I want to own a business; What are my options?

Three different roads to business ownership are possible each with challenges and opportunities.

1. Startup

Attempting to start a business from zero is the riskiest of the three but in certain scenarios it offers the highest upside. Having an idea is just the start. The business will need to consider corporate and production processes, accounting standards, business advisors, marketing, and REVENUE generation. How about the fact that a staggering 95 percent of small business will close their doors before they hit their fifth year of operation? If you are contemplating a startup seek out advisors who have been there and done it. If you are considering a startup, know that you must be agile and willing to embrace the ability to adapt.

Keys to success for a startup

  • Find a mentor
  • Have a strong personal network
  • Raise sufficient capital
  • Solve a problem, fill a need
  • Be the expert
  • Can you save someone money, can you make someone money, can your product or service make their life easier?
  • Identify your customer needs and wants and the value they associate with them
  • Value Proposition – Differentiate your offering based on unmet needs within the market place
  • Establish go to market strategy
  • Build processes
  • Be consistent
  • Sell absolutely everyday
  • Communicate any and all directions in writing
  • Surround yourself with people smarter than you
  • Track gross and net profits monthly

 

2. Buy an existing business

Generically a business acquisition is a greater financial cost in the short term than a startup. Because of the increased cost; risk is in theory mitigated. Depending on the sector, business valuations range. Due diligence is key. Mindset of the takeover must be larger than one person. The new owner has to communicate with each and every person in the company. A great majority of your time should be spent conducting a human capital audit by mentoring and coaching current employees. The major challenges in buying an existing business are getting the staff to buy in, shifting the company culture, improving communication gaps, and dealing with the resistance to change.

Keys to success

  • Due Diligence – Hire a professional if you are not an expert in valuing a business opportunity
  • Release control to capable supervisors and lead them
  • Create an advanced financial reporting and projection system
  • Instill a team-based mindset
  • Overhaul the business model
  • Strengthen all communication
  • Identify the strength and value of the existing brand/name
  • Speak to current clients/customers to gain an understanding of why they choose to do business with your target. Ask them, what needs to be improved and why? What are they best at and Why? What is that important to them?
  • Speak to current employees. Ask them why they choose to work there? Ask employees what can be improved and what impact would that have on their performance and for the customers of the business?
  • Develop an actionable strategic plan that incorporates all you learned while exercising your due diligence to acquire the business

 

3. Buy a franchise

Owning a franchise allows you to go into business for yourself, but not by yourself. A franchisor provides franchisees with a certain level of independence where they can operate their business. A franchise provides an established product or service which may already enjoy widespread brand-name recognition. This gives the franchisee the benefits of a pre-sold customer base which would ordinarily takes years to establish. A franchise increases your chances of business success because you are plugging into proven products, processes, and methods. Franchisees are required to operate their businesses according to the procedures and restrictions set forth by the franchisor in the franchise agreement. In exchange for the turn key opportunity most franchise systems require an initial franchise fee and ongoing royalty. Since the royalty is directly correlated to sales, franchisors have skin in the game to help the business run at optimal levels.

Keys to success

  • Follow the process and systems set forth
  • Believe in proven blueprint that others are successfully utilizing to achieve their dreams
  • Understand levels of support from franchisor
  • Interview successful franchises
  • Have clear expectations for the financial performance of the franchise
  • Community involvement
  • Be passionate about the service or product you will be offering to the marketplace
  • Embrace the franchise model

 

All of the above offer the freedoms of being your own boss. Which avenue do you want to pursue?

Checkout the census data here http://www.businessknowhow.com/startup/business-failure.htm

and here http://smallbiztrends.com/2012/12/start-up-failure-rates-the-definitive-numbers.html

 

Checkout these articles http://www.entrepreneur.com/article/227394

http://www.statisticbrain.com/startup-failure-by-industry/

http://www.businessknowhow.com/startup/business-failure.htm

http://www.franchise.org/what-are-the-advantages-and-disadvantages-of-owning-a-franchise

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Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

Follow or Connect with Ryan on LinkedIn at https://www.linkedin.com/in/ryan-rao/