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Yesterday, we blogged about new signs of a migration from the financial sector to the franchising industry. But who does go about getting that business off the ground? There are preliminary steps that a prospective franchisee needs to make to get their franchise rolling, but there are also psychological steps that one must take to prepare themselves for this big leap.

With signs that more and more young people are also considering franchising because of the state of the economy, Enterpreneur.com blogger Scott Gerber has provided 10 tips for the first-time business owner. The timing was so good, we couldn’t ignore it.

We’d like to single out a few tips that we thought we’re particularly insightful:

2. Know what you do. Do what you know.
Don’t start a business simply because it seems sexy or boasts large hypothetical profit margins and returns. Do what you love. Businesses built around your strengths and talents will have a greater chance of success. It’s not only important to create a profitable business, it’s also important that you’re happy managing and growing it day in and day out. If your heart isn’t in it, you will not be successful.

6. Act like a startup.
Forget about fancy offices, fast cars and fat expense accounts. Your wallet is your company’s life-blood. Practice and perfect the art of being frugal. Watch every dollar and triple-check every expense. Maintain a low overhead and manage your cash flow effectively.

7. Learn under fire.
No business book or business plan can predict the future or fully prepare you to become a successful entrepreneur. There is no such thing as the perfect plan. There is no perfect road or one less traveled. Never jump right into a new business without any thought or planning, but don’t spend months or years waiting to execute. You will become a well-rounded entrepreneur when tested under fire. The most important thing you can do is learn from your mistakes–and never make the same mistake twice.

Work in a field that you love, work at a minimal cost level, and cast those business bibles aside and learn while you work: it sounds like the best way to make a good start with your franchise.

Signs abound that more and more victims of the Great Recession – ie highly-skilled professionals who have lost their jobs as the economy has contracted – are turning to franchising. Not everyone knows how to locate the ideal franchise. If you’re one of those people, don’t fret, there’s of information out there.

Alisa Harrison, vice president of marketing and communications at the IFA, has been all over the media in the last few weeks, discussing the state of the franchise industry. She popped up recently for a Q&A session with the  Brandenton Herald about investing in the right franchise. Florida is one of the biggest markets for franchising in America, as companies like 7-11 have realized, and we understand the franchising model has attracted a lot of people in a state which has had to deal with some harshest realities of the recession.

Alisa’s advice to prospective franchisees is pretty interesting and we’d like to share some of it with you today:

With the number of franchise options out there, how does one narrow the choices?
It is important to purchase a franchise business that is in an area that you have interest in. For example, if you are a pet lover, you might consider one of the many businesses that are involved in pet services.
However, many people choose a franchise based on a service need in their area. If there is a growing demand in your area for a particular kind of restaurant or personal service, you might consider those options.
For a first-time business owner, how crucial is it to pick a franchise that offers guidance in startup and operations?
One of the attributes of buying a franchise is that you buy into a known brand and systems that offer training and marketing support.
It is important to know what level of support the franchisor provides to the franchisee, which should all be disclosed. It is in the franchisor’s best interest to help the franchisee succeed so there is normally significant support during the start up and for the length of the contract.
What makes a franchise a good business endeavor?
Buying into a franchise that has a proven record of training and supporting franchisees is important to the success of the entire franchise company.

Of course, Franchise Direct has plenty of valuable information. Just visit our Information Center to learn everything you need.

If you’re about to take a long journey for your vacation or are just planning a week on the beach, may we suggest some informative reading material? There’s loads of fascinating content in the new issue of Inc magazine, with a number of How To… guides, including tips on starting a restaurant, a T-shirt company and even a franchise.

Of particular interest to us though was a well-researched article about preparing for the upturn. Journalist Nadine Heintz charts the story of Boston laundry company Garment Valet. With 1,900 customers and almost a million dollars per annum in sales, the company was planning to roll out a national franchise network. But then the economy tanked, the credit markets went fallow and their bank looked like it might go under. Founder Dominic Coryell faced a conundrum: speed up or slow down?

“Other people were going to be slowing down and trying to just hold on,” Coryell told Inc. “I am a big advocate of living on the edge.”

Rather than simply lying low and trying to weather the recession, Coryell has invested $50k in  “proprietary Web software” that will allow customers to “place and track orders online” once the company begins to franchise. So while their dream to open a national cleaning and laundry franchise has been delayed, Garment Valet will only be better prepared for franchising success because of the downturn.

That is a lesson that many businesses out there should take on board.

