Franchises & start us Business ideas

[SirJimi05]

Couldn't find a thread that covered this so i thought it might be a good idea.

Just a general discussion point where we can discuss the pros and cons of both options and give tips and advice for any business they have had experience with.

I've been looking at many different options as i'm going to be starting something up within the next 6 months or so and one option which is starting to tickle my fancy is buying a Tattersalls agency.

It is a little bit different to most of the franchise types of agreements because in this case you take a commision on all tickets sold. Most of them have the Intraloot facilities now which is another form of revenue and then there are the obvious options like magazines, cigarettes etc.

Another major benefit is that the operating capital for such a venture is a lot smaller than something like a Nandos restaurant. Stock on hand for a smaller kiosk style store generally wouldn't exceed more than about 5k. Minimal staff needed if any at all.

I have viewed the business profile of a couple of established agencies which are up for sale and i must say i was quite impressed. One in particular that i am interested in has had net profits of $170,000 & $178,000 over the last 2 financial years with a ROI of around 25%. This is pretty good in anyones language.

One other thing which got me thinking is the viability of such a business during tough economic times such as a recession. This is one business that i reckon would thrive in a recession. People are more likely to spend a $20 in the hope of getting them out of the shit.

What are your thoughts guys?

Anyone on a franchise of any sort? Any reccomendations?

 

[SirJimi05]

Forgot to mention that with a tatts agency there are no renewable franchise terms such as 5 x 5 or 10 x 10. Once you purchase it it's yours for as long as you want it. You just pay a fee at the start which i think is about 1.5% of previous years ticket sales. Not sure how much Intralot charge but i think it might be a flat rate of about $10,000 once off. If i end up making an offer on a store i will most certainly be taking the above into consideration when coming up with an amount.

 

[bigburger]

I reckon Muzz Buzz would be a goer as would Noodle Box. I have heard the latter has extremely good margins.

 

[SirJimi05]

I reckon Muzz Buzz would be a goer as would Noodle Box. I have heard the latter has extremely good margins.

Yeah i've heard some pretty good things about Noodle Box and in terms of the quality i reckon the food is pretty good.

I'm guessing the margins are pretty good. It usually costs me about $13 for noodles and a drink. Pretty steep but i'm happy to pay it because the food is good.

 

[amf87]

those all seem great ideas, i am fresh out of uni and looking to go into business, but obviously in a smaller scale, so have decided to start up an online business, just not sure which way to go yet. eCommerce seems to be relatively cheap to start up which appeals to me.

 

[r dub 19]

I reckon Muzz Buzz would be a goer as would Noodle Box. I have heard the latter has extremely good margins.

Actually had the founder of muzz buzz come into curtin to give us a lecture on marketing. Poor guy lost control of the company when new investors came in, good guy none the less. One of the questions he got asked was "how long did it take before you got a ROI" he said 6 months and it had cost him 200k. Pretty goodI'd say and I have seen muzz buzz's franchised for 150-175k.

I've always wanted to buy the maccas in tuart hill (24-7) the amount of money it would make would be incredible.

 

[Chief]

I reckon Muzz Buzz would be a goer as would Noodle Box. I have heard the latter has extremely good margins.

Had a mate who opened one of those a fair while ago. Wrong location - they lost it all. Luckily he's got the money to lose but it would have wiped out your average Mum and Dad franchise buyer.

Standard business caveats apply, plus a bit of luck.

Someone else pointed out that there are almost no donut shops in Perth. Is this right?

 

[r dub 19]

Had a mate who opened one of those a fair while ago. Wrong location - they lost it all. Luckily he's got the money to lose but it would have wiped out your average Mum and Dad franchise buyer.

Standard business caveats apply, plus a bit of luck.

Someone else pointed out that there are almost no donut shops in Perth. Is this right?

Donut King, Wendys is about it. Perth is screaming out for a Krispy Kremes!!!! I actually looked into it but you can't franchise them.

 

[Chief]

Try Dreamy Donuts. Just as good.

 

[evo]

Those 'Boost' juice bars in shopping centres look like a license to print money to me. It doesn't matter which centre you are at there is always a line 7 or 8 people deep, and at all times of the day. And 5 chicks working flat out. The mark up looks extraordinary too.

I don't know any details about ROI though.

 

[Chief]

those all seem great ideas, i am fresh out of uni and looking to go into business, but obviously in a smaller scale, so have decided to start up an online business, just not sure which way to go yet. eCommerce seems to be relatively cheap to start up which appeals to me.

It is also cheap to everyone else, so you had better work out how to make it work.

Seth Godin:

Creating sustainable competitive advantage

No successful web company (not eBay, Flickr, Amazon, Facebook...) succeeds because of a significant technological barrier to entry. It's not insanely difficult to copy what they've done. Yet they win and the copycats don't.


Few organizations succeed in the long run because of proprietary technology. Not Starbucks or CAA or Nike, certainly. Not Caterpillar or Reuters either.


Technologists often tell me, "this product is very hard to build, that will insulate us from competition and protect our pricing." It might. For a while. But once you're successful, the competition will figure out a way. They always do.


So, what to do?

