20/11/2020

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Starting a Company: Startups Vs. Franchises

Owning your own business is an exhilarating and liberating feeling, but it’s also a massive contrast to the typical lifestyle of a corporate employee. It’s important to learn all the facts so you are prepared before making the change. Your readiness will depend on the type of business you want to own.
​There are two options that most people consider, do you launch a new startup or invest into a franchise? We believe the best thing to do before any decision is make a list of advantages and negatives to make an informed decision.
Investing in a Franchise – Advantages
Being your own boss is the big allure and when it comes to franchising, that freedom not tied to the corporate ladder, with the knowledge that the roadmap is already planned for you gives massive peace of mind and confidence for success.

Proven Model
A franchise business comes with a proven operational concept which is designed to make it easier for new business owners to get started and reduce the financial risk associated with a startup. The knowledge that a market demand exists for that product or service gives necessary reassurances that the decision will be profitable.

Dedicated Support
Franchisees typically operate within an extensive network of pooled knowledge, shared by all other members and their experiences within the network. In addition to this network of experience, there will be other franchisees on board who can provide moral support during those early days. A franchise is similar to a family, there is always someone to offer a helping hand or bounce ideas off, knowing that everyone has the same common goal.

Manageable Costs
Franchise networks typically have established and streamlined operational platforms which contributes to keeping costs down on products or services that would generally cost much more, were the business a startup. Secondly, proof of concept gives lenders more confidence when lending for investment, which can make the financial beginnings of the venture less stressful, compared to a startup.

Investing in a Franchise – Disadvantages

Every new business is posed with risk and similar to an independent startup, the success of a franchise is not guaranteed. As with any company, a new business owner must channel all of their time and energy into getting the business off the ground and into profit or risk failure. If it were easy, everyone would do it. However, a franchise model with a proven concept does improve the chances of success.

Limits to Growth
It has been known that some franchisors operating within saturated markets or who want to restrict the growth of its business, have placed limits on how much or how quickly a franchise can grow. This is a rarity because the overall success and growth of a franchise network benefits all involved.

Startup – Advantages

The same allure exists for those looking to start a new business, whether it be a new franchise opportunity or the launch of a new company. A new venture offers the hope of financial freedom.

Endless Potential
A startup may have the potential to become large enough to achieve the dreams of the entrepreneur, providing that the industry and marketplace allow for it. The increased risk of starting alone will require more time and effort to manage more elements that a franchisee would not have to consider, such as managing pay-checks until a demand for products or services have been found, or building a website, marketing costs and software services. With more power, comes more responsibility.

A Sense of Adventure
The element of risk is received differently by different people, to some it’s scary, to others it’s exciting. The adventure into the unknown, uncharted waters ahead and building something from nothing, offer a sense of liberation that may have been squandered by a previous corporate lifestyle. The only person who knows if this is the right decision, is themselves.

Startup – Disadvantages

There are no guarantees and this is the most common reason that people do not begin their own business. The risk outweighs the potential reward and if you don’t have the money to make more money, or enough money to support yourself and a new business, it can all collapse very quickly. The lack of a roadmap will focus the entire investment on oneself and the capability of doing what is necessary to succeed.

Expensive Mistakes
The lack of support during a startup means that decisions can turn out to be expensive or time consuming. Making decisions by yourself without prior experience may mean that you need to invest more time to ensure that the task is completed and according to plan. 

Going Solo
A startup owner would be wise to partner with a dedicated and reliable team who they can rely on at all hours of the day, to help navigate the choppy waters of a startup business. A new startup owner will be required to work long hours to complete hard work necessary to bring this new business to life, and if it fails they are left in a financially difficult position.

​Conclusion
We support all entrepreneurs who decide to venture into the business world, regardless of their setup, but from our experience we prefer franchising. We offer support to business owners where we can as a business and will share permitted information to support those not within the franchising world.

If you are ready to begin a new adventure and you choose the franchising route, then we remain at your disposal to discuss that opportunity with you in detail. Schedule a call today with one of our franchise directors and see if our business model is right for you.

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1 thought on “Starting a Company: Startups Vs. Franchises”

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