In the world of ‘conventional’ business, there are three ways
to approach owning your own business. They are, in no particular order, buying
a franchise, buying an existing business, and starting your business “from scratch.”
Each of these choices gives you advantages, disadvantages and options.
If you decide to go the route of a franchise, you are buying a proven model,
and the franchiser may check out the location you are proposing to make sure
their model fits into the demographics of the area. They also generally give
you business plans, help you to secure financing to some extent, and help
you to set things up and get it going. They do this because they are making
money selling you the franchise, and they also get a percentage of your
profits.
That brings us to some of the negatives.
The start-up for many well-known franchises is well over $100,000, although you
can get smaller ones for as little as a few thousand. Many of them also require
you to purchase inventory and supplies through them. This ensures your fitting
into the model and gives your customers pre-knowledge of what to expect.
Another option is to purchase an existing business. If it is a successful
business (hopefully you’ve done research to ensure this or have solid ideas on
how to improve an existing situation), you will already have a customer base
and possibly staff and employees. This will help the transition, as you will
have everything already in place as you walk in. Hopefully, the deal you have
worked out also includes some training from the current owner or management.
The negatives in buying an existing business can include inheriting existing
problems and a large outlay of money, depending on the size and nature of the
business.
With both of the above options, you also
usually have to figure in the cost of maintaining a building, cost of property
purchase, or rental costs. Managing staff also presents its own unique issues,
so you also need to be prepared for that if staff comes with the business or is
required for the franchise.
In the third option, starting a new business, there is a whole different set of
advantages and disadvantages. To start out, you do not necessarily have to have
your own space to buy or rent. Many small opportunities you can pursue can be
done out of an existing home office or with your home computer. You also have
the option of being a "one-man band" which eliminates cost of staff
but also adds personal responsibility. A way around that is to hire freelance
people for your writing, graphic design and business set-up and continuous
needs.
A further advantage is that often you can maintain your current source of
income, perhaps even being able to taper off the hours worked in your present
employment as your own business ramps up. That is a best case
scenario. Often, a clean break once the new business has started gives you
more incentive to grow it quickly. In either case, it is imperative to have
some means of supporting yourself until the business is self-sustaining and
eventually also replaces and then exceeds your current income.
Disadvantages to starting your own business can include other items such as
needing to provide your own health insurance, hiring an accountant, and legal
services.
In any of the three options there are pros and cons. Starting your own business
using any of these methods is exciting, exhilarating and scary. Controlling
your own destiny and starting your own business is not for everyone, but the
road less traveled is often the most fulfilling path to take.
The columns, articles, message board posts and/or any other features provided on Wealth Training Source are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author’s own and there is no implied endorsement by Robert Britt of any advice or trading strategy
