Once the trials of launching a new business are over, Filipino entrepreneurs often find themselves asking what comes next. For the ambitious ones, the answer is clear: expand to the next stage of growth. However, the questions get more difficult from there. For instance, should you grow your business organically or through franchising? Organic growth involves grinding out more sales, opening more locations, and extending product offerings through your own profits—something that can be even more difficult than it sounds. On the other hand, franchising allows much more rapid expansion through licensing your brand and business model to independent operators. But while it sounds easy on paper, it does mean your business has to be compelling enough for potential franchisees to be interested.
In either case, a business banking loan may be necessary to help your business pursue its intended expansion strategy. The Maya Flexi Loan emerges as the smarter choice for modern Filipino entrepreneurs, offering instant business banking loans of up to PHP 2 million within just 3 months of signing on to Maya Business—more than enough to confidently pursue a wide range of franchising or organic growth strategies.
Now that you know how you’re going to fund your expansion, it’s time to look at the pros and cons of each approach. Let’s examine the broader benefits and drawbacks of both approaches so that you have a better idea of which strategy to pursue.
Pros and Cons of Organic Growth
Pros
1. Full Control Over Your Business Operations
A purely organic growth strategy will let you keep complete ownership and decision-making power over your business’s branding and operations, allowing for the best possible consistency. This sidesteps the consistency issues that you can get when you entrust your brand to often-unreliable third parties. Your strategies, branding, and customer service can also be changed as needed without having to consult all your franchisees.
2. Lower Risk Compared to Franchising
With some exceptions, expanding organically usually means you can scale upwards at a manageable pace, keeping your financial and operational risks to a minimum. In franchising, a bad franchisee or failure to oversee brand compliance can damage your business’s reputation, and both risks become greater when your business grows faster than you can manage.
3. Better Profit Retention
Organic growth strategies avoid franchise-related costs like franchisee training, support, and marketing expenses. All the cash that you would have otherwise spent on those areas and franchise profit-sharing can be kept within your own business, giving you fewer things to worry about.
Cons
1. Slower Expansion
While it’s possible for an organically grown business to expand rapidly, these cases are exceptional. Should you pursue organic growth, you’ll have to be prepared to invest time to achieve steady increases in sales, loyal customers, and resources. Though speed is not always an issue, it might be for highly competitive industries like fast food service, since competitors may dominate key locations before your business is ready to scale.
2. Higher Capital Requirements
Since you aren’t splitting costs with operators, organic expansion requires you to put up significantly more capital when you open new branches. This may mean severely limiting your expansion goals to accommodate your available capital.
3. Operational Challenges with Scaling
It takes a lot of work to manage multiple branches yourself, let alone ones that are run by third parties whom you may not be too familiar with. Without a well-structured system, you risk inefficiencies and, at worst, quality and brand inconsistencies that damage your reputation.
Pros and Cons of Franchising
Pros
1. Faster Expansion
Leveraging franchisees’ investments enables you to grow much faster than would be possible through purely organic growth. In the Philippines, franchising has been instrumental in countless brand success stories, particularly in the fast food and service industries. It’s a proven path to success and, so long as you have strong brand equity and good franchisee management skills, it can build a positive feedback cycle of interest and growth.
2. Shared Financial and Operational Burden
Since franchisees cover the costs of setting up and operating their locations, your immediate risks tend to be fewer. Additionally, since franchisees manage daily operations, your workload can be further reduced compared to operating a separate branch by yourself.
3. Stronger Brand Presence and Market Reach
The more franchise locations you operate, the more visibility and recognition your brand gets. Provided you stay on top of quality and branding, a widespread presence will benefit everyone involved.
Cons
1. Loss of Full Control
Franchising requires you to share at least some control with your franchisees. Though you can set operational guidelines, your franchisees may interpret or implement them differently, leading to inconsistencies in service quality.
2. Potential Brand and Reputation Risks
Coming off of the previous point, if your franchisees deliver subpar products or services, your customers may associate the poor experience with your brand as a whole, impacting the entire business. You’ll need to stay completely on top of your brand and processes, bringing us to our final point.
3. Complicated Support Requirements
To attract and support operators, you must develop and maintain a credible support system that includes training, marketing, supply chains, and quality assurance, just to start. While you might be saving yourself some of the day-to-day headaches of running new locations yourself, the added responsibilities can still be demanding, especially if you haven’t experienced running a franchise before.
Build Your Business Your Way with Maya Flexi Loan
When you expand your business, you won’t always have time to wait for a traditional loan to come through. You want to be sure that you have the financial flexibility to grab opportunities and address challenges right as they come up. This is where Maya Flexi Loan comes in. Sign up for Maya Business to enjoy the business loan Philippine-based entrepreneurs depend on for instant funding.
Signing up for Maya Business also grants access to a Maya Business Deposit account for receiving your Maya Flexi Loan funds and for growing your business’s savings. Your Maya Business Deposit account offers an industry-leading 2.5% per annum interest rate, allowing you to earn PHP 25,000 per year for every PHP 1 million deposited. You can also use Maya Business Deposit to transfer cash to partners and suppliers for free via InstaPay and PESONet, saving cash on these daily transactions.
You will receive a Maya Flexi Loan offer of up to PHP 2 million within just 3 months of signing up for Maya Business. Whether you decide to go for an organic or franchising-based expansion strategy, Maya Flexi Loan will give you that extra bit of capital you need to succeed. Just keep using Maya as your primary processor for all wallet and card payments for better loan offers.
Sign up for Maya Business today to experience effortless instant funding for all your business expansion needs.