Inc also passes on six tips for preparing for the upturn and we think they’re worth passing on:

Invest in technology: Technological improvements — new billing software, for example, or an online ordering system — will allow you to add new customers with little additional cost when business picks up.
Snap up talent on the cheap:  Because of record layoffs, the job market is flooded with qualified applicants. Take this opportunity to hire talented employees at a discount.
Ramp up training: Identify employees’ strengths and weaknesses and invest in targeted training and development programs to prepare them for the upswing.

Form strategic partnerships: Make the most of the business slowdown by striking up partnerships that will pay off down the road.
Get to know prospective customers: Build relationships with potential customers and learn more about their needs, then tailor your offerings accordingly to position your company for the future.

Cut costs strategically: Instead of making across-the-board cuts, analyze costs carefully and reduce spending in ways that are unlikely to impair future growth. Be sure to put controls in place so spending stays in check after the rebound.

Given the state of the economy, it’s perhaps a good time to reconsider some of the myths of entrepreneurship to see whether the small business dream holds the same allure it once did. Certainly the days where all you needed to get investment in an internet business was a quirky idea are gone the way of the buffalo. If anything, the death of this kind of entrepreneurship makes the best possible case for franchising.

Some of these thoughts came to us after reading a highly interesting piece in the Harvard Business Review by Walter Kuemmerle, an associate professor at the Harvard Business School in Boston. Although he was writing in 2002, most of the points Kuemmerle makes are still relevant in 2009, if not more so.

In his piece, Kuemmerle seeks to outline the various risks and challenges that a prospective entrepreneur will have to take on to truly succeed. Kuemmerle wants to force business-people to look in the mirror and ask themselves: is this really the model I want to follow to achieve my personal business dreams? The converse to his questions are: is franchising a better business model?

Kuemmerle outlines two entrepreneurship risks/questions that we hadn’t even considered:
Are you comfortable stretching the rules?
Are you prepared to make powerful enemies?

The former is particularly compelling argument against entrepreneurship. Those first two or three years of getting a business going involve taking huge financial risks, and in many cases, hounding off creditors, juggling debt on personal credit cards and even leveraging your family home in order to keep the business afloat. This is a reality that most entrepreneurs simply accept, but it brings great risk and peril to your home life, especially in this recession. But as Kuemmerle says, most success stories for start-up’s he knows include the use of outrageous tactics. Or Kuemmerle later asks: “Do you have the stomach for subterfuge?”

He also points out the fact that having a truly successful start-up often means brushing up against powerful enemies. Kuemmerle adds three other points about the need to be flexible, decisive and incredibly patient to make it as entrepreneur.

Now while all of these skills are generally needed to run a strong small business, the fact is the franchising model eliminates many of the risks and indeed dangers that are part and parcel of launching a start-up. With a franchise, you have a proven business plan and a source of support and knowledge from the franchisor. Some entrepreneurs may disagree with the concept of a franchise fee, but really it is nominal compared to some of the outrageous leaps involved in entrepreneurship. It’s a time for hedging your bets and as Kummerle concludes:

“Being an entrepreneur isn’t for everyone, and even those who have the right stuff find the path to success much rougher, and usually, much longer than they had anticipated.”

Franchisees and franchisors have been spending so much time of late looking to protect their business, it’s easy to forget the importance of keeping an eye out an out for signs that business is on the up. Perhaps Ben Bernanke was being optimistic when he said he expects the economy to come around by 2010, but that shouldn’t stop entrepreneurs from being attentive to promising indicators.

Writing for Business Week, technology expert Gene Marks offers a few common sense pointers that will give entrepreneurs a pretty good sense that the economy is beginning to veer back towards better times. He says to study commodity prices and interest rates, as well as consumer attitudes:

Experts and pundits can do all the analysis they want but the reason why the auto, real estate, financial services, manufacturing, and just about every other industry has slowed or declined is because people are…duh…spending less. So here’s another point of genius that most small business owners know: When people feel more secure, they’ll start spending more. Everything trickles up, and down, from the consumer. Whether they’re in Cleveland or Qingdao. And no matter what our business is, we’ll be affected.

Finally, Gene says to keep an eye on the media’s handling of the recession story. Once those grim recession stories begin to give way to media coverage of people who’ve beaten the economic downturn, you can be sure the nation’s economic mood has radically altered.

The media will have a big impact deciding when our country emerges from this recession. Go to Google Trends and search for both “Recession” and “Recovery.” When the number of times “Recovery” is mentioned exceeds the number of times the word “Recession” is mentioned, that means the media has now become bored with the “Recession” and instead wants to talk about the “Recovery.” The talk of our economic “Recovery” will then become the new news story.

Keep these things in mind over the next months and you may be able to perfectly synchronize your leap into franchising with the renaissance of the American economy.