Millennials are proving they’re Generation Entrepreneur, preferring startups over the 9-to-5 and wanting to be the next Mark Zuckerberg. And franchises are increasingly the business venture of choice for members of Generation Y.
So if you’re thinking about what to do when you finish college or if you’re struggling to find a job, then read on. Maybe you’d love to start your own business, but the risk factors are stopping you from taking the plunge? Franchising can be the ideal business model for anyone considering setting up in business, and investing in a franchise in your twenties can be the perfect choice because of the established brand and support network.
Ten years ago it would have been tough to find somebody in the franchising industry who thought people in their twenties or early thirties were prime franchisee candidates. For the most part, franchise ownership has been reserved for a small demographic of high-net-worth individuals or executives from the corporate world who wanted to go out on their own. But this has totally started to change.
Franchises, especially lower-cost franchises and tech-based systems, have “discovered” Millennials. Despite a media-fed stereotype that Millennials are self-absorbed, avoid hard work and expect praise without accomplishment, franchisors who have worked with them have found many to be energetic, adaptable, smart and hardworking.
HOW TO DEAL WITH A LACK OF EXPERIENCE
While the thought of owning your own business is alluring, the reality for a millennial can be daunting. Faced with the desire to be their own boss, but challenged with lack of experience, many millennials should consider franchising as an ideal solution.
Franchise owners are provided rights to market a brand’s goods or services within a certain territory or location, in exchange for a fee and royalties for ongoing support. The royalty fee also works to keep the company owner (franchisor) invested in the continued success of each franchise location.
Franchises provide the opportunity for business ownership and a level of independence alongside an established company with a proven record of success, and oftentimes a well-recognised brand name. Individuals will be more likely to see a higher probability of success through franchising than starting an independent business for a variety of factors, including:
- Shorter ramp up/opening period
- Initial training and ongoing support
- Lower costs through group purchasing
- Use of an established business model
- Marketing and advertising support and tools
- A network of peers to rely on for advice, mentoring and best practices
- Assistance with securing funding
The franchise model allows individuals to go into business for themselves, but not by themselves. In addition, many entrepreneurs find that joining a trusted and recognised network also provides their consumers with the comfort of purchasing items or services they are familiar with and working with names they know and trust.
HOW TO OVERCOME A LACK OF FINANCE
A lack of startup cash is a real problem for young people when setting out on their franchise journey. Your bank should be your first port of call but here are some terrific, alternative sources of funding for the younger franchisee.
STATE GRANTS
Local Enterprise Offices (LEOS) and Enterprise Ireland
What you get: 50% of costs excluding VAT capped at €15,000.
Key details: Feasibility grants are designed to assist the promoter with researching market demand for a product or service and examining its sustainability. It includes assistance with innovation including specific consultancy needs.
Website: localenterprise.ie/Discover-Business-Supports/Financial-Supports/Feasibility-Grant/
OTHER SOURCES OF STATE FUNDING
Credit Review Office
Provides a simple review process for Small and Medium Enterprises who have had requests for credit refused or existing credit facilities reduced or withdrawn.
Website: creditreview.ie
Credit Guarantee Scheme
This Government scheme enables the State to act as a guarantor to the bank for your loan application. The purpose of the scheme is to guarantee SMEs that have been declined credit due to inadequate collateral and/or lack of understanding of the business model.
Website: djei.ie/enterprise/smes/creditguarantee.html
CROWDFUNDING
With banks reluctant to help, entrepreneurs are turning to alternative forms of finance and crowdfunding is one of the big hits of the emerging new financial sector. Businesses frustrated by a lack of support from traditional banks have been turning to the wisdom of the crowd for investment instead. There are different forms of crowdfunding: equity, rewards and charitable. Here are some that a millennial could consider.
The following are the main crowdfunding platforms in Ireland:
iCrowdFund
An Irish crowdfunding firm from the same people that developed iDonate, iFundraise and iRegister.
Rate: 4% commission
Website: icrowdfund.ie
Fundit
An Irish-owned not for profit organisation working to support resilience and transformation in the cultural sector through research, innovation and partnership.
Rate: 5% commission
Website: fundit.ie
Linked Finance
Another Irish owned crowdfunding site with favourable commission rates.
Rate: 2.5% commission
Website: linkedfinance.com
You may also want to check out international crowdfunding platforms open to Irish startups:
Kickstarter
Having funded over 77,000 creative projects since 2009 Kickstarter are a big globalplayer in crowdfunding.
Rate: 5% commission
Website: kickstarter.com/ireland
Indiegogo
Indiegogo are another big player in international crowdfunding.
Rate: 9% but they refund you 5% if your project goes ahead.
Website: indiegogo.com
MICROFINANCE LOANS FOR IRISH STARTUPS
Micro Finance loans are a great way for small businesses to access capital that would have no opportunities going through a large financial institution or might struggle going through crowdfunding.
MFI provides loans from €2,000 up to €25,000 to newly established startups or to growing micro-enterprises that do not meet up to the conventional risk criteria which can be applied by commercial banks.
Website: microfinanceireland.ie