So, you want to own your own business but don’t know where to start. Should you buy an existing franchise or start from scratch? The answer depends on what your objectives are as a business owner. Both options have advantages and disadvantages. Before starting your journey as an entrepreneur, read on for guidance on buying a franchise or starting a business.
The advantage to buying an existing franchise is all the legwork associated with start-up is already done. When you enter into a franchise agreement, you pay the franchiser a licensing fee for rights to the name, brand, and business operations. Typically, the franchiser will assist with selecting the location, connecting you with existing vendors or suppliers, training the staff, and setting up the store. Buying a franchise takes all the guess work out of how to get up and running.
There are a few disadvantages to being a franchisee. Oftentimes, you must pay ongoing royalties to the franchiser which may decrease your profit margin. Also, there’s little control over the business model which can impact your product or service offerings. Lastly, as a franchise owner, you run the risk of negative publicity for the brand with which you have no control. If you decide to buy an existing franchise, do your homework. Talk to experts in the industry as well as your financial and tax professionals for help developing a game plan. The more diligent and prepared you are now, the higher the probability for success in the future.
Starting a business from ground zero is an attractive option for many entrepreneurs. It can be incredibly exciting and rewarding to execute on your unique business idea and have total control over how the business operates. When you start your own business, you run the show.
However, as with buying a franchise, there are risks involved with starting a business on your own. You’re responsible for developing the business model, brand aesthetics and standards, operations, and product/service offerings. This can have a higher learning curve and take a significant amount of time compared to buying a business that’s already established. Moreover, starting your own company requires a significant amount of capital expenditure upfront to support the development phase and carry you through until you become profitable.
Whichever route you decide to take to business ownership, it’s always wise to speak with a business attorney and accounting professional for guidance on navigating the legal/ tax aspects of owning your own company. BWK’s integrated team of expert financial, tax, and strategy professionals provide knowledge and guidance for all your business needs. Contact us today for more information or to speak with a tax expert.