Often times as start-up franchisee we first tend to calculate capital before contingencies. But Henry Ong (a coveted financial adviser) suggested otherwise.
Now, your budget will depend on feasibility studies on any thing else that includes as part and parcel of your target business. At this juncture – it’s location!
For somebody who has cold cash in hands we sometimes shrink our location to fit the size of our budget or shrink our budget to fit the size of our location.
This time it would seem neither.
Your target location maybe:
PUBLIC MARKET: Or otherwise known as “bilihang bayan” or “pang-masa.” Here, margins are kept low for the price to be much competitive; leveling it to the kind of consumers found in the public market.
Lower margins would mean:
- Cutting cost in every area of your operations
- Cheaper recipes or ingredients
- Reduced servings
- Source out for intermediate workforce
If your target location is a public market, then obviously your cash or capital outlay is a little bit smaller.
Affordability is king!
But then logic dictates that what you give is maybe what you take. With lower margins, then comes lower return of investment – most of the time.
SHOPPING CENTER: A place most of the time a bit aloof from common mass footprints.
Little elite in ambiance.
In this location designs and taste have to tango to get to the edge. Remember that shopping centers are hubs of professionals and young individuals who are likely to be attracted to comely branding, stylish designs and packaging.
To be at par you may have to:
• Shell out more cash
• Use high-end ingredients
• Train staff for better costumer service
With all these, revenues are higher for the reason that higher end branding, packaging, training whatsoever brings out the best in the business. Besides, you can also charge higher prices for the goods or services.
Location now depends on your risking personality. For shopping centers, returns maybe big but losses maybe the same too. In the public market – you’ll get the reverse – lesser investment – lesser loss.