It’s no secret that thousands of intelligent employees harbor a desire to eventually go into business for themselves. They do this for many personal reasons, not the least of which is the belief that they can be successful at the helm of their own organization. Perhaps you’ve been in a particular field long enough to know of a more efficient way to run a similar business model. It may stem from the famous thought that you can build a “better mousetrap,” as the saying goes.
Generally speaking, there are three ways to go into business for yourself, including starting a business from scratch, buying an existing business to run, or investing in a franchise opportunity. There are similarities in the two preceding examples, but as we will see, one of these three options has a much higher rate of success over time. Let’s take a look at the three distinct paths and delve into the pros and cons of each journey.
Starting a Business from Scratch
You’ve got a great idea for a business. You may be an expert in your field and ready to branch out on your own with the knowledge you’ve gained while working in a similar industry. You’ll certainly enjoy having complete control over your new venture. You alone will be making the decisions and reaping the profits, right? Then there’s the downside. You must come up with a viable business plan, make all the decisions (right or wrong) and create the financing and systems necessary to be successful. And studies have shown that it may take years to turn an actual profit.
Buying an Existing Business
A little bit safer alternative is buying an existing business. After all, the framework will already be in place and you may have historical results to fall back on. Buying an existing business makes you slightly more attractive to lenders because the establishment of your location, employees, and systems should already be in place. However, what if your assessment of the opportunity is off? Small factors such as employee defection, a higher debt service, and a lack of support from the previous business owner could hamper your efforts to successfully start the business further down the line.
Investing in a Franchise Opportunity
The final option for starting your own business may be the safest option of all. And why is this? Well, franchises are well known for providing the investor with a proven concept or service—often times with a well-run brand awareness effort. In almost every franchise option, there is a proven business model with well-heeled systems in place to predict future results. Adding to this positive aspect is the level of support you can count on from the franchisor and other franchisee owners in the same category. You’ll do well because they do well, and vice versa. The only drawbacks to this business ownership opportunity may be the endless supply of options you have to choose from, but don’t take this decision lightly. Matching your business skill set to a particular franchise is likely the single most important decision you’ll have to make.
It’s time for revealing some interesting facts and figures that lend support to the franchise ownership option over the other two paths to business ownership. From 2006-2010, FranNet conducted a study to track the multi-year success rates of the three ways to go into business. A key finding? 92 percent of FranNet franchise placements were still in business after two years, compared to only 67 percent of other small business ventures (according to studies by the U.S. Census Bureau). After a five-year period, FranNet placements clocked in at 85 percent success rate compared to only 50 percent of other small businesses. What should you take from these statistics? There is innate value in matching an individual with their ideal franchise concept, because it consistently leads to a much higher rate of business success.
Do you feel that you’re ready to get started? If this article has inspired you to investigate the best way to start your own business, perhaps it’s time for a free consultation with a qualified and experienced franchise consultant. As it turns out, FranNet is just the place! As a franchise consultant company with a 25 year track record of assisting thousands of individuals on their path to business ownership, make arrangements to speak with one of our representatives today.
This article was originally published by FranNet.com.
Published: May 29, 2013
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