Are you considering a career change?
If you are considering a change of direction in your career, an option open to you is running your own business. This could be your opportunity to follow your passion. It’s certainly a chance to break out of the corporate career trap. As a business owner, you’ll have better control of your life and work schedule and the potential to achieve financial independence.
Could business ownership be the best choice for you? If so, what ownership options are there?
Your entrepreneurial options
In the debate of starting a business vs buying one, you cannot ignore factors such as the risks of running a business. According to the Bureau of Labor Statistics (BLS), there is a 50% chance of a new business failing within the first five years. However, also according to the BLS, the average time that someone stays with an employee is 4.1 years.
What about all the entrepreneurs who succeed? There is no limit to your earning potential when you run your own business. In the corporate world, no matter how good you are at your job, your earnings are limited – and, in most cases, dictated by the number of hours you work.
There are three ways to unlock your potential as a business owner: start a business from scratch; buy an existing business; buy a franchise.
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Start a business from scratch
Starting your own business from scratch allows you to be the chief decision-maker in your business. It helps you achieve financial independence and gives you creative freedom too. It’s the fresh start that you’ve been looking for in terms of your career. You can create a brand image just as you’ve always envisioned.
The potential is huge. So are the risks. You’ll have to plow a lot of money into starting up. You’ll need to market your business, find clients, and establish yourself and your brand. You’ll probably have negative cash flow in your business for the first few years before you start to make some real profit.
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Buy an existing business
Buying an existing business has some advantages over starting a business from scratch. You have the infrastructure in place. You don’t need to go out and hire new employees. The business already has customers and positive cash flow.
But what if those employees reject the idea of working for a new boss? You’ll want to change some things, and people get nervous about change. What if you discover investment is needed in premises, equipment, and machinery? And, what if, when the old boss leaves, you discover that the biggest customers only dealt with the company because of the relationship they had with the previous owner?
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Buy a franchise
Buying a franchise is kind of like a combination of starting from scratch and buying an existing business.
If we consider a franchise vs your own business that you have acquired, the costs are often comparable. As a franchisee, you benefit from the existing business brand and name. The business systems that have made the business successful are already in place.
Comparing a franchise vs new business, again the costs are likely to be broadly similar – you’ll need to invest in premises and equipment, for example. But as a franchisee, you’ll be supported with training, marketing, and the existing brand name. The franchisor will help you with setting up your new business location, and you’ll be trading with a tried and tested business model.
You won’t have quite so much autonomy as you would if you started a business from scratch, but you will be the business owner and benefit from a customer base that you build.
Should you start a business, buy a business, or buy a franchise?
In this article, we have only had time to give you an overview of the differences between different business ownership options. Which is best for you is a personal choice, though you should discuss your options with others.
Our Executive Career Change Coaching helps you explore all your options, including business ownership. You have unique circumstances that need consideration, but if you are considering getting off the corporate hamster wheel and unleashing your entrepreneurial talents, you will need to explore three key questions:
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Should I buy a business or start one? Do you relish the challenge of starting your own business from scratch?
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Should I buy an existing business? Will the premium you pay guarantee success, or will customers and employees walk away?
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Should I buy a franchise or start my own business? A franchise offers you the chance to own your own business with the support of the franchisor and in a proven business model.
Choosing which business model is best for you is a decision that is yours to make. As you ponder your options, you’ll have many questions. For the guidance you need as you consider your next move, contact New Ground Consulting for a free consultation.