Starting business from the ground up has some disadvantages. You have to build a customer base, market and strategize your new business, hire the employees who will run your business operation, etc. And you’re doing all of them without established trust and reputation.
When you want to own business but have no idea about what type of business you’ll make, or you worry where the best place to start it, there are other options: buying an existing business, buying a franchise, or buying a business opportunity.
Buying Existing Business
Buying an existing business is less risky than starting a business from the ground up. In brief, you’ll take over the operation that’s already generating revenue. You also gain an established customer base and reputation, empoyees who familiar with and have adequate skills. You don’t have to set up all from zero, since the business operation formula has already put in the place.
Comparing with starting business from scratch, buying existing business is more costly. But, it’s easier to get financing since bank or angel investors feel comfortable in dealing with business that has a good reputation.
Of course, every choice has each consequences. If you’re not careful, it may not be managed well and start declining. Therefore, choosing the right type of business is most important thing. Determine a business that not only has a proven track record, but also match with your expertise and passion. Consider the size of business too, in terms: number of employee, how big the capital required to take over, as well as market share.
In practice, franchisee who buy a franchise pays an initial fee and ongoing royalties to the franchisor, who sell a franchise. In return, the franchisee can use the trademark, ongoing support and right to run the existing system, and indeed to sell its product and service.
Some advantages that offered by buying a franchise are proven system and operation procedure and established reputation that makes customer feel confident to spend their money. Even, the franchisors used to conduct market research before open their new outlet. Hence, you’re able to avoid a lot of mistakes in starting a business.
Unfortunately, this scheme doesn’t sounds good for some entrepreneurs who need more freedom to manage the business. Franchise models mostly present strict rules that you must obey. So, if you’re independent one and hate interference in designing business, there is another option that may fits your need: buying business opportunity.
Buying Business Opportunity
It’s a simpler terms than franchise. At a glance, it offers business investment package that allow you to running business any way and under any name you want. You gain a set of equipment and material required to run. Unlike franchise, business opportunity doesn’t apply trademark selling and ongoing royalties. It means, there is no continuing relationship after the sale is made. Consequently, you’ll have a chance to operate business without interuption, but less, if any, support when you’re facing the problems.
The choice is yours. Consider your current situation in deciding what business terms you want to start. It depends your personality, skill, financial, and other resources. Be honest in measuring your abilities is the success secret.