• You can own something that's hard to copy (like real estate).
• You can race down the pricing and scale curve, so it's cheaper for you to do what you do because you have a head start.
• You can create switching costs, so that the hassle and cost of moving to a cheaper competitor is so great, it's just not worth it.
• You can build a network (which can take many forms--natural monopolies are organizations where the market is better off when there's only one of you).
• You can build a brand (shorthand for relationships, beliefs, trust, permission and word of mouth).
• You can create a constantly innovating organization where extraordinary employees thrive.

The reason the internet is such a home to wow business models is that it's easier to create a network here than any other time in history.

 

[amf87]

thanks for the big reply chief, yeah very good article, i am thinking of creating an online marketplace for people to buy sell and trade with eachother, yes this sounds like ebay, but i want to just focus on one product (not sure yet have a few ideas). so i will only need to provide the website, have no idea how much this will cost to get going but im hoping for 1k max!

 

[SirJimi05]

Had a mate who opened one of those a fair while ago. Wrong location - they lost it all. Luckily he's got the money to lose but it would have wiped out your average Mum and Dad franchise buyer.

Standard business caveats apply, plus a bit of luck.

Someone else pointed out that there are almost no donut shops in Perth. Is this right?

This is the reason i don't think i will purchase a new franchise. Too much risk involved. I know you are aead of the game bein g involved with an already established brand but it is still arisky proposition.

I would prefer to buy an existing franchise. Sure, you will pay extra for a decent store due to the goodwill attached but i would rather pay a bit more for the added piece of mind. If you do your homework and purchase a good already established franchise the main thing that can ruin it for you is incompetence.

I know i can start up a tattersalls agency for around 300k but i'm more inclined to purchase an existing one with a very sold trading history. For approx 550k i can purchase one that has been trading for 13 years in current location, with net profits every single year, last 2 years 170k+ net profit, with a ROI of about 25%.

It may take longer to recoup the initial investment but the process will be far less stressfull.

I have this sort of money to invest without too much problems but unlike your friend, it would hurt to lose it all as it would be much of my savings gone.

The other option is to start another business from scratch as i have done more than once in the past but to be honest i want to take a break from that fort he time being. You get great pleasure out of building a business from scracth and watching it grow but it takes a huge level of commitment to succeed. Now that i have a familly i want a type of turn key business that only requires you standard type working hours.

 

[bigburger]

Dreamy Donuts just put their first shop in Perth in Carousel.

 

[evo]

It is also cheap to everyone else, so you had better work out how to make it work.

Seth Godin:

Creating sustainable competitive advantage

No successful web company (not eBay, Flickr, Amazon, Facebook...) succeeds because of a significant technological barrier to entry. It's not insanely difficult to copy what they've done. Yet they win and the copycats don't.


Few organizations succeed in the long run because of proprietary technology. Not Starbucks or CAA or Nike, certainly. Not Caterpillar or Reuters either.


Technologists often tell me, "this product is very hard to build, that will insulate us from competition and protect our pricing." It might. For a while. But once you're successful, the competition will figure out a way. They always do.


So, what to do?

• You can own something that's hard to copy (like real estate).
• You can race down the pricing and scale curve, so it's cheaper for you to do what you do because you have a head start.
• You can create switching costs, so that the hassle and cost of moving to a cheaper competitor is so great, it's just not worth it.
• You can build a network (which can take many forms--natural monopolies are organizations where the market is better off when there's only one of you).
• You can build a brand (shorthand for relationships, beliefs, trust, permission and word of mouth).
• You can create a constantly innovating organization where extraordinary employees thrive.

The reason the internet is such a home to wow business models is that it's easier to create a network here than any other time in history.

I have found the youtube model the most fascinating one yet.

Their soul objective has been to get as many views of the site with little attention to revenue.

On October 9, 2009, the third anniversary of the acquisition by Google, Chad Hurley announced in a blog posting that YouTube was serving "well over a billion views a day" worldwide.

Only now are they going to start figuring how to make money from all those views.

I can't think of any example in history where a company pretty much gave its stuff away free for years, had little or no plan for revenue on its inception yet ended up being genuinely worth billions.

During the internet stock marketbubble a lot of crap was being sold on promises and little revenue but youtube seems to me the first one that will be able to deliver.

 

[Willis]

Just a thing to remember in regard to running a newsagency is that there were rumours a few months back of Woolworths or another big player entering the market (i.e. Scratchies/Lotto Tickets etc). May be worth investigating more thoroughly if you decide to go that route.

 

[SirJimi05]

Just a thing to remember in regard to running a newsagency is that there were rumours a few months back of Woolworths or another big player entering the market (i.e. Scratchies/Lotto Tickets etc). May be worth investigating more thoroughly if you decide to go that route.

Thanks i will look into it although i do wonder how this is possible? Are the government going to hand out more licenses? If so you would think the last group they would grant one to is Woolworths given the fact they already have a monopoloy in the supermarket industry.

A while back they granted Interlot a license due to the fact that Tattersalls had the monopoly over the whole industry and now Interlot are the licensed company to sell scratchies whilst Tattersalls still have the license for the lotto tickets.

