The Natwest BFA survey results show that an increasing number of people under 30 are choosing franchising as a route to self-employment.
One in five franchises that launched in the last two years were operated by under 30s. What is it about franchising that’s drawing in more and more millennials, and how does the traditional franchising industry compare to the trendy world of startups?
Franchise vs ‘Startup’
The use of the term ‘startup’ is on the up, with companies like Uber, Facebook and AirBnB inspiring graduates and young professionals alike to come up with the next big idea. Indeed, many have tried their hands at side projects alongside their dissertations or day-jobs. The culture of entrepreneurship is certainly on the rise, in 2015, 608,100 new businesses started – an increase of 4.6% year on year. London is the UK’s start-up hub, with nearly a third of all new business in 2015 starting in the capital.
According to Fortune, nine out of 10 startups fail. A survey of 101 unsuccessful startups showed that the main reason for failure was down to a lack of ‘market need for their product or service’ (42%). ‘Running out of cash’ proved the second most common reason for failure (29%) and many attributed their failure to running their business ‘without a business model’ (17%).
The risk of starting a business from scratch is high, especially when compared with franchising. Bfa research shows that 97% of franchises report profitability, with 56% saying they are ‘quite’ or ‘very’ profitable. This may explain the renewed interest from the under 30s in the franchising arena, as franchising is a risk-averse route to business ownership; 96% of franchises succeed and only one in 20 franchises fail.
Franchising offers the best of both worlds for young professionals; a gateway to entrepreneurship, providing franchisees with the business model that they need to succeed and the ability to plan for the future, to avoid falling into the trap of running out of cash.
Join the unicorn club
Many decide to go down the startup route because they are looking for the freedom to follow their passion without the restrictions associated with traditional employment. However, the same passions can be followed in a more risk averse way through franchising.
Entrepreneurs can take their pick from any industry sector, as there is a franchise to suit nearly every type of person. In an Entrepreneur article, PilmerPR CEO John Pilmer advised readers that ‘a successful business can be built on the genius of someone else’. This could explain why more of us are putting this into practice and investing in a proven business idea through franchising.
Franchising is a great alternative for people looking to start a business with minimal risk that suits their interests, with opportunities spanning a wide range of industries. From Pet Care to Consultancy, Design to Dating, there is something to suit all. With 1000s of UK based franchises for sale on Reed Commercial, the industry is ripe and ready for growth.
How can you get involved?
Are you ready to find the right franchise for you? Why not take a look at hundreds of different businesses that you could own.