If you are considering going into business you may be wondering whether it makes more sense to start a business from scratch, buy an existing business, or buy a franchise from an existing entity. Although the lure may be strong to start your own business, the reality is that about two-thirds of all new businesses will fail over time. Let’s look at the pros and cons of each as well as potential pitfalls.
Both new businesses and new franchisees have a long road and long hours ahead of them. A new business will often fail because the owner did not create the right business plan or did not do enough market research that their products or services were needed in that city or town. A successful existing business has already passed that hurdle, and franchises also do market research as part of their operation.
A franchisee is required to follow the same business plan as all other franchisees as part of their agreement. This gives them a slight advantage over a new business because they are not developing their business through trial and error. Also, franchisees receive ongoing support from the franchise owner as they develop their location. This is far different from a new business owner who is on their own and having to deal with all the problems themselves.
A key part of any business success is brand awareness. This can be a major obstacle for a new business, particularly if they are offering a product or service not familiar to the public. Many franchises, on the other hand, are well known to consumers and are welcomed in a new area. Also, many franchises are supported by national advertising from the parent company which gives them a great advantage over a local small business.
One advantage of starting your own business may be the need to provide less upfront cash than is needed to buy a franchise. Another advantage is you can buy a local business that is well established without having to deal with a franchise owner. This may appeal to some business people who would rather not operate under a franchise structure but prefer independence. Buying an existing local business also means you are buying brand awareness in your community, which is a great advantage over starting a new business.
Hallmark Business Brokers can advise you on opportunities in the greater Sarasota Florida area if you are interested in buying either a local business or a franchise. For more information please call 941-445-4726.