Now if you want to start a Tatts agency you have to pay two application fees - one to tattersalls and one to Intralot.

I'm pretty sure there was also a big war between Intralot and Tattersalls because Tattersalls were pissed off. Apparently they started going into stores and threatening to shut down the machines of operators that had scratchi tickets on the same counter as the tatts tickets. They basically argues that that counter was there space and not the owners.

I think it was all resolved in the end but there were some worrying times for the owners who looked like they could lose out on a lot of revenue.

But thanks once again i will certainly keep what you have said in mind.

 

[Pilchard_Adams]

Ever considered internet based retail businesses? Over the years more and more people are using the internet as a shopping source than ever before. I started an eBay store and website a year ago. Why go out to a busy shopping centre, takes 20mins to get there, petrol is expensive, weather is rainy or hot, when you could get it delivered to your door.

Plus, a small shop in a decent shopping centre here costs between $400 and $600 a week. Dont have to pay that if its run from home

 

[Frodo]

Ever considered internet based retail businesses? Over the years more and more people are using the internet as a shopping source than ever before. I started an eBay store and website a year ago. Why go out to a busy shopping centre, takes 20mins to get there, petrol is expensive, weather is rainy or hot, when you could get it delivered to your door.

Plus, a small shop in a decent shopping centre here costs between $400 and $600 a week. Dont have to pay that if its run from home

On the money.


The A$ is so strong that buying from China and onselling via an ebay store is very good. Just do your research on demand and suppliers.

If I were a youngster, I'd be straight into it.

 

[Colin D'Cops]

If I were a youngster, I'd be straight into it.

Starting what type of business on the internet? Selling goods?

 

[Pilchard_Adams]

Starting what type of business on the internet? Selling goods?

Anything really. I sell DVDs which has pros and cons. Australian DVD players use Region 4 DVDs so I cant stock USA or chinese made items. Also, there are few hundred DVD sellers on the net and eBay already. Not much market so we all compete for lowest prices making profits smaller. But DVDs are small, can run from my house. Larger items need more room. Best bet is to find something new, something the market isnt flooded with.

The worst part is finding a supplier. No one tells you anything and if they do, chances are its not that good.

 

[SirJimi05]

On the money.


The A$ is so strong that buying from China and onselling via an ebay store is very good. Just do your research on demand and suppliers.

If I were a youngster, I'd be straight into it.

Is this what you do?

If so you would know that a strong AUD almost always leads to price increases by your supplier.

Chinese suppliers expect their customers to ride out the good times and bad times when it comes to the strength of the USD but when the USD is weak they will come up with every excuse under the sun why prices must go up. Funny thing is they don't go back down again when the USD strengthens.

This is coming from a guy who used to import 4-10 40ft HQ per month.

 

[SirJimi05]

Ever considered internet based retail businesses? Over the years more and more people are using the internet as a shopping source than ever before. I started an eBay store and website a year ago. Why go out to a busy shopping centre, takes 20mins to get there, petrol is expensive, weather is rainy or hot, when you could get it delivered to your door.

Plus, a small shop in a decent shopping centre here costs between $400 and $600 a week. Dont have to pay that if its run from home

Yeah mate. I've been there done that. I've operated 2 sucessful import businesses. One of them was almost exclusively internet based although we did fave a factory outlet as well. We dealt in big ticket items but still shipped Australia wide. I sold the business last year for a healthy profit.

eBay is not the place to make money on big ticket items but it a fantastic marketing tool. We were content selling items on eBay without making any money on them because it was a terific form of exposure. If we covered our costs we were happy. It drove plenty of people through our doors who we then converted into showroom customers.

It was enjoyable but also very stressful and time consuming. I am now looking for something with less stress and something that doesn't require all of my attention.

We are actually contemplating a Maccas franchise atm. A lot of hoops to jump through to make it happen but it's tempting.

 

[Frodo]

Is this what you do?

If so you would know that a strong AUD almost always leads to price increases by your supplier.

Chinese suppliers expect their customers to ride out the good times and bad times when it comes to the strength of the USD but when the USD is weak they will come up with every excuse under the sun why prices must go up. Funny thing is they don't go back down again when the USD strengthens.

This is coming from a guy who used to import 4-10 40ft HQ per month.

No I don't

But I have 8 Chinese suppliers / friends

Your experience means that you have not learned about Chinese business culture.

I visit twice a year to maintain the friendships. These guys are dear to me. We help each other through thick and thin.

 

[carmi99]

No I don't

But I have 8 Chinese suppliers / friends

Your experience means that you have not learned about Chinese business culture.

I visit twice a year to maintain the friendships. These guys are dear to me. We help each other through thick and thin.

They are your close friends and suppliers? Number 1 no no in business imo. I'm with SirJimi05. I used to import from China. Very smart business people but cannot be trusted. I also had a similiar experience where they continually put prices up when the usd weakens. Another thing is they will do almost anything to avoid and sort of compensation when it comes to quality issues.

Started importing from Malaysia and had far less problems. Prices have not gone up once in well over a year now and all problems are addressed well. Quality is also superior.