Regardless of its stage in growth, a brand can answer plenty of crucial questions pre-investment.
A start-up brand has plenty of razzle and dazzle to catch potential investors’ eyes, but what’s left when the glitter fades? It’s important to perform due diligence on brands in their infancies, especially when contemplating an investment in the concept. Here are 10 questions that you should ask a start-up brand before hopping on board.
What differentiates the brand from competitors? Knowing why a brand can charge ahead of pack leads to answering yet another crucial question—how will the brand make it a reality?
How can it be scaled into a global brand? One-unit businesses are all fine and good, but in the franchising industry, expansion is the name of the game. Confirm that the brand is scalable so expansion can be a viable option.
How, where and when does the brand hope to expand? Referencing back to the previous question, laying the foundation for an expansion plan will make the process smoother down the line.
Where does the brand see itself in 5 years? 10 years? Assessing the longevity of a brand will also bring the quality of its premise under a microscope. If you can see the brand thriving a decade from now, you’ve truly found a timeless concept.
Why does this need to be a business? Defining the niche that a brand satisfies or the void in the market that a product fills is indicative of its overall lasting power. Know the brand’s place in the commercial landscape.
Is this idea timeless? Evaluate the business and ensure that it has no expiration date. If it has the potential to taper off in the foreseeable future, it’s probably not a viable investment or sustainable idea.
How much financial backing does the brand have? Assess how investors respond to the business idea. The overall reception of the brand will provide a third-party perspective and give you an objective look at the brand.
Who is on the executive board? Knowing who will be making decisions and steering the ship is crucial when forecasting the brand. Establishing a rapport with this board will also be important when contemplating your role as an investor or franchisee.
Who are the competitors, and how does the brand plan on exceeding them? Being able to name competitors and devise a plan on how to outlast and outsell competitors is indicative of the brand’s self-awareness and efficacy.
Why does the brand need you? Knowing why the company is seeking investors and/or franchisees is a crucial piece of the puzzle. The motives behind this pursuit will reveal any objectives or shortcomings within the company.