There are two primary routes that you, as an entrepreneur, can consider when pursuing your dream. These routes are to either start a business from scratch or buy a franchise. In making this decision, you’ve probably already read the articles and heard the advice about the pros and cons of each. Those are important factors to weigh as part of this decision. There are long hours, personal sacrifices and hard work with both. Success or failure are the end result of both startup efforts.
But, on a much more personal scale, you need to know which route works for you. Where you are in life and the situations that define those moments play a role in selecting an entrepreneurial route that fits.
What worked for me
I’ll use myself as an example of what I mean by thinking about this factor. When I first decided to be an entrepreneur, I was in my 20s, single and just out of college. Unfortunately, a job I had at the time to offset college costs led to a horrific accident. That accident had me bed-ridden and spending many months on rehabilitation.
I had plenty of time to think about and research business ideas. But, I also had limited capital. I decided to bootstrap my startup while returning to a traditional job to help fund it. Since I did not yet have a family to support, risk was not as much of a concern. That situation afforded me the time and opportunity to start a business from scratch.
There was also my personality that played a role in my decision to start a business from scratch versus buying a franchise. For me, the purpose of running the business was to create something unique and that addressed a certain need. I believed that operating a franchise meant simply managing someone else’s dream and passion. There were hundreds of people doing the exact same thing at other franchise locations. That just didn’t work for me.
Determining what works for you
As an entrepreneur, you will need to go through a similar process, like I just described.
Let’s start with a franchise. Ask yourself these questions:
- Are you willing to accept orders and rules from the franchisor and follow their standardized approach to the business?
- Do you mind the idea of handing over a percentage of your profits each month, quarter or year along with wide-ranging annual fees?
- Can you take on the role of supervisor and manager right from the start?
These are just some of the questions you will need to ponder to determine if buying a franchise works for you.
Then, there is starting your own business. Think about these questions:
- Do you have the know-how to develop every aspect of your business or the funding to hire some talent to help you?
- Can you handle the often lonely route involved and lack of community assistance that comes with starting your own business?
- Are you willing to wait out the one to two years it may take to make it profitable?
- Do you have the energy to potentially keep your day job while spending the rest of your available time on more work?
Before you make a decision based on these questions, take more time to explore each route. Although I knew the franchise route did not work for me for the above reasons and because I had a business idea to pursue, you may need to do more research.
When it comes to a franchise, find out about these other factors:
- Calculate the resources, equipment, knowledge and support the parent company provides
- Find similar businesses in your area and research their performance
- Ask other franchisees about their experience and satisfaction with results
- Find out how the franchisor will protect your territory
Do the same for the business you would like to start:
- Determine how much funding you will need for the first few years and where you can get this money
- Research your target audience and the type of problems you can solve for them. The answer can determine if it’s a sustainable idea
- Learn about the basics of business. These areas include marketing, financials, product development, human resources and more
- Consider your risk acceptance or aversion level. Doing so will help you see if you have what it takes to take a risky journey like starting a business from scratch
- Gauge how your family feels about this journey. Also, think about the lack of certainty involved compared to that of a franchise
Think before you leap
Whatever you decide, don’t rush it. I spent many months mulling over all these factors and that was after ruling out the franchise route. If you are considering both, take all the time you need. Talk to others and get their perspectives. Make pros and cons lists and reflect on those responses. While you may be raring to go, it’s better to leap with knowledge and confidence than to take a flying leap on a wing and a prayer. Your future business will thank you for it.