Start from scratch or buy a franchise resale?
So, you have made the decision, to go it alone. Hat's off to you, it’s an exciting journey and it can be hugely rewarding. Now for the big question..... What is your business idea? Something new? something no one else has thought of? Perhaps you are waiting for that light bulb moment.
While you consider what the world needs next, read on to help you choose which pathway is going to get you there.
Bright Ideas or Costly Mistakes
So let me hit you with some stats, as tough as it is to hear, knowledge is power!
42% of start-up businesses fail because there is no market need for their service or product. So, think very carefully as to what industry you want to be in, what service or product you are going to sell and research, research, research to make sure there is demand for what you are about to offer.
Be sure to pick something that people will need now and in the future. That said picking something that lots of people want, means lots of competition in the same space. 19% of businesses were out competed, make sure you check out the competition and find something that is going to be your USP. Everyone needs an edge, something to make you stand out from the crowd. Don't go too cheap trying to beat the competition, 18% also failed because of pricing and cost issues.
The great benefit with a franchise resale, is that someone else has already come up with that winning idea, the research has been carried out at someone else's expense and they have already tested the market for several years.
Funding Your Business
Funding your new business idea is often one of the most difficult aspects of launching a business. Although you might feel passionately about your product, convincing the bank manager that you are the next Bill Gates can be a real challenge. Creating a business plan, forecasting what cash your business is going to need, before you begin trading, its crystal ball time! 29% of businesses failed because they ran out of cash. Banks simply won't take that risk, so unless your plan is rock solid you could face rejection early on. All is not lost, there are other options for financing your start up, angel investors, friends and family, crowd funding but they all, will expect to see a watertight plan.
Using the history of an existing resale, you can leverage the borrowing based on fact rather than fiction and provide accounts for several years prior, giving the banks confidence in what exactly has been turned over and how much profit is available at the end of each year. Don't forget the bank is a business too, they are protecting their investment and want to know when that loan will be repaid.
Hunting and Farming
Finding your customer and keeping them happy, the ultimate key to success. How do you do this when things are constantly changing at such a pace. It’s a fickle world out there, so a great deal of time and money can be spent on hunting down the customer and even more time and rightly so, spent on keeping them satisfied. Websites, social media, mailing, advertising, cold calling there is a great number of ways in which you might attract customers. The question is how much can you afford to spend doing this, until you achieve your goal? or until you run out of money? 14% failed because of poor marketing, a further 14% because they ignored their customers. Such a simple thing, I hear you say... but when your close to it, it’s often the most difficult thing to get right and even harder to pull yourself out of, if you’re doing it wrong.
Building a customer base from scratch should not be underestimated. Buying a franchise resale can often come with existing customers, long-standing contracts, and a great deal of goodwill. Familiar branding, trusted names all play apart in the customers decision making process and a company that has been around 3 weeks verses one that has been around for 30 years is a formidable opponent.
Agile to manoeuvre
You are right, and there is no one to tell you otherwise. You are your own boss, and the decision is yours. There is a lot to be said for having the freedom to operate exactly how you want to. No board to win over, you can quickly adapt and manoeuvre your business to navigate the storms or profit from a direction change that sees you in front of the latest trend. Being part of a franchise means staying within the rules, following the guide, and doing your part in a well-oiled machine. If you want to call the shots and only be accountable to you, then starting from scratch wins this one hands down. McDonalds won’t let you add a new pie to their menu, but then they also know their customer and the costs in making a mistake on a global scale.
Woo hoo its Friday! Oh, wait I work for myself.
Getting to the point in which you can take on staff, to help you means you must be doing something right. After all, you did build this business so you could enjoy the benefits. Building a team that works well together and appreciates what it is to work towards a common goal is paramount if you are going to move from owner operator to business leader. Finding good people can take time. 23% of businesses failed because they didn't have the right team running it. It can be hard to let go but when you have the right team, that is exactly what you must do to thrive and give yourself the opportunity to take a step back and start managing. Only then can you see the changes required to grow. Resales are no different, although you may inherit staff with a business resale, fast tracking you to an already established team. There may be changes needed if that business is to grow, skills and training gaps, bad habits or someone that is holding the business back. It is tough at the top but taking on the challenge, is what you signed up for.
and the winner is....
It’s a personal choice, there are pros and cons to both, but to sum up, 20% of businesses fail in their first year and around 60% will go bust within the first three years. Being an entrepreneur is about risk, but it’s a calculated risk. If you truly believe you have the next best thing then go for it. If you want to take a more calculated approach use a franchise resale to fast track you to the front and purchase a business that is tried, tested and operational. Fast forwarding all those uncertainties means you get to use all that passion, energy, and enthusiasm to power a business forward and push it on to greatness. Making a profit is most common only after the 4th year of business, so bypassing the stress and going straight to running your own business with security and rewards wins for me every time.
Interested and want to know more about Metro Rod ?
The Metro Rod profile outlines all aspects of their franchise opportunity and allows you to contact them for further information or to ask a question.