Home > Startup > What is a Turnkey Business? A Beginner’s Guide

What is a Turnkey Business? A Beginner’s Guide

By: Bill Bradley

 

a hand turning the key in a car

Are you looking to escape the 9-to-5 grind and become your own boss? If so, you’re among good (and plenty of) company. 70% of Americans have said they want to work for themselves, despite just 6% of the population actually being self-employed. And a turnkey business might be the perfect solution for you.

We get it, though. Owning your own business is tough work, and it’s difficult to get started. If you’re unsure where to start, we suggest considering a turnkey business. In simple terms, a turnkey business is a ready-made business designed to be easily operated by the new owner.

Think of it as a fully furnished house you just need to move in and start living in immediately. These businesses have everything you need to get started, from equipment and inventory to marketing strategies and customer databases.

The point is that if you’re interested in starting your own business but don’t have the technical know-how or time to build one from scratch, then a turnkey business might fit. It’s a low-risk and hassle-free way to become an entrepreneur, allowing you to hit the ground running immediately and start making profits.

Ready to take the leap and start your own business? Follow along as we explore the ins and outs of this type of business, from what’s included in most turnkey business sales, even the option of owning a turnkey franchise.

What is a Turnkey Business?

Essentially, a turnkey business is a type of business model that allows you to hit the ground running with a complete business package. Turnkey businesses typically come with everything you need to start and run a successful enterprise, including:

  • Training
  • Equipment
  • Branding
  • A pre-existing customer base

When you buy a turnkey business, you’re essentially buying a “business in a box.” This allows you to avoid many of the common pitfalls of starting a business from scratch, such as:

  • Business planning
  • Market research
  • Equipment and inventory acquisition
  • Customer acquisition

Instead, you can simply focus on running the business and generating profits. We’ll dive deeper into the benefits of this type of business investment in just a bit, but some of the other standout features include the following.

Reduced Risk

One of the biggest benefits of a turnkey business is that it carries less risk than starting a business from scratch. This is because a turnkey business has already been proven to work. You know that it has a pre-existing customer base, established systems and processes, and a proven business model.

Ready-Made Support

Turnkey businesses typically come with training and support from the parent company. This includes marketing, advertising, and ongoing support for the business. This can be invaluable for beginners who may not have the knowledge or expertise to run a business independently.

Brand Recognition

With a turnkey business, you’re often buying an established brand with a well-known name in the industry. This gives you a significant advantage over starting a business from scratch since you don’t have to spend as much time and money building brand awareness and credibility. Trust us; that saves a whole lot of money.

Faster Return on Investment

Because a turnkey business is established, you can start generating profits quickly. Your ROI is likely much faster than if you were starting a business from scratch. In most cases, you can start earning money immediately since you’re simply taking over the already up-and-running business.

Other Benefits of a Turnkey Business

In addition to the benefits we’ve covered above, turnkey businesses have a few more benefits you may not have considered. Let’s take a closer look at what else a turnkey business can offer you as a business owner.

Well-Defined Business Model

One big benefit of a turnkey business is that it comes with a well-defined business model. This means you don’t have to spend valuable time figuring out how to operate your business or what your unique selling point is.

The business model has already been developed for you. You can likely access customer profiles, a brand voice, market research, and more. This allows you to focus on growing your business and generating revenue.

Established Relationships

You gain established relationships with vendors and suppliers when you purchase a turnkey business. This can be a huge advantage, as it saves you time and energy that would otherwise be spent finding reliable suppliers and building strong relationships with them.

Perhaps the biggest benefit of this, though, is that it allows you to take advantage of bulk pricing and other benefits that come with being an established customer.

Efficient System Integration

Running a business requires various systems and processes to work together seamlessly. You need to ensure that:

  • Your inventory is in sync with your sales
  • Your customer service is responding promptly
  • Your marketing campaigns are attracting the right audience

These operational tasks can be overwhelming for first-time entrepreneurs and may take a considerable amount of time and energy to optimize. Most new business owners underestimate the time, energy, and money that goes into building efficient business operations.

However, turnkey businesses come with an efficient system integration already in place. You don’t have to worry about any of it. With a turnkey business, you can focus on providing excellent customer experience and expanding your business instead of dealing with logistical issues.

Plus, streamlined processes and workflows help eliminate unnecessary steps and reduce the risk of errors.

Training and Support

While we’ve already discussed the benefit of ready-made support, it’s important to note that turnkey businesses often come with training and ongoing support. This can be especially helpful if you’re new to entrepreneurship, as it can help you get up to speed quickly and avoid costly mistakes.

Types of Turnkey Businesses

Turnkey businesses come in different shapes and sizes and operate in various industries. Here are some of the most common types of turnkey businesses you should know about (and consider).

Real Estate

Turnkey property is one of the most popular turnkey business options. Investors can purchase a property that’s already in good condition and has tenants, allowing them to start earning rental income right away.

The property can be anything from an apartment building to a commercial space. It’s up to you. You can also choose to manage the property yourself or hire a property management company to handle everything.

Franchises

Franchises are another popular turnkey business option. Essentially, franchises offer investors a system and brand that has already been established. As mentioned, this allows for a smoother transition into owning a business.

However, the franchise business model is a bit unique. With a franchise, you pay an upfront fee and ongoing royalty payments to use the business model, products, services, and brand name.

Online

Female seller worker online store holding scanner scanning parcel barcode tag packing ecommerce post shipping box checking online retail store orders in dropshipping delivery service warehouse.

