If you are either out of work, caring for a person with special needs, or simply looking for a part time gig, one of the fundamental questions you need to ask yourself, is do you want to start your own business or buy an existing one?
Questions you need to answer are:
1. Do you want something already in place that had been established like a franchise with a proven track record or formula for success? If you have the net worth of several million dollars and want to open several of them, McDonald’s franchises generally do well in recession and boom economies.
On the other hand, maybe you have your own recipe for burgers and fries and want to do it yourself from scratch to keep costs low.
2. Franchises are good if you want a blueprint for making a profit. For the better franchises, depending on marketing conditions, you can make a profit easier than starting something from scratch. On the other hand, you pay a hefty premium at times back to the company you are franchising from for the service.
If you have the business skills from running somebody else’s business already, you can parlay them into your own job hopefully learning from your previous employer’s mistakes.
3. If your goal is to make money, the larger franchises already have a track record for generating income. You can talk to people who own them and they can frankly tell you the nuts and bolts of what they like and what they don’t like about dealing with the parent company. In some cases it is the fees, in other cases there may be lack of marketing support or in even worse cases, the parent company may accidentally shoot the franchisee in the foot by offering the same product/service through a competing store.
Some supermarket chain stores were carrying Baskin and Robbins ice cream and that did not go well with people who were owning the franchised stores.
4. If you are an independent person who likes to handle things for him or herself, you could do well starting your business from scratch. The important thing is to still being able to listen to experts, competitors and the marketplace for making your decisions and trying to keep emotion out of the equation.
5. If you like to work within a system, you may be better off either buying a franchise or an existing store. The previous owner should share with you his or her secrets and recipes for success and being profitable. Just bear in mind that past performance doesn’t always equate to future success, especially in the changing economy that we are all living through now.
Questions or comments? Please let me know!
Thanks!
Kim Greenblatt
On an unrelated note, I worked with Morris Rosenthal on checking out his new Kindled book. More information can be found here.
Tags: Business, buy existing business, franchises, profitable, start a new business from scratch