Is Buying a Franchise or Existing Business Safer Than Your Job?
One of the most fundamental career choices you can make is whether to work for someone else or for yourself. This series has taken you through weighing the risks and rewards: from the four paths of business ownership in part one, to weighing the risks of employment vs. self-employment in part two, to how self-employment will affect your income in part three.
Work for someone else? Work for yourself? It’s not just a black-and-white issue. You’ll need to consider the different options for owning your own business. If you don’t have a marketable idea for starting a business from scratch, you may be better off purchasing a franchise or buying an existing business. Which path is safer? Here’s what you need to keep in mind
Who’s My Boss?
For a person who likes to be creative, a franchise may not be the best fit. Everything from products offered, in-store décor, advertising, employee uniforms, and signage is predetermined by the franchisor. You’ll still have a boss, per-se, as you will have to meet set requirements dictated by the franchisor; but you will be responsible for running the business successfully.
If you want more share of control, consider buying an existing business. The groundwork is laid, a business plan is usually in place, there’s an existing customer base and employees, and you can make improving the business your main focus.
Do I Know the Product?
The largest benefit of a franchise? The well-known brand name. Most reputable franchisors will also conduct market research before you purchase, or they will have guidelines of where the business will be located, so you’ll be set up for success with a product that is already established.
A known brand or business name can also be a benefit if you’re purchasing an existing business. When you come in as CEO, having an existing clientele allows you to keep the integrity of the business intact while adapting it to your own vision.
Check back next week for part four: How Your Age and Government Programs Can Aid in Deciding if Starting a Business Is Safer Than Your Job?
Missed the first two posts in the series? Read about the four paths to business ownership in part one, and learn how to weigh the risks of employment vs. self-employment in part two of Is Starting a Business Safer Than Your Job?
Where Will I Get the Money?
When buying a franchise, many franchisors don’t provide you with financing options. There are some franchises approved by the Small Business Administration (SBA); these have SBA-accepted agreements that can get you access to advice and help with funding from the SBA. Also keep in mind that when you become a franchisee, your take-home pay will be impacted by start-up costs and royalty fees.
If you decide to purchase an existing business, you’ll want to put together an acquisition team—your lender, accountant, and attorney—to help you confirm what you are buying. This process of due diligence will help you investigate and review financial records, verify all of the information about the business you’re interested in, and determine whether it’s a good fit for you.
If you’ve examined the long- and short-term risks of buying into a franchise or purchasing a business, and you’re ready to jump in with both feet but don’t have the funds to do it, consider financing your venture with an acquisition loan.
What Is the Bottom Line?
Buying and running a franchise or buying an existing business is a decision to be made with care. A great product and a great location is not always the secret to a healthy bottom line, although any choice will include an inherent risk, whether it be a start-up, franchise, existing business, or staying at your current job.
Is starting a business safer than staying at your job? Only you can answer the question. After weighing the risks and rewards, examining the different paths of business ownership (and which one is right for you), thinking about the pros and cons of self-employment vs. employment, and how the decision will affect your income, you’re armed with the tools to decide if now is the time to take that first step.
Read about the four paths to business ownership in part one: Is Starting a Business Safer Than Your Job?
Examine the pros and cons of quitting your job in part two: How to Weigh the Risks of Employment vs. Self-Employment.
Consider how self-employment could affect your income in part three: The Difference in Income: Employment vs. Self-Employment.