What Type of Franchise is Best for You?
What Type of Franchise Arrangement is Best for You?
Deciding on the level of franchising that best fits your needs is almost as important as investigating and choosing the right franchise. Below are the four levels of franchising. These include information on the territory specifics, the required level of participation, and the typical liquid capital requirements. It is best to consider all aspects of each level, before deciding what type of franchise is best for you.
Single Unit Franchises
A franchisee has the right to operate one franchise unit. Most franchisees enter the world of franchising by owning one unit. It is a great way to get in and understand the system before taking on more units.
Territory: The franchisee may have a small radius of exclusive territory to operate within. If it is a retail store, the area of exclusivity may be a two or three mile radius around the store. If it is a home-based business the area may consist of a few specific zip codes.
Level of participation: The franchisee is very involved with almost all operations of this type. Even if it is a semi-absentee owned business, the franchisee will want to be present at the business and be as hands-on as possible.
Typical liquid capital required: $25,000 to $60,000 initial out-of-pocket investment required on a total investment of $100,000 to $200,000.
Multi-Unit Franchises
The franchisee acquires more than one unit of the franchise, usually at reduced franchise fees. The risk is lower because the franchisee can take advantage of the economies-of-scale theory; by spreading costs across multi-units, the locations may be more successful. A good sign of the health of the franchise is if many of the franchisees are multi-unit owners.
Territory: There is usually no exclusive territory where the franchises must be set up. The franchisee may have one unit in one part of town with a surrounding radius of exclusivity, and another unit in another part of town 15 miles away or even in another county with its exclusive radius of operation.
Level of participation: The franchisee is less involved with each of the units operations, but will be managing multiple operations and will need to have some level of supervision in each unit. If many units are opened, a general manager and additional administrative and training staff may be needed. The franchisee is more of a general manager when many units are involved.
Typical liquid capital required: $50,000 to $70,000 initial out-of-pocket capital is required to take care of mostly the initial franchise fees. The rest of the investment is usually financed when each unit is opened.
Area Development Franchises
This license usually grants the franchisee the right to open a certain number of franchises in a given area. There is usually a production schedule where the franchisee must open a certain number of franchises during a certain period. The franchisee has an exclusive area where no other franchisees can be allowed to open a franchise.
Territory: The franchisee maintains an exclusive geographic territory as long as the opening schedule is maintained. The territories range from a small city to parts or all of a larger city.
Level of participation: The franchisee will be very involved in the beginning stages of the first location to make sure it is successful. The franchisee will also need to be looking for qualified real estate to open the next few locations. Once several locations are open, the franchisee will need additional assistance to manage several units.
Typical liquid capital required: $60,000 to $120,000 initially to secure the area, pay all franchise fees and have additional start-up capital. The franchisee will then need to be able to finance the rest of the start-up costs for each of the franchises, as they open.
Master Development Franchises
A Master Franchisee, sometimes called a Regional Developer, has the rights to a larger area than that of an Area Developer. The Master Franchisee, in addition to opening franchises at a much reduced franchise fee and royalty, can also sell unit franchises, multi-unit franchises and area development franchises and make a nice return on the sale. The master usually receives a part of the royalty and franchise fee paid by each franchisee.
There may be additional income available from distribution of products through the franchisees in the area and possibly even some real estate interest. The master becomes somewhat of a sub-franchisor for the area, without having experienced all the trial and error the original franchisor did. The master franchisee will usually want to open and operate at least one unit (pilot location), for income and use as a training center. Master franchises are rare as most franchisors do not offer them. However, when they are available they usually sell quickly. The income available from a master franchise is extremely lucrative. The initial investment is low compared to the type of value you can build in the master franchise area. The flexibility is also the greatest at this level.
Territory: Usually is a large metropolitan area, an entire state or even several states or country. It is an exclusive area and will remain exclusive as long as the master franchisee meets the development schedule of franchises in the territory.
