your risks for failure are less with a successful business model.

What kind of franchise should I buy?

Before purchasing any franchise, you need to do your homework. It isn't absolutely necessary that you have some experience in the type of franchise in which you have an interest but it sure helps if your experience is applicable in some way. Of course it is also essential that you can either afford the franchise outright or be able to finance it at a reasonable interest rate.

Here are some of the questions for which you will need answers in order to reach a good decision.

1. How much is the franchise and how much will you have to sell per month just to meet that oblig

ation plus all overhead and franchise fees?
2. How much are the monthly franchise fees and what do you get in return?
3. Are you required to make all purchasing through the parent company or can you purchase locally?
4. How much training is provided and for how long? (One well known pizza franchise has 5 days of training. Four and ½ days are spent on employees and marketing while only ½ day is spent on learning to make the pizza. Is that enough?)
5. Is the business seasonal such as a tax preparation business or limited to certain parts of the year? (Can you make enough during a limited period to carry the business from year to year and support yourself and perhaps a family?)
6. Will you have a protected territory or area? In other words, will the parent company sell a franchise close enough to you that there is not enough business for either?
7. Does the parent company interview you as much as you interview them to determine if you are a fit for their company or will they sell a franchise to anyone who can come up with the money?
8. What is their reputation within their industry?
9. Will you need special licenses or permits to own the franchise? An example is that you might need a cosmetology license to own a SuperCuts or Great Clips franchise.
10. Is there a need or market for the product or services of the franchise in your area?

Let me give you a great example of an inappropriate franchise for an area. Texans are absolutely passionate about their chili. People have come to blows over what should and should not be in chili. Frank X. Tolbert wrote a

n entire book, A Bowl of Red, on the subject In general a real "bowl of red" is made with chopped, not ground, meat, lots of seasonings, is very thick and has no beans. People are divided on whether it should contain tomatoes or not but that is another discussion. In short, there is a limit to what you can do to it and still call it a bowl of red. Several years ago, someone brought a franchise of Cincinnati style chili to Dallas. For those who don't know, Cincinnati style was developed at a Greek restaurant and contains such unusual ingredients as a lot of cinnamon. The restaurant opened and in six months it was gone. People from the Midwest at first flocked to the place but there were not enough to sustain

it and Texans looked upon it as an insult to the word chili. Right or wrong was immaterial because the fact was it wasn't an introduction of a new and "exotic" food to Dallas but was taken as an attempted insult. The lesson here is to make sure there really is a market for that franchise in your area. If you live in Idaho, for instance, a franchise surf shop probably is not a good choice nor would a winter sports shop do well in Florida.

Common Sense

Many franchise opportunities cannot pass the "sniff test." Some of the less expensive ones are only a way to part you from your money. Don't be fooled by written testimonials because they may just be more inventions to help you open your wallet. Check with the Better Business Bureau in the city where the parent company has its headquarters and possibly with the Attorney General of that state. Look online for the company and see if you find a lot of complaints. If any of their advertising or information sounds too good to be true, you can rest assured that it is. Should you find yourself a victim of one of these scams don't let embarrassment prevent you from reporting it to the proper authorities - police if possible, the Better Business Bureau in your city and the parent city, the Attorney General of your state and also the state of the parent company, and the Federal Trade Commission. Not only will this make you feel better but you will be helping to prevent others from being scammed. The scammers like to keep the cost under $10,000 and preferably under $5,000 because victims are less likely to report that amount out of embarrassment. Not all low cost franchises are scams but they need to be checked out thoroughly.

Use common sense and research in order to find a worthwhile franchise.

There are many franchises available that, while not scams, are risky, unethical, or have products and/or services of questionable quality. As you talk to the parent company and do your research, there are several red flags that you should be aware of that should make you think twice about becoming involved.

1. You are not allowed to talk to other franchise owners or only certain ones. Why can't you talk to the others?
2. You are not allowed to take the contracts to an attorney to make certain you are going to get what they say and there is no objectionable "fine print." What are they afraid of?
3. They won't show you the audited financial statement of the company. Why not?
4. They won't tell you who are their suppliers or vendors and what contracts they may have with them. Do they have good vendors or contracts at all?
5. They insist on picking the location even if your research and knowledge show that it is not the best choice. Who knows more about the area, you or them? If they wish to help you choose one, then take their expertise into consideration.
6. They provide adequate training in operations and other details. Why do they offer absolute minimal training and perhaps with little needed subject matter?
7. Do they have 24/7 support if you run into a problem or emergency. Don't problems and emergencies always occur after 5 pm and especially on weekends? Depending on the franchise 24/7 isn't always essential but you must have support availability.
8. Offer to help you find financing from non-standard sources. Are their sources legitimate and are their rates and terms reasonable and without hidden terms or issues?
9. Exit strategy. If you do not attain success or for other reasons such as health concerns, will the company buy your franchise back or help you sell it? Do they try to prevent you from selling because of items in the contract?
10. Employees. Who does the advertising for employees, controls wages and benefits, promotions and/or terminations? Do they have discriminatory hiring practices?
11. Many companies also have corporate locations. Will they build a company owned business in your "territory" and compete with you directly? Does their contract protect you at all?

If you do your research well, find no red flags, and are not looting your nest egg or retirement money to purchase a franchise then they can be a good choice for many would be entrepreneurs of any age. Common sense is your best detector. Look for franchise fairs in your area and/or talk to a franchise broker to see what opportunities might be available. Or contact companies in which you might be interested to gather information. Remember that this needs to be a business decision not an emotional one. Good luck.