With the rise of eCommerce, online turnkey businesses have become increasingly popular. These businesses can range from dropshipping to affiliate marketing, where investors promote other companies’ products and earn a commission for each sale.

With the growing demand for online shopping, running an eCommerce website can be a lucrative turnkey business option. For example, Forbes predicts that by 2026, nearly a quarter of all retail sales occur online.

Service-Based

Service-based turnkey businesses can include anything from a fully-equipped auto repair shop to a cleaning service. Investors purchase an existing business that generates revenue and has a solid client base. Because it’s a service-based business, you benefit from a local community and local marketing tactics, which are often more effective.

The business may require some minor tweaks. Ultimately, it’s best to consider why the previous owner is selling the business. However, similar to other turnkey businesses, you can start producing profits immediately.

Home-Based

Home-based businesses may be a perfect fit for those looking for a low-cost and flexible turnkey business option. These businesses can include digital marketing or social media management, which only requires a computer and an internet connection.

Starting a home-based turnkey business allows entrepreneurs to work remotely, be their own boss, and enjoy a work-life balance. It’s the professional trifecta most people are looking for nowadays.

Turnkey Franchise Investments

So, you’ve heard about turnkey businesses, and you’re probably thinking, “Okay, this sounds great, but how do I choose the right one?” Well, let’s explore turnkey franchise investments a bit more.

Essentially, a turnkey franchise investment is when you buy a complete, pre-packaged business ready to go. This means that everything has been set up for you — from the company name to the logo to the systems and procedures. All you have to do is step in and start running things.

Why are turnkey franchise investments so great?

For starters, franchises are proven business models that have already been tested and refined. This means you don’t have to figure out what works and what doesn’t. Plus, you get the support and guidance of the franchisor, who will likely provide you with training, marketing materials, and ongoing assistance.

Another benefit of turnkey franchises is that they generally have higher success rates than non-franchise businesses. According to Lending Tree, about 20% of businesses fail within their first year. Recent reports from the International Franchise Association show that isn’t true for most franchise businesses.

So, who is a turnkey franchise investment best for? Here are a few groups of people who might benefit from this type of opportunity.

First-Time Business Owners

If you’ve never owned a business, a turnkey franchise investment can be a great way to start. You’ll be working within a proven model and have the franchisor’s support to help you along the way. This minimizes the risk of failure as there is already a customer base and brand recognition in place.

Additionally, franchise owners receive ongoing support and training from the franchisor, which can be invaluable for those with little business experience. Plus, franchises often benefit from group advertising and marketing efforts, resulting in increased visibility and foot traffic.

Career Changers

If you want to make a major career shift, a turnkey franchise investment can be a good way to jump into a new industry without starting from scratch.

Additionally, franchisees benefit from supplier relationships, marketing programs, and access to training. Thus, franchise businesses are a great option for individuals looking to step into entrepreneurship without the stress of figuring out everything independently.

Retirees

If you’re retiring from your current job but aren’t quite ready to completely kick back and relax, a turnkey franchise investment can be a fun and fulfilling way to stay active and engaged in the workforce.

You don’t have to deal with the added stress of market research, branding, and more. Instead, you get a ready-made business you can run without the hassle of all the other things that make being a business owner difficult.

Is a Turnkey Business Right for You?

Now that we know what a turnkey business is, the question becomes: Is it the right choice for you? Let’s break it down and recap what we’ve learned.

First, let’s talk about the advantages. A turnkey business can be an excellent option for someone who wants to become an entrepreneur but doesn’t want to build something from scratch. It’s also great for those looking for a business that comes with a:

  • Proven business model
  • Established brand
  • Supportive team to help make the transition smooth

Turnkey businesses can also offer a great return on investment. Many of them come with an operating and revenue history you can leverage to continue generating sales. The transition time from acquiring the business to making profits can be significantly reduced, as most of the groundwork has been laid out.

However, it’s not all sunshine and rainbows. Some turnkey businesses can come with a hefty price tag. Finding one that is the perfect fit for your interests and skill set can be difficult. Additionally, some turnkey businesses may not have the same control over operations that comes with starting a business from scratch.

It’s crucial to weigh the pros and cons before making a decision.

If you have some business experience and are willing to put in the necessary work to maintain and grow the business, a turnkey business might be a good fit for you. But starting from scratch might be the better option if you’re looking for complete autonomy and control over the business’s direction.

Ultimately, deciding to dive into a turnkey business depends on your goals and vision for entrepreneurship. Take some time to research the best options and speak to others who have acquired a turnkey business to better understand whether it’s right for you.

Find Franchises

Overall, a turnkey business is an attractive option for those who want to be their boss and start a business with minimal hassle.

If you’re interested in exploring turnkey business opportunities, don’t hesitate to browse franchise opportunities. We’ve organized them by industry, location, investment size, etc. It’s easy to find the perfect match for your goals and budget.

Published: March 11, 2024
242 Views

Source: America's Best Franchises

Trending Articles

Stay up to date with
Bill Bradley

Bill Bradley

Bill Bradley is founding member and CEO of America’s Best Franchises, LLC.  Bill founded three financial services firms, Ocean Shores Ventures, Denali International and William Bradley Enterprises. In addition, to launching America’s Best Franchises in 2005, Bill orchestrated approximately 20 private equity transactions in excess of $31 million, and launched five specific purpose private equity partnerships.

Related Articles