Top 3 Ways to Scale Your Business Fast and Why Franchising May Be the Most Viable Option
The top two wishes of every entrepreneur are more money and more time. More time to spend with family, friends, and other interests; and more money to fund our business properly as well as our lifestyle of freedom.
Typically, those two wishes are at a variance with each other: to earn more money, invest more time; to have more time, sacrifice working harder to make more money. That is, unless you are willing to consider other outside ways to scale your business quickly.
Among the top options to scale fast are IPOs, Private Equity, and Franchising. Let’s take a glance at all three. But here’s a spoiler: franchising is most viable option.
Initial Public Offering (IPO)
Most new business begin with the entrepreneur investing all their existing revenue into the startup, and all they can borrow to keep it going. But then what? All too soon, many come to find they need outside financing to keep growing, and therefore decide to go public with an IPO.
An initial public offering (IPO) “is the process by which a privately held company begins selling stock to outside investors, thus becoming a public company. From that point on, the company can raise the capital it needs by selling shares, but it must also comply with a strict set of reporting guidelines, as established by the Securities and Exchange Commission (SEC).”
Going public with your stock offerings opens access to a world of capital. This money can then be used for R&D, marketing, hiring employees, expansion, and anything else your company needs to grow and keep making money.
However, once public, you are now accountable to your shareholders and a large measure of control over your company is forfeited. You also must publish regular disclosure statements and share financial information with the world.
Private equity is “capital sourced from high-net-worth individuals or firms that raise and manage shareholder funds. They typically purchase shares in private companies, but they can also purchase equity in public companies with the intention of delisting the business from public stock exchanges.”
Private equity investors are typically on the lookout for proven businesses with substantial earnings. In other words, a safe, sound investment that promises a solid return. They can also purchase a company lock, stock, and barrel. Here again, control is surrendered.
Historically, private equity funding has been difficult for small businesses to obtain. For the most part, private equity companies are more interested in large companies in which they can invest and spark a significant gain. Small businesses are generally not large enough game to satisfy their needs and goals.
Probably the best known type of small-business-focused private equity firm is small business investment companies, or SBICs. SBICs are privately owned and managed investment funds licensed by the U.S. Small Business Administration. They’re allowed to invest in small businesses using funds borrowed with an SBA guarantee. SBICs can be a valuable source of small-business funding. In fact, since 1958 they have invested $60 billion in over 100,000 small businesses.
Franchising is a solid business model for scaling your business rapidly with a proven track record over time. Since 2012, the franchise market has experienced the highest year over year growth than any other time period.
Franchising simply allows a business to offer franchise units based on its own model. New franchisees put up their own money and operate as independent business owners within your franchise network. Franchisees have a vested interest in seeing their franchise business succeed, so they work harder, care about the success of the business, and have the same intensity in growing the business as you do.
Your company also benefits from multiple funding sources like franchise fees, royalty fees, training fees, and more. The franchisee bears most of the expenses as well as the liability and risk for their franchise business. This powerful infusion of capital and human investment combines to create a significant growth vehicle for your business.
Now that we have touched on the Top 3 Ways to Scale Your Business, it is clear, through franchising, you can rapidly scale into new markets with minimum investment and maximum revenue gain. And, you maintain the overall control of your business, as your franchises are all models of your company that follow your established guidelines and adhere to your core values.
Why Franchising Wins
When comparing the Top 3 Ways to Scale Your Business, only one allows you to keep control of your business, expand rapidly, and generate growing revenue streams. Franchising is by far the unmatched method of scaling your business while keeping the things that are important to you intact. If your brand is solid now, how much better can it be with dozens of franchises promoting it in new markets?
Are you ready to explore all that franchising can offer your business? Do you have questions? Connect with Franchise Guardian to discover how we can help you through each step of franchising your business for growing success.