Today, there are many new entrepreneurs who would like to be their own boss and enjoy the benefits of a profitable career that comes along. When starting a business, there are a lot of factors to be considered before you actually commit to it.
For example, you must identify your target audience, determine the market demand for your products or services, test out your business idea and so on. Aside from all that, many new entrepreneurs hesitate when it comes to starting a business because they lack the experience and perhaps even the resources to start their endeavor.
Fortunately for them, there’s also an opportunity to buy a franchise, which doesn’t require so much experience, to begin with. Both starting a business from scratch and buying a franchise have unique advantages and disadvantages. It the end it comes down to which option suits you the best. Therefore, here are a few pros and cons surrounding both options.
1. Pros of starting a business
Entrepreneurs who decide to start their own business from the bottom up will also get to enjoy the freedom and flexibility of making their own choices. Anything from market research to business development is up to you. You get to decide how your startup will grow and develop in the future.
That includes deciding on marketing strategies, product placement, customer service and so on. Needless to say, you get to be the boss in every sense of the word. In addition, any profits you made are your own, aside for paying expenses and employee salaries, among other things. Simply put, you build your own career and financial stability alongside your business.
2. Cons of starting a business
Starting a business of your own is quite a difficult challenge. It requires a lot of effort, dedication and time, not to mention resources. You have to plan it out carefully or risk business failure at some point. In addition, you will need a hefty startup capital, in order to pay for everything until your business starts generating profits.
For instance, your main challenges would be to develop a business idea, adapt the idea if there’s no demand for it, develop an approach to reach out to customers, create effective marketing strategies, develop a product or service and so on. All of these activities cost money and they must be executed properly if you wish to succeed. What’s more, you’ll have to compete against other businesses on the market that have been there longer than you and that are probably better funded than you as well.
3. Pros of buying a franchise
Unlike starting a business, buying a franchise is more suited for entrepreneurs who lack the experience in running a business. A franchise is a developed business model that’s supported by a franchisor, i.e. a brand or a popular trademark. In other words, when you buy yourself into a franchise, your franchisor will provide you with continuous support that includes, funding, training, marketing strategies, equipment, inventory and many more.
There are plenty of franchise opportunities for you to consider until you find a model that suits your needs. With franchising, you’re a business owner who’s not alone in the whole endeavor. You get a chance to run a business while enjoying the reputation and brand awareness of your franchisor. The only thing left to do is to ensure your franchise can outrun competitors on the local market.
4. Cons of buying a franchise
Running a franchise business means you’re a part of a larger organization. In other words, you won’t have as much flexibility or freedom of choice as you’d have with your own business venture. A lot of decision making is up to the franchisor, which turns a lot of entrepreneurs away from this business model.
Everything is pre-determined in a contract agreement and if you don’t like the terms you can walk away before signing anything. However, if you do decide to sign, you’ll have to abide by the specified rules. What’s more, some franchisors require from you to pay royalties, which is a small percentage of the profits your business makes. In short, if you don’t like the downsides of franchising, you should best avoid it from the start.
Entrepreneurs who wish to test their skills in the business world can either choose to start their own business or buy a franchise. Both opportunities have their own unique pros and cons and it’s up to you to decide which option is better suited to your needs.