Buying a Franchise Versus Starting a Business
Starting a business can be an exceedingly rewarding endeavor. From its inception you have complete authority on all decisions big and small – something as imperative as planning a restaurant menu, for example, to choosing what color and style of blinds to hang in the windows, you control everything.
Additionally, for those lacking the start-up capital to purchase or rent a location, you can start a business from home with little more than a computer with Internet access. As attractive as this autonomy seems, however, starting a business from scratch is not without pitfalls.
For instance, there are high failure rates for new businesses. It takes time and effort to develop your business plan, secure financing, acquire the necessary licenses and get a clientele base. Indeed, it is wise for new business owners to have six months to one year of income set aside to subsist on while the business gets its footing. And, unless you have a wholly unique business idea, you will likely find yourself in competition with franchise businesses that enjoy vast brand awareness and customer loyalty.This brand awareness is one of the major pros of buying a franchise business. You will be working within a proven system and enjoy instant brand awareness and credibility. Additionally, a network of support is available to franchisees. This includes technical and managerial support from individuals who are knowledgeable about your specific business as well as the benefit of shared marketing. And, if another franchisee in your area airs a commercial or sponsors an event, it stands to reason that your franchise location would share in the customers purchased by your neighbor’s advertising dollars. All of these facts add up to a quicker return on your investment because your franchise business is recognized from the moment you open its doors for the first time. Also, should you find that you are enjoying great success with your franchise business; expansion is far easier with franchises than with a small business.
Finally, if it’s the food, hospitality or retail industry in which you’re interested, franchise businesses have a much greater success rate in all of these areas.Despite all of these redeeming qualities, a new business owner should remember that a franchise business is not a guarantee for success, and the start-up can be quite costly. A franchise business requires the same initial investment as a new business where location, supplies, inventory and employees are concerned, but it has the added cost of a franchise fee which varies widely but can be as much as several hundred thousand dollars. Read the rest of this entry »
