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Below are just a few of the advantages and disadvantages of starting a traditional storefront business:
Franchise
(Risk Rating: low)
- Advantages
- Established proceedures
- Protected Sales Area
- Marketing and Promotion
- Turn Key setup
- On going help
- Recognized brand
- Standard Design
- Predictable Profiability
- Disadvantages
- Higher up front costs
- Franchise Fees
- Less Creativity
- Application Process
- Restrictive Covenants
- Binding Associations
Buying an Existing Business
(Risk Rating: medium)
- Advantages
- Established procedures
- Turn Key setup
- Recognized brand (hopefully)
- Owner financing (often)
- Moderate Risk
- Disadvantages
- Less Availability
- Requires considerable research
(Risk Rating: High)
- Advantages
- Complete control
- Unlimited Creativity
- Disadvantages
- Untested Market
- Long-Term Commitment
- High Start Up Costs
Traditional Businesses that start out as small business are often started with seed money from lots of different sources. An entrepreneur setting up a own business will often work within a business environment that he is used to. A simple example which most of us are familiar is the restaurant industry. It is the largest single industry for employing young people. Whether it's a McDonald's or a new start up fast food or perhaps a well established local eatery, most future restaurants will be started by the same people who are working as cooks and waitresses and bartenders and dishwashers today.
The problem they run into is the same. They learn all they know from just one or two sources. The working industry knowledge of their particular employer is limited and they adopt only what they've learned. They may know how to cook, but their is a lot more to starting a new business.
The problem they run into is the same. They learn all they know from just one or two sources. The working industry knowledge of their particular employer is limited and they adopt only what they've learned. They may know how to cook, but their is a lot more to starting a new business.
WHERE TO FIND THEM
The easiest place to find current Franchise opportunities for your area is through a Google search for franchise. Nothing earth shattering there - right?
But that's only part of the process. There is a lot of work to do once you start the research to find the new business that you'd want to own. Remember, once you're involved with the franchise, they are your partners and expect many rules and regulations. In addition to what they give you for finding your industry market, you must also do the same thing for yourself. Remember, the franchiser is in the business of selling franchises!
It's vital to speak to as many other franchise owners as possible to give you the honest pros and cons of each franchisee.
Existing Business should only be purchased through an intermediary such as a business broker or a licensed commercial real estate broker. Yes, you need to pay a commission to them for the work, but it's a small price to pay for getting big brother (the State Real Estate Commission) on your side. Once that' established, continue your due diligence by using your accountant and attorney to protect you from yourself. Listen to their advise.
Starting a new business from scratch is the most risky, but the most emotionally rewarding. Just be prepared for the worst and plan on the best. Always have a back up plan or two.
