Buying a franchise or starting your own business requires careful planning. First, you must figure out what you want to sell.
Assuming you’re serious about running a business, explore the preliminary considerations. Then, examine the pros and cons of buying a franchise versus starting your own company.
Some Preliminary Considerations
Starting a franchise will benefit your customers if you find a location for your offerings. You may not have as many customers if you serve in a smaller city compared to a large, metropolitan area.
Still, the customers in a smaller community will be 100% yours until a competitor moves into the same area. Setting up a franchise in a region with a lower population density you may not strike it rich. However, you may earn a steady income if you promote a well-known brand in that territory.
Suppose you want to start a small specialty shop instead of a large franchise store. Some examples of this include cosmetic salons, homemade craft stores, or photography studios. Specialty shops or “boutiques” often perform well in areas with fewer people due to not being flooded with business rivals.
If you do decide to start a specialty shop, you would benefit from running your own business instead of a franchise. This will allow you to personalize your customer service and offer your most needed skills within that community. You will corner the market in that location for as long as no other entity moves into your service territory.
Pros and Cons of Buying a Franchise
Buying a franchise of a successful company paves the way for you. Everyone already knows the brand, so you don’t have to spend much time educating them about it.
You also can plug into the technical support provided to every location by the brand you represent. In addition, you would have access to a built-in supply chain, and experienced people can help you train new employees.
Franchising enables you to hire from inside the company too. You won’t have to perform “cold recruits” to people who don’t work there.
Running a franchise has a major disadvantage though. In theory, selling well-known products can take less effort than if you decided to start a new brand. However, customers still might buy what you sell from someone they know, not you. If a well-known brand has already saturated the market, then you will have to work harder to be noticed. This may mean spending more on advertising than you want to.
Additionally, startup costs for franchises may run steeper than if you venture out on your own. What’s more, you have to adhere to that brand’s identity. Not much deviation is permitted except for minor product or service customization. However, this will not be a problem if you believe in the franchise brand.
Pros and Cons of Starting On Your Own
A major advantage of starting your own business is that you can establish your own mission and vision. Think of it as the difference between supporting your own dream instead of someone else’s.
If you venture out alone, you can also control how fast you expand. This enables you to work with the startup money and the operating capital you have until your company turns up an increased profit.
In addition, you have power over what products and services you offer to the public or specific interest groups. This also enables you to follow your passions and sell what you know will benefit others.
A disadvantage of starting your own business is the difficulty in building a network. You have to make more of an effort to connect with others than you would if working with a franchise with established employees. Not only that, but you also might have limited funds for hiring help.
Going at it on your own forces you to figure it all out yourself. You don’t have to start your business alone, however. You have resources available to you, such as the Small Business Association or LinkedIn entrepreneur groups. Your local library can also help you connect with the community. Reaching out to your location also comes easier when you attend special events.
So What’s Best For You?
If you have your own money set aside or an inheritance sum, starting a franchise may be the better option. You can operate it with less effort than if you had to complete the work of five or more people.
If you don’t mind being overworked until you grow, starting your own business would be the better choice. Besides, you may qualify for a startup loan in your company’s name.
Otherwise, you can always choose to provide online services. Digital businesses often cost less than physical stores to run, and you can make a steady profit.