Level or participation: The master franchisee will usually set up and operate at least one unit and use a manger to manage it while working on selling other “sub-franchises” and assisting them in operating properly. Very rarely is a master franchisee “hands on” in a unit franchise. They tend to spend more of their time operating like a business consultant or coach to their franchisees to help them become successful.
Typical liquid capital required: $100,000 to $250,000 is needed to acquire the territory and for initial liquid capital to start the area. Financing will be secured for the start-up of the unit franchise.
Interested in purchasing a franchise or selling one? We’d love to help. Contact us today.
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Price or Terms: The Structure of the Deal
An old saying in negotiating the sale of a business goes like this: The buyer says to the seller, “You name the price, and I get to name the terms.”
Another saying used to explain the actual value of the term full price: “If we could find you a business that nets you $250,000 a year after debt service, and you could buy it for $100 down, would you really care what the full price was?”
It seems that everyone is concerned only about full price. And yet, full price is just part of the equation. If a seller is willing to accept a relatively small down payment and carry the balance, a higher full price can be achieved. On the other hand, the more cash the seller wants up front, the lower the full price. If the seller demands all cash, barring some form of outside financing, full price lowers – and, in most cases, the chance of selling decreases as well. Even in cases where outside financing is used, such as through SBA, etc., the lender will do everything possible to ensure that the price makes sense.
Sellers should understand that both what they hope to accomplish in the sale of their business and the structure of the actual sale can dramatically influence the asking price. Price is obviously important, but other factors may be even more important. For example, consider a seller with health issues who needs to sell as quickly as possible. In his case, timing becomes more essential than price. Another seller may place more importance on her business remaining in the community. In her case, finding a buyer who will not move the business may supersede price or certainly influence it.
Likewise, the structure of the deal can both influence price and be a more significant factor than price to either the buyer or the seller. The structure can dictate how much cash the seller receives up front, which may be more important than price for some sellers. On the other hand, sellers should also be aware how much the interest on their carry-back can add up to. If cash is not an immediate concern, monthly payments with an above-average interest rate may be enticing.
These examples all demonstrate the importance of the business broker professional sitting down with the seller prior to recommending a go-to-market price. During this meeting, the broker should find out what is really important to the seller, as these issues may have a direct bearing on the price.
Sellers should look at the following factors and rank them according to importance on a scale of one to five, with five being extremely important.
• Buyer Qualifications
• Full Price
• Amount of Cash Involved
• Financing
• Confidentiality
• Commission/Selling Fees
• Closing Costs
• Exclusive Listing
• How the Business is Shown
• Advertising/Marketing
• How a New Owner Continues the Business
By ranking these items and discussing them with a professional Business Broker, a seller can receive helpful advice from the broker on price, terms, and structuring the sale.
Copyright: Business Brokerage Press, Inc.
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5 Characteristics of a Successful Franchisee
Franchisors and researchers have spent many years profiling the ideal franchisee candidate to determine which type of buyer has the best chance for success. Franchisors and professional psychological profilers have spent large amounts of time and capital to increase their chances of gaining a successful franchisee. To understand how well a potential franchise candidate will do in a certain franchise system, the franchisor considers these five essential characteristics of successful franchisees. Here is what most successful franchisors look for in potential single-unit, multi-unit, and master franchise candidates before they will award the franchise:
People skills. The franchisee must have the ability and desire to deal well with people. If they treat their employees and customers with trust and respect they will probably treat the franchisor the same. If they treat their employees well the employees will usually treat the customers well. Franchisees will need to enjoy spending time with people. Franchisees who do not enjoy a lot of human interaction tend to become stressed. This will often lead to rudeness to employees, customers and eventually to their family, which will tear down the business instead of building it up.
Follow the System. The franchisee must have the ability and desire to follow a proven system. After analyzing the franchise system, the franchisee must be able to enjoy the system and reaping the rewards of following the proven track record. If the potential franchisee can’t or won’t follow a system for success, the franchisee should consider starting their own business or buying a business. At the heart of the franchise system are the marketing strategies and systems. The marketing programs should be examined carefully to insure the potential franchisee feels comfortable with the system.
