This lesson is part of our free Franchise 101 course.
When picking a franchise, you have to put a lot of work into considering what it provides. But there’s another side to consider, one that’s equally important: your needs. If you’re starting a business, then you need to make sure that it will provide enough income for you.
What Are Your Net Income Requirements?
The starting point for this is to consider your net income needs.
Some of this comes from looking at your existing finances. How much are you spending each month on the mortgage, power bills, groceries, and all the other necessities of life? How much do you want on top of that for a lifestyle that you’re comfortable with?
Consider your current or recent income as well. If you’ve had a high-paying job, you’ll probably want a franchise that could maintain the kind of lifestyle you’re already accustomed to. Fortunately, a previous high income means you might also have the savings to invest in a bigger league franchise.
Regardless of how you work it out, you’ll need a figure for what is an acceptable net income, as a starting place for picking your franchise.
From there, it’s time to look at the net income that different franchises could provide. Franchise Chatter’s average profits list is a great place to start, as it gathers information on what you can earn from different franchises, all in one place.
Take a look down the list and see which franchises match or exceed the income you’re looking for. This is a good way to compare the relative value to you of different franchises you’re already considering, and perhaps to draw attention to some you hadn’t considered.
Remember, these figures are averages, and there’s going to be some variation. Franchises with incomes close together are effectively the same on this front, it’s the big differences that you need to consider.
Work In, Money Out
It’s also worth considering the amount of effort that will go into each of these franchises. The potential for high income can only be realized with lots of hard work. Aiming for a higher net income will mean more effort to keep your franchise running, and you should balance that effort against the rewards you’ll receive. Are you happy to accept an income lower than you’ve had before, if it means a more relaxed lifestyle? Or is franchising the moment in life when you’re going to aim big?
You need to pick a franchise that can match your income needs. Beyond that, the balance is up to you.