What Are Your Business Ownership Options?
The more you understand your options, the more likely the best next move to accomplish your Income, Lifestyle, Wealth and Equity goals will become apparent. Business ownership can take on many forms, there are pros and cons to the three main categories of entrepreneurship listed below that might be helpful as you are evaluating your next step.
Buying an Existing Business. For some aspiring entrepreneurs, buying an existing business represents less of a risk than starting a business from scratch. This can be true however, most businesses go through stages of a lifecycle, and it would benefit you to know what stage an existing business is in at the time of purchase. Also ask questions such as why are they selling, competition in the market space, financial track record, etc.
There are some downsides to buying an existing business. The asking price might be high due to length of time in business, the fact that you are inheriting a customer base, the good will of the brand and other fundamental work that has added to the success or not of the business. Also, be aware of hidden problems associated with the business like debts the business is owed that you may not be able to collect.
Opening a Start-up Company. Establishing a business from scratch can be a very exciting challenge, however, it requires a tremendous amount of planning, market research and financial knowledge. Other considerations include researching the ideal location, identifying funding partners, creating a business plan with both short-term and long-term goals.
Statistically, start-ups have the highest failure rate of all your business options. A 2012 Kaufman Foundation study discusses the dramatic drop in startup activity in the United States over the past three decades. Based on U.S. Census data, it reveals that new businesses shrank from thirteen percent of U.S. employers in 1980 to eight percent in 2010.
Investing in a Franchise. The franchise business model is one that has already proven to be successful and comes with a network of other franchisees and a support system in place. The success rates of franchises tend to be higher than start-ups.
Franchises are awarded to new investors, meaning the franchisor needs to see that you are a fit for them, as much as it has to be a match for you. Yes, there are royalty payments, and an operating system to follow, however, the value of knowing and feeling that you are not alone and that there are others you can learn from, can make this business model ideal for many seeking to be self-sufficient through business ownership.