Good Attitude. Carefully consider the potential franchisee’s attitude. Are they asking a lot of questions about failure or do they ask more questions about the success of the franchise. They should be seeking to find out what makes the franchise successful rather than dwelling on what makes the franchise a failure. All franchisors that have many units and that have been around a few years have failures. Most of the time it is due to the failure of the franchisee to follow the system. The franchisee must be self-motivated to take action and follow the successes of others. They should have a good work ethic and not be afraid to roll up their sleeves and work side-by-side with their employees. A potential franchisee can consider the success rate of the franchise. If it is under 70 to 80%, it may not be worth the time to consider it. Franchising as a whole has a 90% plus success rate.
Proper capitalization. The franchisee must have the minimum amount of liquid capital and net worth available to meet the franchisor’s requirements. A good franchisor will not allow the potential franchisee to move forward without the proper initial capital. The franchisee must have good credit, not perfect, but decent credit. This is essential for qualifying for a loan if necessary. Good credit also has a direct correlation with how successful the franchisee will become.Area development franchisees and master franchisees will need to have the four characteristics listed above and, in addition, a fifth characteristic listed as follows:
Extensive business experience. Real life success in real business is essential. Successful master franchisees or area development franchisees will take their experience and apply it to the franchise system to help other franchisees succeed. With a proven record of success of the potential franchisee, the franchisor can expect the success to continue on the franchise system.
Do you need help selling your franchise? Contact us.
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Considering Generational Strategies
When you are buying or selling a business, you might very well end up making a deal with someone from another generation. Therefore, it only makes sense to take the time to understand that individual’s background and how that might cause behavioral differences. It is important to understand and reflect upon where many of them are coming from and the collective experiences and trends that shaped their identities and perspectives. At the same time, you can identify your own biases, strengths and weaknesses that may be caused by your own upbringing.
The strategies in this article originated from Chuck Underwood who is considered a leading expert in the diversity of communication styles between generations. He is the author of a major book on the subject as well as host of the long-running “America’s Generations with Chuck Underwood” on PBS.
Generational Sensitivity
Underwood’s perspective is that people of each generation were molded by their unique formative years. The decisions that buyers and sellers make will be impacted by their generation. Mostly likely, the buyers or sellers you will be coming into contact with will be either Baby Boomers, Generation Xers and Millennials.
Working with Baby Boomers
Baby Boomers (those born between 1946 and 1964) are a major force in the business world. While they often possess a patriotic passion to improve the country, they were also witness to a time of great change via many movements including the civil rights and women’s movement.
When you’re dealing with Baby Boomers, it is important to remember that they will want to build relationships and get to know you. Common courtesy is very important to Baby Boomers. That means they’ll expect you to show up on time and turn your phone off during meetings.
You’ll want to keep in mind that older Baby Boomers may be experiencing hearing and eyesight loss. As a result, you’ll want to keep your type and font size larger, and make text easy to read.
When you’re working with your clients, it only makes sense to pay attention to the generation during which they were raised and adapt your approach accordingly. Understanding generational differences will help you get a leg up on the competition while at the same time helping your clients achieve their goals.
What is Generation X?
Generation X (or Gen X) had a wildly different formative experience than the Baby Boomers. Generation X is generally defined as being born from 1965 to 1980. This generation spent its formative years from the 1970’s through the 1990’s. In stark contrast the relatively more pleasant and optimistic childhoods of the Baby Boomers, Gen X had a rougher ride.
America became more mobile during the time period during which Generation Xers grew up. As a result, many children were uprooted and separated from their friends, family and hometown roots. Growing up, these individuals witnessed a variety of scandals ranging from political and religious figures to sports figures. Gen Xers witnessed the systematic dismantling of the American middle class and with it a general lowering of quality of life, opportunities and confidence in corporations. In the end, Gen X was quite literally left home alone and lived as “latch key kids.” It is no wonder that this neglected generation has some issues.
