You decided to start your own business, but you can’t choose what to invest into - a franchise or your own business?
This is a very important issue at the initial, crucial stage of entrepreneurship, that’s why you should really consider all the pros and cons before embracing any of these two routes.
In the franchise business, the franchisor provides a “ready to use” way of doing business. Thus, the temptation of you becoming the boss through a single purchase can seem a really cool thing to invest in. But there are several advantages and disadvantages to be taken into account.
The benefits of buying a franchise
- franchises offer business ownership independence backed by the benefits of a large network;
- you don’t need business experience to run a franchise;
- they have a greater chance of becoming successful;
- it might be easier for you to find financing;
- they usually have an established reputation and image, proven methods of management and work, access to national advertising and ongoing support.
Disadvantages of buying a franchise
- entering a formal agreement;
- the agreements offer little room for creativity;
- there are restrictions on where to work, which products to sell and with which suppliers to cooperate;
- mistakes in the work of other franchises may affect your reputation;
- constant sharing of profits with the franchisor;
- franchising is not a guarantee of success (you’ll also need to make decisions, manage, think about marketing and staff).
Now you see that buying a franchise is not just easy and fun. Sometimes, creating your own business from scratch may be more profitable. Especially if you use the right strategy. But first, answer this question, why do you need an independent business?
There may be several reasons:
- achieve the next goal in your career;
- prove to yourself that you can do it;
- monetize a hobby;
- get more freedom.
Your motivations do not dictate whether to start your own business or buy a franchise. But you will make better decisions as soon as you find out why you want to become a business owner.
What skills do you already have?
Most franchises focus on physical products. That’s why people with technical skills should probably aim to start their own business. Consider creating an online store, a digital agency, or creating software to satisfy the needs of the consumers.
On the other hand, if your skills include working with people in a physical location, such as government accounting, home services or retail, there are many franchise options that can make good use of these skills.
It is important to choose a business that suits your skill set and meets your needs, because it usually leads to success - both in franchises and in unique projects.
What are your time expectations?
Starting any business takes some serious time. Different types of business require different time intervals to develop into something nice. Starting a franchise business can take from 3 up to 6 months. Or more if you need to build a new building. Setting up your own business might take you even more than one year, depending on the company formation laws in your country of choice.
Conclusion
As you can see, opening your own startup or a franchise business has its advantages and disadvantages. Before you make an informed decision, you must take into account all the nuances, your skills, your expectations and the economic situation in your country of choice. So think carefully, write down your own plan and go on with the chosen path.
