Thinking about buying a low cost franchise? Worried about the earning potential? Don’t worry –– it’s healthy to be skeptical. Many people looking to become business owners with a franchise assume that if an opportunity doesn’t cost much to start, it must mean there isn’t as much to make for one reason or another.

The truth is, many franchise owners turn a little into a lot every year. One of our very own franchise owners plans to do $1 million in sales in 2018 owning and managing his grout and tile franchise, The Groutsmith. Learn more about Mike Ketzner and his low cost high profit franchise here.

In general, turning a low cost franchise into a high profit business boils down to three essentials: doing your homework, learning and using the systems the franchisor lays out for you, and making smart investments in growth.

Mark Laughlin, a former owner of three low cost franchises (that he grew and sold for six-digit figures) says the key to low-cost franchise profitability is more about the franchise’s business model than the business itself. Specifically, he recommends new franchisees “find a business model that fits your life and your personality, not just your business goals.”

Let’s break this down into five specific tips that, when combined, can help you turn low-cost franchise opportunities into big-time moneymakers.

1. Make sure you have enough capital, even at low cost.

It’s absolutely crucial to be prepared to invest with enough capital before making a purchase. No matter what the costs are to start a particular franchise, relying on an undercapitalized investment can be disastrous if your budget runs dry before you begin making a substantial profit with the franchise.

To be sure you’re in good financial standing, take the time to determine your budget and have a solid backup plan to cover your costs if needed.

To-do List:

Determine how much total investment the franchise will require. Ask existing franchise owners about how much they spent to get their businesses up and running considering all expenses.
Determine how much you’ll need to cover operating expenses and living expenses until you break even. Depending on whether you start advertising ahead of opening day or not, you may need to have a reserve of cash on hand to cover business and living expenses. This is where a personal monthly budget can be a huge help.
Figure out if financing options exist and if it’s a good idea for you. The most common forms of standard financing are bank loans and/or commercial leases. Many new franchise owners secure an open line of credit against their home equity –– an easy and relatively inexpensive form of bank financing.

2. Once you’ve launched your franchise, make it a full-time commitment.

Franchise or not, starting any kind of business and assuming a leadership role demands diligence, motivation, and commitment. Even with a grout and tile cleaning, repair and restoration service like we provide at The Groutsmith, making big business gains means promoting yourself and dedicating yourself to providing a service your customers will want to tell their friends and family about.

Especially in the months after starting your business, getting a foothold in your local market will most likely require you to commit yourself to establishing a well-respected brand within your community.

To-do List:

Learn and follow the advertising and promotion plan your franchisor has given you. There’s a reason franchisors give you their best advertising strategies: they work.
Ask existing franchise owners how they improved upon the franchisor’s advertising plan, or what they would have done differently. Trial and error can get expensive. Lean on the experiences of those who’ve started a franchise before to learn how they innovated on the franchisor’s ad plan and what else they did to get traction early on.
Ask existing franchise owners for general advice about managing their franchise day-to-day. This is a huge opportunity to learn tips for being more efficient, overcoming challenges, or trying new things with your business.

3. Establish long-term relationships with customers by making service a priority.

Great customer service is one of the most powerful ways to leave a lasting impression on a customer and it costs nothing to you. A good rule of thumb is to treat each person you work with exactly the way you’d like to be treated if you were the one receiving the service.

“When I talk to new franchise owners I tell them ‘you get out of it what you put into it.’ Work hard and follow the process. Good things will come. When it comes to customer service, a lot of it is letting your personality come through. Just being able to talk to people, especially if you’re doing estimates for new customers. Whenever you walk in, these customers are looking at your Groutsmith logo, but it’s really your face. You have to have that personality and that outgoingness, and be able to talk to people. It really goes a long way.”

– Brad Young, Groutsmith Owner in Pittsburgh, PA.

→ Grab our free guide and get more valuable advice from our franchise owners about starting out with a franchise of your own: What it’s Like to be a Groutsmith: A Q&A With 8 Franchise Owners

Remember that truly outstanding customer service takes everything into account. Even things like returning phone calls and emails on-time, acknowledging small mistakes, and showing up exactly when expected can go a long way in the minds of your customers. Going above and beyond to provide great service is also one of the best ways to reach new customers through the most powerful form of marketing: word-of-mouth.

To-do List:

Ask existing franchises for specific customer service tips. This is another area where the firsthand experiences of other franchises are incredibly important. Ask what customers have told them they value most from the service experience and plan to make these things a part of your work procedures.
Be prepared with a plan in case something goes wrong. Mistakes happen. Think of them as opportunities to show your commitment to customer satisfaction by going above and beyond to make it right. Consider what types of possible problems could likely occur and create a plan to exceed customer expectations with quick and effective resolutions.
Listen to your customers and make it about them. Differentiate yourself by making the experience about your customer. When you are attuned to their needs and by personalizing the experience to provide a solution, great things will happen.

4. Find a work routine that works and stick to it each day.

Many low-cost franchise opportunities, including The Groutsmith are made possible by the fact that they’re home-based. For those who want to work from a home office, this can be a huge advantage. But for those who are used to working from a dedicated office or other workspaces, it might take a little adjustment.

Find a steady work rhythm and routine that keeps you productive during the hours you’re working and stick to that routine to ensure you can stay organized and motivated even if home-based working is new to you.

To-do List:

Define roles and responsibilities well ahead of time. It’s worth it to put the work to make sure each job function is accounted for before starting the business. Don’t rely on letting too many things “fall into place” as you get going.
Develop a consistent work rhythm. Once your business is off the ground, feel out the way things work best and make a point of sticking to that rhythm as much as you can. Consistency and predictability can be surprisingly appreciated no matter what type of business you run.

5. Use your franchisor’s knowledge and experience to your advantage.

One of the biggest advantages of franchising is access to proven business systems right out of the gate. Unlike starting a business from scratch, a franchise allows you to get a head start by eliminating the time it takes to find a suitable business model that fits the way you work.

Great franchisors have already been through this expensive phase of trial and error that often times ends in failure when businesses run out of steam before finding a model that actually works.

When launching your franchise, don’t try to reinvent the wheel. Use this advantage to save yourself the anxiety, effort, and money it takes to change things round. Stick to a proven plan, implement it, improve upon it and start generating business quickly.

“If you listen and follow the business model, you will do well. There are people out there, I don’t know why, but there are people out there who will buy a franchise and then try to change things and don’t follow recommendations and they can run into trouble. Everything I’ve seen, everything I’ve experienced, is as Jonathan has indicated.”

– Mike Ketzner, Groutsmith Owner in Orlando, FL.

To-do List:

Learn what works best from the franchisor’s existing systems. Talk to other franchise owners to learn what you absolutely shouldn’t mess with and do by-the-book.
Discover where there’s an opportunity for smart innovation. Other franchise owners may have found a better way to do things or solve certain problems. Learn these key innovations and use your own skills and knowledge to improve upon the systems you’re given.

Looking for a low-cost home-based franchise opportunity that offers a business model proven to work time and time again? Click here to learn more about how the Groutsmith stands out among the competition. Want to get started today? Click here to contact to talk one-on-one to see if The Groutsmith is the right opportunity for you.

Looking to learn what it’s like to own a Groutsmith franchise? Get a first-hand look from eight franchisees in our free Q&A guide. Click or tap below to download ⤵