The national chain “Jack and Jill’s Sporting Goods” has sold my partner and I an agreement to open a franchised branch in or near Rockford, Illinois for the sum of five thousand dollars. The franchisor is allowing us to pay for that over a two-year period without interest. We are responsible for obtaining a building, either by purchasing or leasing. We must stock the store with at least 75 percent of their endorsed brands of merchandise. We have to pay a premium of five percent over cost with all chain-endorsed wares as a royalty fee. Both of us must complete a one-week training seminar at their headquarters in Portland, Oregon.
We have found building that we may possibly purchase in Machesney Park, Illinois. Re-Max has a listing for a vacant retail store that will be adequate for a sporting goods store and is in a prime location. It is near an intersection of two state highways, just north of Rockford and is only a few miles from Interstate 90. It is located near Menards, Kohl’s, and many national chain retailers and national chain restaurants. It is 9891 square feet and has a price of 1.35 million dollars (www.loopnet.com).
Between my business partner and me, we can put a down payment of thirty percent without depleting all of our assets. Both of our spouses are working and neither of us is dependent on income from this business. We feel that buying the building will be a great investment that will increase in value and we will have more to show for our money besides a box full of rent receipts.
The corporate leaders are well aware of what it takes a business to succeed and what causes most business owners to fail. During the week of training and orientation in Portland, the corporate trainers covered all of the mandatory policies and guidelines as well as how to succeed as “Jack and Jill’s Sporting Goods” Franchisees.
Managerial incompetence or lack of experience is very detrimental to the way a business conducts business (Ebert amp; Griffin, 2007). It is the duty of managers to schedule the workers around the operations of the business so that there is plenty of staff on hand to handle the workload but not more than is necessary as well. The franchisor has provided training DVDs that clearly demonstrates every aspect of running a sporting goods store competently. Every manager will be required to watch the appropriate training videos and pass a competency test before he or she begins actual work in the store.
The owners of the sporting goods store branch (the franchisees) will be a role model for their managers. They will monitor their managers and link great performance with appropriate rewards, including pay increases and promotions. The managers will know what their duties are, and what the consequences will be, whether they perform competently or otherwise (Baldoni, 2008).
Many businesses flounder or even fail because the business owners do not spend enough time working the business and taking care of problems that arise. Besides the regular functions of operating the store, which is the purpose of hiring managers and employees, business owners have other tasks to perform, such as marketing. Perhaps local television stations, radios, and newspapers may report about the business opening up for business. The owners may need to compare costs of advertising through different avenues of media or have fliers made. When business owners are an integral part of the business, they tell the managers and employees that they care about the business (Poyoh, n.d.).
It is important to have a commitment in writing between partners how much time and effort each will spend towards the operation of the business. Each partner must be willing to devote their time working with the management, employees, and customers. There is a lot of capital and other resources at stake and this business needs to have a priority with each partner.
Some businesses fail to utilize strong control systems, meaning the owners do not prioritize business procedures. Many problems start out small, but when not dealt with, the problems get bigger and create additional problems. Sometimes, business owners are so anxious to have any business, so they extend credit or accept checks without a check reader system (Ebert amp; Griffin, 2007). I am currently working as a marketing consultant and the client I am currently helping is a good example of this problem. He has approximately $750 worth of bad checks. He will most likely recover from his current financial strain that he is experiencing, but he is now considering getting a check reader and a credit and debit card machine.
Business owners need to monitor and understand customer buying trends and habits. While some things are obvious, such as not stocking up on skiing equipment in May, shifts in buying patterns may not appear so obvious, so a business owner may want to consider purchasing software that helps track how merchandise is moving. If a business owner orders merchandise once a week and the store runs out of a particular product regularly, managers may increase the quantity of the order. A business owner has to actively participate and be the control that the business needs (Ebert amp; Griffin, 2007). Moving a display rack of more popular item(s) further away from the checkout register will expose a customer to more merchandise.
Many businesses “bleed to death,” meaning there is not enough money to pay the bills. Business owners can save a lot of money by hiring enough employees, which will allow adequate staff to operate the store without paying time and a half for over-time. Business owners should have enough capital to pay the overhead for six months to a year (Ebert amp; Griffin, 2007). The economy is always going to be cycling and it would be prudent to start a business sometime after the beginning of an upward trend. During the years when the economy is doing well, business owners should add to their capital base by twenty percent or more of their profits.
Besides four main causes of failure, there are four reasons why entrepreneurs succeed. Business owners are dedicated and work hard. When problems occur, successful people work extra hard, doing their regular work plus the extra work required to overcome any obstacles or problems. Smart business owners are continuously analyzing market trends and are prepared to have the products that their customers want, on the shelves of their store. Individuals going into business with a partner select a partner with similar goals and ideals but different and complimentary abilities so that they can benefit from having each other on their team. The textbook refers to luck and maybe that is what some people seem to have. Someone once said that luck is what you get after you did everything else, i.e. work. (Ebert amp; Griffin, 2007).