Individuals growing up during this time learned early on that they had to be ready to fend for themselves. Since Gen Xers have been met with consistent and systematic disappointment and even wide scale institutional betrayal, this generation, on average, is more distrustful of organizations.
Gen Xers are self-reliant and independent and one of their core values is survival of the fittest. In his view, Gen Xers are self-focused, individualistic and want everyone to skip the nonsense and get to the point. They have no real interest in getting to know you or playing a round of golf.
Working with Millennials
Millennials spent their formative years in the 1980s and early 90s. They are a very optimistic and tech savvy generation. They are also the most classroom educated generation in history.
It is also very important to note that Millennials are the most adult supervised generation in history. So-called “helicopter parents” who work to protect their children from setbacks are the norm. Employers find that Millennials are entering adulthood, but are still relying upon their parents to help them make decisions and even career choices.
Where Gen Xers are distrustful of the “wisdom of their elders,” Millennials actively seek out such advice. Likewise, Millennials tend to volunteer a good deal and look for ways to solve the world’s largest problems.
You will find that Millennials will enjoy building a relationship with you. Keep in mind these individuals tend to be quite socially conscious and they may very well expect you to agree with their views. Additionally, there is a chance that they will have their parents involved in their business dealings.
Keep in mind that the de facto tech addiction, or at the very least acute overreliance on technology, has led to issues with Millennials’ soft skills. They can often lack the ability to read another person’s body language and adjust accordingly.
In the end, regardless of what generation you are working with, it is important that you continually adapt. This will greatly increase the odds of cementing a successful deal.
Copyright: Business Brokerage Press, Inc.
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Confidential Business Reviews Should Establish Trust
When you are selling a business, your business broker or M&A Advisor will likely create a Comprehensive Business Review, or CBR. This comprehensive document can then be presented to prospective buyers once they have signed all necessary confidentiality documentation. It is essential that this document builds trust between both parties, as this will go a long way towards achieving a successful deal.
Be Honest
The bottom line is that your CBR will be 95% positive. The majority of the document will be dedicated towards selling and promoting your business. Therefore, it only makes sense to disclose some potential problems. When handled correctly, the disclosure of problems can actually be a strong asset.
For example, current weaknesses of your business could become strengths in the mind of the buyer. For example, a business with a very poor online presence represents a substantial opportunity for a buyer to improve marketing and communications. Summed up another way, don’t be afraid to include negative information, especially if that information represents an opportunity.
Sharing Information
It is important that there is an element of trust between the parties. Creating that sense of trust begins with the CBR’s seller section.
Buying a business is radically different from buying a home. When someone buys a home, they usually don’t care too much about the person who they are buying the home from. But buying a business is usually a different experience. Your buyer will want to feel as though they have a fairly clear understanding of who you are and what you are about.
In the seller’s section, the buyer should get a decent idea of who you are. Your broker or M&A Advisor will want to interview you to gain ample information to include in your CBR. Your broker may even want to find out about your family, hobbies, interests and more. You may even want to consider including photos of yourself and your family.
The bottom line is that a potential buyer should be able to pick up the CBR and get a good feel for what you are like. If no level of trust is ever established between the buyer and seller, then it will be much more challenging for the deal to be successful.
Copyright: Business Brokerage Press, Inc.
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How to Sell a Franchise Business
These 9 Steps Will Save Franchise Owners Tens Of Thousands Of Dollars
By leveraging the power of technology and automation, industry forms, and online advertising, there has never been an easier time for business owners to value, market, and sell their franchise business ‘on their own, but not by themselves’. In addition, by using these tips, they can save the large commissions (often 10% of the selling price) charged by full-service business brokers. Follow these steps to learn how to sell a franchise business.
Preparation For Sale
Prior-Proper-Planning-Prevents-Poor-Performance! If time is on your side, the best things that you can do to prepare for the selling process is as follows: 1) As the owner, don’t be the secret sauce. 2) Raise up other managers. 3) Cross-train. 4) Focus on branding. 5) Put systems and redundancies in place. 6) Clean up your books. 7) Normalize all wages to market value. 8) Stop paying for personal or one-time expenses through the business.
