Gemma Reeves
Looking into your options for an entrepreneurial endeavor? Don’t know whether to buy a franchise or to launch your own brand? Our friends over at www.findmyworkspace.com share insights to help you decide!
Going into business is a major life-changing decision. Before you start, there are so many questions that you need to ask yourself.
- What is your reason for going into business?
- What kind of industry are you interested in?
- Where does your expertise lie?
- What kinds of products and market do you have experience in?
- Do you have a location in mind?
- Who is your ideal customer?
- What will be your unique selling proposition?
- Do you have the necessary resources (time, money, skills) to get the business started?
- Do you have a list of prospective suppliers?
- Who are your competitors?
- How will you market your business?
- Will you be the one to manage your business or will you hire a manager?
When you have the answers to the above questions, it will be easier for you to decide which type of business is better suited for you, your strengths and your goals.
So should you start a franchise or put up your own business? A closer look at the ABC’s of the two business models can help you decide:
Autonomy / Ownership
In a franchise, you do not own the name / brand of your business. You are only granted a license to use the franchisor’s brand name and operating systems. In exchange for your investment, you benefit from the efficiencies and stability of a well-established system perfected by the parent company.
In an independent ownership, you build your business from the ground up. All decisions on the brand name, products and services, and operating systems fall on your shoulders. You can be as creative and flexible as you want to be in adjusting to your market’s needs and trends.
The main differentiating factor in this aspect is: security and stability of an established franchise system versus absolute autonomy on the process, details and direction of your business organization.
Brand
The most valuable thing that you are buying with a franchise is the brand name. It takes years and millions of dollars to build a strong brand. With a well-known brand, reliability and familiarity have already been embedded in the consumers’ minds. Customers expect that your products are exactly the same in appearance, price, taste, quality as in the branch five blocks away.
When you start your own independent venture, you have to proactively cultivate the brand. A new brand is highly unlikely to enjoy the prestige and recognition of long-standing brands. However, you have the power to develop your brand’s image to truly embody yourself and your vision. You can also inject a lot of homegrown flavor into your brand- something that your target market might appreciate.
Which advantage is more important to you? A strong and established brand image versus a brand that reflects who you are and where it started.
Costs
Apart from the initial investments in securing your license and setting up the operating system, there are ongoing royalties to be paid for a franchise business. Royalties may be a fixed amount or a certain percentage of your sales. Franchisors may also require certain details such as a minimum size for your store, minimum number of employees and number of operating hours per day.
Independent business owners have the upper hand in deciding how much money to put into their business. There is the option of starting smaller and then expanding as you go along or vice versa. Needless to say, owners are in full control of their business earnings, sales data and operating hours.
Ask yourself: are you willing to shell out an ongoing maintenance fee for your business (in exchange for several benefits) or would you rather maximize your earnings and invest them back to the business?
Direction
A good franchise package includes initial training for you and your employees; and continuous support. An even better package includes periodic trainings and workshops, as well as regular get-togethers with your fellow franchisees. You can be part of a team with a common goal of growing your business brand. Your mother company’s direction is communicated clearly and you just have to lead your team towards your goals and targets.
Independent business owners take complete responsibility on their organization’s objectives. From creating a business plan to the actual implementation, to tracking of the results, to addressing all problems and revising strategies, if needed- your business building and entrepreneurial mindset are fully optimized. It takes a lot more thinking and work, compared to a franchise business set-up. However, you can set goals which are more personal for you and your team.
It’s your choice: Do you feel more comfortable with ongoing support from more experienced business practitioners? Or are you confident that you can gracefully manage your entire business operations?
Recently, some franchisors have started evaluating their system and packages. Some companies are now offering more flexibility and leeway for franchise owners to introduce their own methods to the business. This encourages learning between the mother company and the franchise owners and addresses possible problems with lack of decision-making power for entrepreneurs.
With the surge of knowledge and information available at our fingertips, independent business owners can get advice from more experienced businessmen, consultants and support groups in running their organization. There are also more cost-savvy but very effective options in promoting your brand- through social media, blogging and search engines.
Starting your business venture is exciting and challenging. Be ready to commit your time, heart and hard work into it. Regardless of which type of business you choose to go into, you are the most important key to the success of your organization!
