The economy has created many challenges for hard working individuals as well as large companies. One of the unfortunate by-products of these difficult times has been layoffs and forced early retirement for many people. The question quickly becomes “what to do?”, since many folks are not ready to stop working.
What can be done to fill the void and provide more control and equity moving forward? One answer is to consider small business ownership as a solution. Owning a small business can provide excellent income and future equity while taking advantage of prior work experience.
Franchise or Non-Franchise?
The first consideration should be franchise vs. non-franchise. A franchise provides three distinct advantages for many people: Name recognition, a proven business system and training and support. Statistics prove that franchises are nearly five times more likely to be in business seven years after start-up than non-franchises. Name recognition can dramatically accelerate business start-up since customers are familiar with the brand and are quick to visit a new location.
The proven business system provided by the franchisor enables a franchisee with limited industry experience to enter the industry and succeed. Their training and support division has the new franchisee’s back throughout the difficult start-up period and beyond.
On the other hand, the franchisee pays for these services by way of a franchise license fee, franchise training fee, franchise royalty fees, national advertising creative fees, local advertising fees, etc. The franchisee must also be in full compliance with the franchise agreement at all times or face the potential for termination.
These fees and restrictions can sometimes become difficult for the seasoned franchisee that no longer requires extensive training or support and seems to rely less on the brand name. Weigh these positive and negative points carefully when considering a franchise.
Independent Business Options
The other business type to consider is an independent business. Being independent means no structured training or support and not having a name that is well known. An independent business owner must create a system of doing business and succeed without a net, so to speak.
In exchange for the willingness to face these challenges, the independent business owner is free to make choices pursuant to the operation of the business and without the additional fees being paid. The independent business owner would find the franchise rules and regulations far too confining. The type of business environment you choose must work for you and allow you to be the person you are.
Lease or Purchase?
When you have chosen franchise or non-franchise, you will have to consider leasing or purchasing the structure that will house the business. Most small business owners lease the business space initially and consider purchasing at a later time when the business has stabilized and is profitable.
If you’re thinking about small business ownership; you’ll immediately begin to notice the many strip malls with spaces occupied by businesses. You’ll need to complete the necessary research to determine the best place to locate your new business. A qualified commercial Realtor can assist you with this important task. Don’t forget the platitude; LOCATION, LOCATION, LOCATION!
Buy a Business?
Finally, you can consider buying an existing small business that is operating successfully. This will be more expensive, but can be a safer investment since you skip the critical start-up period. Take a look at what is available by visiting gabb.org or bizbuysell.com. You may discover an opportunity that will work for you and your circumstances.
Please let me know what you think.
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