Determine Business Value
Next you’ll need to determine the fair market value of your business. There are many levels of valuation reports ranging from hundreds to thousands of dollars. In most cases, a Summary Opinion Of Value & Key Indicator Report is enough.
Create A Business Profile For Buyers
Once you are comfortable with the established value range and have decided on a ‘go to market’ asking price, you’ll need to create a 1-5 page Business Profile, which you will provide to qualified buyers. Sometimes called an offering memorandum, or Confidential Information Memorandum (CIM), the Business Profile should include a business description, history of the business, information about the franchise concept, why you are selling, financial summary, and more. Sometimes business profiles also include video interviews and tours.
Buyer Marketing
Another crucial step in learning how to sell a franchise business is advertising your business for sale on some or all of the major business for sale search portals including BizBuySell.com, BusinessBroker.net, BusinessesForSale.com, BizQuest.com, LoopNet.com, DealStream.com (formerly MergerNetwork), GlobalBX.com, Axial.net, and more depending on industry, size, location, etc. To remain confidential, you will need to sell “the sizzle” but not “the steak”. Ads must be created in a way where the reader will get excited enough to ask for more info, but cannot know exactly what business it is without inquiring further.
Buyer Management
As each buyer responds to your ads, make sure that the buyer first signs a non-disclosure statement (NDA), and that that they have the skills and financial resources required to purchase your business. Once you have qualified the buyer, you will email them your Business Profile. You will continue to reach out to each buyer until they either agree to submitting an offer, or until they go away.
Offer / Counter Offer / Due Diligence
Leaning heavily on your primary business advisors (accountants, attorneys, financial planners, business brokers, etc.), you will work with the buyer to negotiate the letter of intent, counter-offer, and asset/stock purchase agreement.
Franchisor Disclosure and Discovery
As soon as possible. upon acceptance of an offer, you will want to make sure that the buyer has reached out to your Franchisor to start the franchise disclosure, discovery, and qualification process. There are a few deadlines that have to be met before the Franchisor can approve the buyer as a new franchisee. This includes the buyer receiving the Franchise Disclosure Document (FDD) and going to Discover Day. It is common to experience a delayed because this step wasn’t taken care of early on!
Business Loan Approval
Your buyer will almost always require some form of financing, whether it be a conventional loan, asset loan, SBA guaranteed loan, factoring, home-equity loan, or seller financing. The most common business loan by far is the 7(a) business acquisition loan through the Small Business Administration (SBA). The SBA lending process is long and difficult. Make sure that the buyer is working with one or more lenders (preferably 2-3) to get loan approval. This will take 60-90 days or more. Buyers should be working with lenders simultaneous to all other aspects of due diligence.
Closing Day
The closing process is different depending on your state. It is imperative that you work with a reputable business attorney and accountant to review (or create) all closing documents. You could also engage a business broker to guide you through this process. Depending on your state, the Closing will be facilitated by either a title & escrow company, the buyer or sellers’ attorney, or a third-party attorney that represents the ‘transaction’.
Prefer to work with a professional to sell a franchise business? Franchise Sellers was originally launched in 2005 to assist existing franchise owners with the multifaceted franchise resale process. They have used that experience to create and refine a 9 step ‘Franchise For Sale By Owner Toolkit”. Franchise Sellers can be found at www.franchisesellers.com or 800-499-4280.
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What You Need to Know About Foreign Buyers
There is a potentially lucrative group of buyers that many sellers don’t initially think about. We are talking about foreign buyers. While there are some hurdles to working with these types of buyers, it is important to note that there are many huge advantages as well. Let’s take a closer look.
How Are Foreign Buyers Different?
At the top of the list of ways in which foreign buyers are different is that they are often seeking a visa. Another commonality among foreign buyers, one that will surprise many, is that they may want access to the U.S. educational system.
