Monday, January 10, 2011

Thoughts on Becoming a Small Business Owner

Recently, I have been giving some thought on an approach to becoming a small business owner. While it is appealing to start a business from scratch, I would likely buy an existing franchise business in which I had some experience. To me, this approach reduces the risk associated with starting a business. Here are the reasons I believe this approach would improve the probability of business success for me:
  • Large company support structure - A franchise offers access to excellent models, successful processes and expert networks, all at a corporate level. The success of the business is not primarily dependent on my business acumen. I would also have the immediate benefit of the knowledge and best practices of a large company which would take me years to develop on my own.

  • Known customer base - From what I've observed, finding and retaining customers is the primarily challenge for a business. An existing business would already have customers as the starting base. Thus, there is a confirmed revenue stream. A new business would have zero customers as the starting point. Revenue starts at zero, which means a new business is generally losing money after all the start-up costs.

  • Practical knowledge of the business - Have experience in the business gives me a better understanding of what is important to be successful, especially on hiring good employees and doing good local marketing.
  • Currently, I am working three part time jobs in which there are franchise ownership opportunities. While I enjoy all three jobs, I only have interest a owning a franchise for one of the businesses. I have worked in the business three years, developed personal expertise, know the customer base and understand the challenges. Based on my analysis, I believe there would be an excellent return from owning and running a franchise. Unfortunately, that company has made all of their nearby locations corporate establishments, which would require me to travel a long distance to own a franchise.

    For now, I will continue work as an employee for all three companies, including the corporate owned business. However, should the corporate owned location be converted to a franchise, I would strongly consider making an offer.

    For more on Strategies and Plans, check back every Monday for a new segment.

    This is not financial or career advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

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