So, you plan to leave the corporate world and start your own business? What are your options? Well, depending on the amount of money you have to spend and the type of person you are there are three main choices.
Start a small business from scratch
Starting your own small business from scratch is the probably the most popular option. It’s the lowest costing option and it allows you to base the business on whatever you want and run it exactly how you want it to run.
However, it may be cheap in monetary terms but its expensive in time and effort – your time and effort. A lot of people underestimate how much time and effort goes into getting a business off the ground and if you’re not fully committed then you could be in trouble.
As you’re starting from scratch you need to do a lot of work to find out if a market exists and how you’re going to break into that market. You also need to make sure you have the skills needed to run the business and promote it.
It can be hard work for the first year or two but starting from scratch can also be very rewarding. So, what are the alternatives?
Buy an established business
This option is often overlooked by people just starting out. The advantage of buying an established business is that it should be profitable from day 1 because someone has already done the hard yards to build up the market, sort out the business and find customers.
The downside is you will have to pay a premium on all that work done by the previous business owner – and the more profitable the business is, thee more you will have to pay. You will also need to do a lot of research into the business – the present business owner isn’t selling the business without a reason; what is that reason? Check through the books very carefully and look at things like supplier relationships and property rent and rates – there could be a nasty surprise waiting for you as the new owner.
Buy a franchise
The third option is a mix of the two above – buying a franchise. A franchise gives you a business model that has been proven to work. So you know there is a market and you benefit from working under a known brand name, making it easier to break into a market. You also get support from the franchisor which can be a real help for a new business owner.
On the downside you have to pay for the franchise model, you will probably have to pay a monthly contribution back to the franchise and you will have to follow their way of working. You will probably be locked into a 3 or 5 year contract too which can be difficult to get out of.
Despite all this buying a franchise is a popular option and can be very lucrative.
If you’re starting a business these are the three basic options that you can choose from. The one you go for will depend on your own circumstances so do the research and make your choice.