Think buying a franchise businessThere are three major ways of getting into your own business. You could start the business from scratch, buy a business or enter into a franchise arrangement by buying a franchise business.
Each of these three options has its own unique challenges and the choice you make will depend on your skills, resources and the amount of risk you are willing to take. If you are thinking of starting a business, review all the options first.
Starting a business takes energy and commitment. Ideally the concept you have should be unique, or it should be in an industry where you have experience and there is room for competition. Starting a new business takes time to build it to the point where it will break even and start being profitable. Extra time must be allowed to source suppliers, set up networks and to build an infra-structure that will allow you to deliver your product or service which may go through several iterations before it is accepted into the market place – all of which can incur costs. A realistic budget will need to have been worked out allowing for limited cashflow, advertising, working capital and contingencies.
Buying a franchise or business is considered the safer option to starting one up.Statistically this is better as much of the hard set-up work has already been done, the business has been proven, and the risks taken. You are purchasing an existing, proven operation with a customer base that has cashflow from day one. Operating systems have been developed and are in place and there is a history of financial records and activity to peruse. All this serves to lessen the risk to you, the purchaser, and to your banker, and provides you with a platform to build on.
Buying a franchise business is an increasingly popular option when considering self-employment. The statistic of a 90 per cent plus success rate makes owning a franchise an attractive proposition for many.
Essentially a franchise is a business system that has been trialed and proved in the market place. When you buy a franchise you are not alone, as in most cases there is additional support in the way of training, management advice and marketing. While this can curb your ability to “do your own thing” it can also reduce your risk. When buying a franchise you will be getting access to a franchise license, which allows you to use the franchisor’s business system, tools and “know-how” for a particular area. You usually pay a fee for this and in some cases, an ongoing royalty also. A proven business system with support is often the primary reason people opt to purchase a franchise.
There are the benefits of vetting the successes
of others; group buying and marketing deals, guidance on many factors from
operations and marketing to choosing the right location and construction. All
these factors will be detailed in the franchise agreement and will need to be
checked by a specialist to ensure they are fair and reasonable.
Other advantages of buying a franchise include purchasing a proven business model or knowing the financial input required. With many franchises you get the advantage of a well-known brand and market presence with a good reputation to trade on. You may elect to buy a new franchise where you will need to build your business, its customer base and cashflow, or you may go for a franchise that has come up for resale. One of the benefits of buying an existing franchise for sale opportunity is that already has customers and a cashflow from day one. This eliminates some of the risk, and will be easier to get funding for as it has cash flow and a trading history.
The road to becoming your own boss is never as smooth as working for someone else and can contain some unexpected twists and turns. Whether starting your own business, buying an existing one or purchasing a franchise opportunity, the potential risks will see most people keep their existing ‘safe’ day job. The keys to self-employment success are to do your homework, ensure it's something you are passionate about and have the skills to add value. Be as prepared as you possibly can be, and ensure there is a market for your product or service. Work out which option is best for your circumstances and consult professionals to help minimise the risks. Remember that although there are risks with any business, the rewards are there too!
For more information on finding the right franchise business for sale for you visit www.aubizbuysell.com.au
By Richard O'Brien - aubizbuysell
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