Starting a business can be tough and expensive. One needs to have the necessary start-up capital, build infrastructure, market the business and find potential customers in an already highly competitive market. That is why some people opt to buy franchises, which give them access to a network of industry experts and an opportunity to work within an established brand that already has the necessary infrastructure and marketing in place.
There are several low-cost franchises in South Africa that lower the barrier of entry for people to start businesses. One such franchise is Ready Made Stores (RMS), which provides clients with ready-made online stores loaded with over 100 products. It costs R11 000 upfront, with a R360 per month ongoing management fee, to purchase an RMS store.
“We have been in business for over 10 years providing online business and support services worldwide,” says RMS CEO, Anthony Phillips. “We build up-and-running stores where the client can simply add in their Paypal and/or card processor information, and they’re ready to take orders within 24 hours.”
There are two income streams at RMS — through being an RMS partner or purchasing your own ready-made dropshipping store. As an RMS partner, you can sell the company’s ready-made stores and support packages, and earn 35 per cent commission. The average sale on the website brings in R10 000, giving an RMS partner R3 500 commission per sale. If you buy a ready-made dropshipping store, you retain 100 per cent of the profit you make.
Phillips cites skills shortage as one of the main challenges facing business start-ups in the country and worldwide. “Not everyone is a graphic designer, technician, marketeer, social guru and business person in one, which is why we provide an all-in-one solution and access to resources giving our clients a strong base to start from to build their own business,” he explains.
PostNet franchise owner Evelyn Fischer thinks that establishing and maintaining healthy cash flow is one of the many challenges faced by franchisees. The idea to buy a franchise came after she worked for 20 years as an employee in the commerce and education fields. When she completed her masters in business leadership, she knew she was ready to start her own business. “I’ve always been a loyal PostNet customer and I wanted my first business to have the backing of an established brand,” she says.
Fischer bought her PostNet franchise for a R450 000 set-up fee in 2015. She continues to pay 8.5 per cent of her turnover as a monthly fee towards royalties and national advertising. She started her franchise business using her own financial resources as start-up capital and now makes an annual turnover in excess of R1-million. “While it is good to have your own resources, one should perhaps use some of it as collateral when you apply for finance and not utilise all your cash resources during the start-up phase,” she explains. Her advice is rather to put some of the cash away for rainy days, which are bound to come in a year or two of acquiring a franchise.
Wilcote franchisee Andre Smit bought his franchise for R500 000. Unlike other franchises where experience in the field is not necessary, Wilcote required Smit to do due diligence and an interview to determine whether or not he was cut out for the work. Being a Wilcote franchisee means receiving technical advice regularly and being supplied with products that are manufactured by the company itself. “A lot of people go out of business because they don’t know the industry,” explains Smit. “The advantage of belonging to Wilcote is that it gives you exposure to excellent products and the knowledge of how to do the work right the first time.”