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Buy a Business, Start a Business or Buy a Franchise?

Written by: Ted Burbank

Article Overview: Should you Buy a Business, Start a Business or Buy a Franchise? Which is best for you? What are the pros and cons of each choice? This compact chart will help with your decision making.

Buy a Business, Start a Business or Buy a Franchise?

Start up -- Franchise -- Buy out?

Which is best for you?

This exhibit reviews and compares the risk elements associated with each choice. The degree of self satisfaction and ego gratification associated with each choice has not been addressed although it must be acknowledged that these factors are perhaps the strongest motivators for business ownership. In this regard, start ups provide the highest degree of satisfaction and gratification and buy outs perhaps the least with franchises somewhere in the middle. Interestingly, most business observers and our own experience indicates that start ups, albeit the most satisfying choice, have the poorest chances for success.

Success Factors	Start up	Franchise	Buy out
Location	unknown	unproven	proven
Product/service acceptance	unknown	unproven	proven
Working capital requirements	unknown	unknown	proven
Time to break-even	unknown	unproven	proven
Time to profitability	unknown	unknown	Immediate
Level of profitability	unknown	unknown	proven
% Return on initial investment	unknown	unknown	proven
Choices available	unlimited	plentiful	limited
Ability to pre-measure management skills required	guess	educated guess	visible
Ability to find the "right opportunity"	easiest	easy	difficult
"Due diligence" (check it out)	easy	easy	difficult
Opportunities for improvement	unknown	unknown	identified
Training and assistance	none	Yes - Franchisor	Yes - by seller
Financing:	unlikely	probable	likely
Outside collateral required (ie: Home)?	Yes	Likely	Seldom
Source of lending	Bank/2nd mtge (Home).	Equip. finance	Seller finance
Chances of success	low	high	high

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  Low Cost Franchises Offer Way to Own Your Own Business
  Did you know: NIIT Franchise was present in Malaysia in 1997?

Article Tags: buy a business, buy a franchise, franchise, start a business, start up, start ups, usiness ownership



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My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Exclusive: Interview with Results - Hi Forum Members, I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles). As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business. This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business. I am looking to interview about 30 businesses across North America over the span of 3 months. At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews. I would like to extend this opportunity to members of the Forum. If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM. Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
Re: Franchise 'due diligence' checklist - One of the things I focus on is this: Does the Franchise fit the Business Model you are interested in? Meaning, are you going to be doing what you want to do on a daily? For example, if you are a restaurant manager now and you hate your job because of the hours, then don't buy most food franchises. You have experience of course, so it is more comfortable, but you will basically be doing very similar duties and hours as you were before. I always go through a series of questions, answers, more questions, more answers etc... to help my clients figure out what Business Model they are most interested in, I do this before even discussing a single name with them, they tell me what the business model is and then I match them up to that type of business, explain the entire business model as best I can and then and only then do we discuss the name of the company. Too many times people come to me wanting to own "abc" name brand franchise, when they don't even understand what type of business it really is and what they will be doing every day.
Fed rate cuts . . . - So just what do the newest Fed rate cuts mean to Franchise and Business Opportunity investing? Is it immediately felt? What timeframe do you think, or rather, where are we in terms of new vs. existing business investment? A similar question can be composed for the economic stimulus checks - will they a have any effect if consumers spend a little $$
Re: Hello EvanCarmichaelers, and Thanks! - "Carmichaelers" ..nice.. Over at the Young Entrepreneurs I'm going to start calling my readers "DSilvelers" - I like the sound of that! Welcome on board theFranchiseMarket. Do you run a Franchise Business or are involved in Franchising in anyway?


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