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Always choose the people you work with rather than building a business for investors

Rune Sovndahl

Why we chose to build a franchise instead of the investor-beloved marketplace platform? If you are a small business owner in the services industry, a platform can look very appealing…

It gets your business out there. You could potentially get found by a lot of people if you choose the right platform.

Sure, some platforms cost money. But in return, this could be a big new marketing channel for your business.

Yet that’s all it is. A marketing channel. Compared to the other options you have – such as franchising – you’re not getting much bang for your buck.

Plus, there are some pretty hefty downsides to listing your business on a platform. Because, unlike a franchise network, a platform is a competitive space.

When you sign up to one, you aren’t joining a supportive network. You better be ready to dive into the shark tank.

Competing in a whole new arena

A platform is not a collaborative business environment. You are usually in direct competition with all of the other similar businesses that use the platform in your area.

This means you’re going to need a couple of things to do well on a platform:
Firstly, a good idea of how to market your business on it. Some platforms might help you with this. But even then, you are going to need to know the unique selling points of your business you want to promote.

For example, if you are a reliable plumber, what sets you apart from another reliable plumber on the platform?

In the eyes of your potential customers, perhaps not much. Or, more to the point, perhaps only the reviews you’ve received.

1000 new bosses governing your every move

Your reviews are those 1000 new bosses. In a platform environment, your reviews can help you swim. Or they can sink you.

Speak to many people who have their businesses listed on platforms and they will tell you how they live in fear of bad reviews.

Of course, every business owner should want to deliver a great quality of service. You should want and in many cases ask your customers to leave you reviews to show off what you can do.

But you don’t want to be in a position where you are held hostage by them. On many platforms, this is a situation that is all too common.

It’s easy to find small business owners or self-employed service professionals on platforms who feel they can’t turn down any job even if they’re overwhelmed. They can’t take a day off. They live in fear of getting sick.

Because they know that any one thing could lead to a reduction in their overall “score” and less work in future.

Platforms vs franchising

I’ll level with you. When we were growing Fantastic Services, we briefly considered creating a platform rather than a franchise.

Investors love platforms, people would tell us. Sure. But do the people on the platforms love the platforms?

I would argue not very many of them do. So for us, it became the difference between creating a place for small business owners to compete against each other on one hand.

And building a communal network where it’s in everyone’s best interests for us all to succeed on the other.

Competition vs community

You always need to think about what you want to actually get out of the business opportunity you are considering.

If you’re thinking about putting yourself or your business on a platform, this is the key difference between the two business models.

One is a competition. The other, done right, is a community.

Control and growth

Some people might argue that it’s the platform that really lets you be your own boss. A platform might levy some control over your standards. But in a franchise system, doesn’t your franchisor have even more authority over how you run your business?

To that, first of all, I would say Uber. The UK courts recently ruled that drivers on the Uber platform are most certainly employees rather than self-employed because of the many, many standards the platform expected them to adhere to.

Of course, those drivers still had to live in fear of getting too many negative ratings and being kicked off the platform. At one point, that “negative rating” meant a score of well over 4 out of 5.

In a franchise, you are your own boss. But with benefits. Those of us who have grown our own companies know that when you’re starting from scratch, anything can happen. When things go wrong, who do you turn to?

Usually, you only have yourself or your business partner (if you’re lucky enough to have one) to count on. As you grow and develop your services, you are iterating and testing through a long process of improvement.

As a franchisee, you skip past all that to use processes that have already been proven, with central expertise to call on should a bump in the road appear.

Getting your business out there: the right way and the wrong way

Franchising and signing on with a platform are both ways of getting your business out there. But one comes with a demand that you meet set standards and throws you into a pool of competition where you are at the mercy of bad ratings.

The other gives you training and access to proven processes so that you naturally meet high quality standards. It supports you throughout the time you are growing your business. And, if it’s a franchise like Fantastic Services, does all of the marketing on your behalf better than any platform anyway.

Platforms were one of the first innovations back when service companies were trying to get found online back in the early days of the internet. Franchising is the way of the future.

What do you think? Do you think a platform has advantages over a franchise Comment below and let’s get the conversation started.

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Always choose the people you work with rather than building a business for investors

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