With the New Year in full swing, business ownership is a strong desire for most Americans. Many people have similar motives for owning a business: they want to attain financial freedom, have flexibility in their work schedules and build equity for retirement. Consider these 3 business ownership models and analyze each option in depth.
Start Your Own Business: It takes a lot of courage to start an enterprise and the benefits are numerous. Due to the Internet, there are many evolving industries that are allowing a new owner to start their business anywhere in the world. Industries like blogging, online marketing and rental businesses are springing up everywhere. However, while there are many reasons to start a business from scratch, there are some barriers that may prohibit you from succeeding in your new venture.
According to Bloomberg, 8 out of 10 newbies will fail within the first 18 months due to a lack of cash. Make sure that you have the financial resources to see your business through its infancy. Complete a business plan and a Proforma before you begin and analyze if you have what it takes to be an entrepreneur. There are more risks associated with this model, however, the rewards are immense for those who are willing to take the plunge.
Buy a Franchise: There are thousands of franchise opportunities to consider. The benefits of owning a franchise are numerous. In most cases, you are buying a proven business model and your “ramp up time” is much shorter than starting a business from scratch. There are considerable funding options, including the SBA 7A, that will allow you to have enough sufficient capital to support your enterprise through the infancy stages. Not everyone is equipped to be an entrepreneur. Therefore, franchising certainly has advantages over starting a business from scratch. If you don’t like to follow the rules and pay royalties, this model may not be suitable for you.
Buy an Existing Business: Sometimes it may be more efficient to buy an existing business with an established book of business. However, due diligence is paramount to any purchase. Unlike a franchise, which may publish a financial performance representation in the Franchise Disclosure Document, you will need to hire a professional to help analyze the figures carefully. There are many good resale’s in the marketplace, however, you will need to make sure you take your time to complete all due diligence with this model.
Not everyone has the fortitude to run a business. It takes a significant amount of courage, discipline and enough capital to weather the storms throughout your ownership term. However, the rewards are priceless once you learn how to overcome the obstacles that any new venture will present.