It is common for foreign buyers to want to buy a business so that they can get their children into a particular U.S. school district or college. Sometimes the desire to be eligible for state tuition also plays a role in the selection of a business and the decision-making process. In this sense, business location takes on a level of importance that it might not have for domestic buyers.
It is important to keep in mind that there are cultural and business differences that play a role with foreign buyers. Everything from a different use of business terminology to expectations can play a role. This could impact negotiations.
What About Visas and Immigration?
One of the most important things to remember is that foreign buyers are often navigating the complex world of visas and immigration. Whether or not a visa is issued can dramatically impact whether or not a deal ultimately takes place. This fact is often built into agreements. For example, a purchase condition may be conditional upon visa approval. Nonrefundable deposits may also play a role in the process.
What Do Foreign Buyers Really Want?
Foreign buyers have been impacted by the pandemic too. Yet, some factors remain unchanged. Not too surprisingly, they will want to see that a business is profitable. In this regard, you should be able to showcase profitability in a clear fashion. You can expect foreign buyers to want to see tax returns and all the typical documentation that you’d need to provide to any buyer.
A second factor that foreign buyers are interested in is longevity. If your business has successfully operated for decades, this will be a major advantage.
Ultimately, most of what domestic buyers are looking for in a business will translate over to what foreign buyers are seeking as well. With that stated, however, there are factors that are often unique to foreign buyers. As mentioned above, navigating the often-complex visa process can add a wrinkle to the entire process.
Copyright: Business Brokerage Press, Inc.
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Essential Meeting Tips for Buyers & Sellers
The buyer-seller meeting is quite often a “make or break” meeting. Your business broker or M&A Advisor will do everything possible to ensure that this meeting goes as well as possible.
It is vitally important to realize that rarely is there an offer before buyers and sellers actually meet. The all-important offer usually comes directly after this all-important meeting. As a result, you want to ensure that meetings are as positive and productive as possible.
Buyers need to understand how the process of selling a business works and what is expected of them from the process. Buyers also need to understand that following their broker’s advice will increase the chances of a successful outcome.
Sellers should be ready to be honest and forthcoming during the meeting. They also want to be sure to not say or do anything that could come across as a strong-armed sales tactic.
Asking the Right Questions
If you are a buyer preparing to meet a business owner for the first time, you’ll want to make sure any questions you ask are appropriate and logical. It is important for buyers to place themselves in the shoes of the other party.
Buyers also shouldn’t show up to the buyer-seller meeting without having done their homework. So be sure to do a little planning ahead so that you are ready to go with good questions that show you understand the business.
Building a Positive Relationship
Buyers should, of course, plan to be polite and respectful. They should also be prepared to avoid discussing politics and religion, which often can be flashpoints for confrontation. When sellers don’t like prospective buyers, then the odds are good that they will also not place trust in them.
For most sellers, their business is a legacy. It quite often represents years, or even decades, of hard work. Needless to say, sellers value their businesses. Many will feel as though it reflects them personally, at least in some fashion. Buyers should keep these facts in mind when dealing with sellers. A failure to follow these guidelines could lead to ill will between buyers and sellers and negatively impact the chances of success.
Sellers Should Be Truthful
Sellers also have a significant role in the process. While it is true that sellers are trying to sell their business, they don’t want to come across as a salesperson. Instead, sellers should try to be as real and honest as possible.
Every business has some level of competition. With this in mind, sellers should not pretend that there is zero competition. A savvy buyer will be more than a little skeptical.
The key to a successful outcome is for business brokers and M&A Advisors to work with their buyers and sellers well in advance and make sure that they understand what is expected and how best to approach the buyer-seller meeting. With the right preparation, the odds of success will skyrocket.
Copyright: Business Brokerage Press, Inc.
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The Main Street Lending Program
There is no doubt that the COVID-19 situation seems to change with each and every day. The disruption and chaos that the pandemic has injected into both daily life and business is obvious. Just as it is often difficult to keep track of the ebbs and flows of the pandemic, the same can be stated for keeping up to speed on the government’s response and what options exist to assist companies of all sizes.
