Are you ready to take the plunge & go into business for the first time?
Well, you’ve got 3 options:
- Start a new business
- Buy a franchise
- Buy an existing business
Start a business:
When starting a business, you’ve got to decide what type of business. Will it be in manufacturing, retail, hair & beauty, software, IT etc.
What will you manufacture, sell or what problem will your software solve?
And how will go to market? Will it be online? Through a retail premise? Do you need manufacturing facilities and a sales force?
You must also be aware of the stats. 20% of start-ups fail within the 1st year, and even more alarmingly 60% fail within 3 years, with only 20% still around to celebrate their 10th birthday.
Buy a franchise:
Although buying into a franchised business can improve these odds. A franchise is part of an already existing business, which has a proven and profitable business model.
Even well-known brands like McDonald’s, KFC & Starbucks offer franchises, but have a very high investment entry point.
But there are others like Subway, TaxAssist Accountants, Snap-on Tools, Drain Doctor, Headmasters & ACTIONcoach, which are more affordable.
It’s said 80% of franchisees are still in business after 5 years, with the British Franchise Association (BFA) saying 93% are profitable, and less than 1% close each year due to commercial failure.
Although, it’s still not a guarantee of success. Things can still turn sour 5 to 10 years down the line if the franchisor gets the strategy wrong.
Our experience:
We’ve real experience of this. Many moons ago we bought into a Cartridge World franchise, and for the first 5 years we were profitable, growing and the franchisor supported us well.
Then 3 major events hit, and the UK market changed…
Cartridge World was a global franchise and didn’t experience this change in other countries, so never changed their global strategy, causing UK franchisees to spiral down into obscurity.
At their height Cartridge World UK had 350 franchisees, and now their website says they have 19.
After we left the franchise (which I’m going to write a book about), we started a new subscription business providing office technology solutions (you can read about how we did this here).
So, we’ve experienced both. And it’s a strange one really, as we only left the franchise because of a lack of UK strategy and direction. Although, it’s worked out as the right decision.
Let me be frank. Both business models are tough. But when it’s just you. You’re alone making the decisions that will make or break you. In a franchise you have others to support you.
Our only advise when it comes to a franchise. Is to choose one which you believe has a long-term future, and where there is a strong track record of profitability & loyalty towards their franchisees.
Why not buy an existing business?
If neither of these appeal to you, and you have some savings, why not buy an existing business?
The beauty of buying a pre-existing business means you can avoid the start-up phase and the hard work phase, where someone has already done this work for you, giving you a proven model.
And you can either buy one business and work within it yourself, or you can buy multiple businesses and put management teams in place to run them for you.
Now I’m not an expert in buying businesses, as I’ve not done it yet. But it’s something we will look to do in future to help us achieve our vision ‘to make office technology affordable for all.’
If you’re interested in buying a business, my advice is read up on the subject. A good start would be Johnathan Jay’s latest book ‘Business Buying Strategies’, which I’ll be reviewing for you on Friday.
Finding a mentor would also be a good idea. Someone who’s bought and sold businesses already and can guide you through the process.
…wishing you all good things, no matter which option you choose.
