Small Business Options
There are three basic options for entrepreneurs:
(1) Start a business from scratch.
(2) Buy an existing business.
(3) Purchase a franchise.
This article will discuss purchasing a franchise. Purchasing a franchise is a terrific opportunity for people who would like to own a business, but do not want to take the risks of building a business from the ground up. Likewise, it is a good opportunity for those individuals who demand security and safety from an investment.
A franchise is an existing product, trade name, or business format. Franchising refers to the process of an independent entrepreneur purchasing licensing rights for a trademark from a business owner. Business format franchising is a more complex relationship whereupon the franchisee will receive guidance, marketing help, and even financial backing from the franchiser In short, the entrepreneur would like to join an existing chain.
The business world is full of opportunity. There are mega-chains, small niches, fad stores, and start-ups. At a glance, the idea of franchising seems daunting. There are thousands of options for franchising, and more ways to lose an investment than can be counted. The entrepreneur must carefully consider these questions during the research period:
(1) What are my goals? Why do I want to start a business?
(2) What is my investment? How much money do I have to invest? How much money am I willing to lose?
(3) What are my abilities? What are my strengths? What are my weaknesses? What tasks will I be unable to perform?
(4) Will I be able to follow a prescribed system without feeling the need to experiment?
(5) How much independence do I need?
(6) Do I want to work directly with customers or would I prefer to work behind the scenes?
Pros of Purchasing a Franchise
Purchasing a franchise comes with many advantages. The main advantage is brand awareness. Consumers will do business with a new franchise based on the reputation and performance of the brand. Brand awareness typically insures an instant and loyal customer base that knows what to expect from the business. Additionally, a franchise will have a prepackaged operating system. The business will have been battle tested in the economic market, and the new franchise will have an easy to follow formula for success.
Advertising is one of the most expensive aspects of small business ownership with seemingly every dollar spent on advertising coming out of pocket. A franchise comes with the power of many, and this often means that the franchise will have a corporate branch which handles advertising (for a monthly fee).
Another advantage of franchising involves start up costs. The headaches of ordering incorrect products or insufficient supplies are gone. The franchiser will have invaluable information regarding the specific things needed to run the business correctly and successfully. Likewise, the franchiser will often help to secure discounts and cheaper rates with start up materials. The parent company will often receive bulk discounts which create savings for the small franchises. Finally, the main pro in purchasing a franchise is guidance. The franchisee will have access to professional help, insider information, and step by step assistance.
Cons of Purchasing a Franchise
By becoming a franchisee, the entrepreneur is agreeing to abide by a specific operating system. As such, owning a franchise means an entrepreneur does not have 100% control over every detail in the operation. The franchisee sacrifices control in order to have greater stability. Some large franchises are expensive and have many fees. It can be more expensive to purchase a franchise rather than start a new business from scratch.
How to Select a Franchise
The franchise should have a good name, reputation, and track record. It is important that the entrepreneur do extensive research to find if the company is credible and profitable. Similarly, the entrepreneur should seek guidance during the detective process and gather as much information as possible. The franchise should meet the needs of the entrepreneur while providing a solid investment opportunity.
There are many websites that can assist in the franchising process:
(1) http://www.franchise.org/ – For browsing 1000’s of franchise opportunities.
(2) http://www.sba.gov/ – For USA residents seeking small business information.
(3) http://www.advancedfundsnetwork.com – For entrepreneurs seeking funding for a business.
Small business franchising is a terrific opportunity for those individuals who seek business stability, faster investment returns, and proven operating methods.