David Banfield from The Interface Financial Group discusses 'What creates an above-average franchise opportunity'.
The Interface Financial Group offers a financial service dedicated to the SME market sector. They have, over 40 years, defined a unique delivery system through a franchise and licensing approach. Now operating in 9 countries, they are again expanding and looking for new growth opportunities.
The service offered by Interface is a simple invoice discounting process. Interface takes single invoices from their small business clients and turns them into instant cash. This cash flow acceleration service is much in demand at the small business level.
Typically banks have been the main suppliers of credit to the business world. In today’s environment however few, if any, banks have a genuine appetite for assisting their small business clients.
This shortcoming in their approach provides a natural opportunity for Interface. Working with businesses that in many cases have been rejected by their bankers, Interface is able to complete their due diligence and put a financing opportunity together literally in a few business days.
By delivering this service through local franchised offices, Interface is able to work with prospective clients on a face-to-face basis adding confidence and speed to the startup process.
While economic uncertainties continue, this in-demand service will certainly provide a valuable service to small entrepreneurial growing companies.
In all startup operations there is always an element of capital required to establish the business, and then to cover day-to-day operations going forward.
This is equally true with both franchises and those that start from scratch. With a franchise model, much of the costly pre-startup work has already been carried out and financed by the franchisor.
The Interface opportunity brings a venture to the marketplace where, naturally, the early stage development work and cost have already been covered.
In any new business you will need capital for premises, equipment, staff, inventory and so on. What happens if you have a business that requires virtually none of those elements? Well, naturally, you eliminate the cost.
Interface has achieved this for their franchisees by making this a simple home-based business that in the very simplest of terms only requires a telephone, fax capability, and a computer with a reliable broad band service.
In some areas maybe it can be dismissed, and in others it is a foundational part of a business.
Starting a business from scratch requires many things over and above the basic finance and business plan. It requires 'courage'. Starting from scratch is in many instances like setting off into the unknown.
For these reasons franchising has achieved a strong foundation in the business world as it brings, in many cases, instant history to a startup business.
History is not easily measured in terms of the events contained in the background. However, the fact that it exists creates the all-important starting point for an entrepreneur. Knowing that someone has pioneered the way before you is a great asset. Especially when you realize that at they’ve travelled down the same road and cleared the road blocks form their path as part of the initial learning curve.
In many franchise models, the original business operated for many years prior to it becoming a franchise. This was certainly the case with Interface - it operated for approximately 20 years prior to franchising, thus accumulating a vast wealth of background information and knowledge that they could package into their franchised opportunity.
If you are familiar with franchising to any degree, you will know that in a 'maid' type franchise it is not the franchisor that is out cleaning houses, likewise in a hair salon franchise - it is not the franchisor that is involved in day-to-day hair styling and working with clients.
This is where the Interface opportunity shows a real difference. Interface is involved with each and every franchisee on a daily basis, working with them on every transaction to ensure that they are completely comfortable with all aspects of the transaction.
Very few Interface franchisees come into the business with an in-depth knowledge of invoice discounting or factoring. It is, therefore, essential that they know there is this comfort zone whereby they can get immediate and expert advice and direction based on over 40 years of hands-on experience.
Their experience tells them that franchisees work to their maximum potential when they know that they have a strong support team and back office facility at hand.
Many of the potential franchisees that apply for a franchise award from Interface are long-term corporate individuals. They have devoted many, many years of their career to working for large corporations. In some cases they have spent an entire career with just one employer.
Employment guarantees are a thing of the past, and no longer does 20+ years of loyal service mean that your services will be required tomorrow.
These corporate 'refugees' are all looking for their next career and, in many cases, finding it extremely difficult to identify an appropriate direction. In many cases, age can be a factor that reduces their opportunities.
They all have strong work ethics and 40/50/60 hours a week is not an unusual work load for many of them. When they talk to Interface we have to burst their expectations balloon, as Interface offers a franchise that calculates time needed in hours per month rather than per week.
They have styled their franchise in such a way that an individual franchisee can engage in other activities, including having a real and normal family life alongside their Interface business. Working hard is fine, but working smart with Interface is even better.
As these candidates work through the due diligence process, probably the number one question they are asked as a franchisor is, how do you get business, and how do Interface franchisees build their portfolio?
They always start off the answer with an understanding of what a portfolio of clients looks like.
Typically it will be small - probably less than 10 active clients, and 5 or 6 is not at all uncommon. Armed with that knowledge, they can now explore what works for them. With over 40 years of history, Interface have literally tried all client acquisition methods over the years. They always keep coming back to one that has been tried and tested and proved to work for them.
Franchisees build their business through a networking approach. This means that they eliminate cold calling, telemarketing (illegal in some areas) and other such 'hard work' approaches. By working with entities that can actually refer potential clients to Interface, they quickly build a business in both a professional and cost-effective manner.
Creating relationships is not a difficult task, so they encourage their franchisees to network with specific groups in their area to create a solid lead source referral group that keeps their new business pipeline active. As a franchisor, they believe it is also part of their task to ensure that each franchisee has an initial lead source referral group as they open their franchise operations. To this end, they craft that initial group for each franchisee.
Relationship marketing is a solid approach that generates lasting results. Likewise, having a strong 'hands-on' relationship between franchisee and franchisor is all part of the recipe for success.
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