In this article, we’ll turn our attention to an overlooked area of the government’s pandemic response and how businesses can use a whole new lending platform to navigate the choppy waters.
As the pandemic continues, you will want to be aware of the main street lending program, which is a whole new lending platform. It was designed for businesses that were financially sound prior to the pandemic. Authorized under the CARE Act, the main street lending program is quite attractive for an array of reasons. Let’s take a closer look at what makes this program almost too good to be true.
This lender delivered program is a commercial loan. Unlike the PPP, there is no forgivable component. However, the main street lending program does have one remarkable feature that will certainly grab the attention of all kinds of businesses. It can be used to refinance existing debt at a rate of around 3%. With that stated, it is also important to note that businesses cannot refinance existing debt with the current lender. Instead, a new lender must be found. Generally, loans are a minimum of a quarter million dollars and have a five-year term. In another piece of good news, there is a two-year payment deferment period.
The main street lending program can be used in a variety of ways. In short, the program is not simply for refinancing existing debt. Additionally, there is no penalty for prepayment. The way the program works is that lenders make the loans and then sell 95% of the loan value to the Fed. This of course means that the lender is only required to retain 5% of the loan on their balance sheet. The end result is that lenders can dramatically expand the amount of loans they can make.
Whether it is the PPP or a program like the main street lending program, there are solid options available to help you. Businesses looking to restructure debt or put an infusion of cash to good use may find that the main street lending program offers a very flexible loan with great interest rates.
Copyright: Business Brokerage Press, Inc.
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Why Does Your Business Need Google Reviews?
In today’s business climate, reviews are the differentiator. Years ago, people commonly asked for references when they were vetting a product or service. But these days when people are searching for a local business to work with, they are likely to conduct research on their own and read online reviews.
Google reviews can give businesses a big credibility boost without having to spend a dime. Let’s take a look at some of the key benefits.
Increased Credibility & Trust
According to statistics, approximately 91% of consumers read reviews to determine credibility of a local business. In fact, 84% of consumers say the positive reviews have helped them gain trust. Without the reviews, that level of trust would not have been established.
Needless to say, people trust Google. The fact that these reviews are on a 3rd party website increases transparency. These reviews have much higher value than testimonials posted on the actual business website.
Improved Business Conversions
Once a potential customer gains trust in your company through reading Google reviews, it is more likely the conversation will get converted to an actual business transaction.
Customer Feedback Loop
When your customers write reviews about your business and post them on Google, these reviews often clearly mention details about your product or service. Through this means, future customers become educated. These reviews can also serve as a feedback loop for you if things need improvement.
Increases Online Reputation & Visibility
The power of online marketing methods you might be using to promote your business will be amplified, as users will become more attracted to your business due to 5-star reviews. This factor increases online traffic to your website and an increase in leads and business.
Another fact to be conscious of is that your clients will review your products or services whether you want them to or not. If you fail to set up Google reviews, you’re missing out on the opportunity to gain a level of control and visibility.
How to Set Up Google Reviews
- Create a Google My Business account. – Visit https://business.google.com/ to sign in or create a Google account for a business. Complete the step by step process by filing required information like email, phone number, business details, etc.
- Ask clients to review your services. – Start sharing your Google My Business URL with clients and ask them to post a review about your services. When asking for reviews, you can mention to clients that their review will help everybody else make an informed decision when they are looking for help. It is important to ask about the review within a few days of closing your transaction. If more time goes by, the client may be less motivated to post a review for you.
- Remind clients. – Everybody is busy. Therefore, there is a chance that your client might forget to write a review. In this case, we recommend reminding them to do so. You can also politely inquire if they need any help posting the review that you discussed.
Through the above-mentioned process, you can begin generating reviews for your business. Of course, it goes without saying that you can only guarantee good reviews when you are providing excellent customer service along with a top-notch product or service.
Copyright: Business Brokerage Press, Inc.
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