Making the decision to become your own boss is just the first step on your hugely exciting journey to becoming an entrepreneur.
One of the next major decisions will be to decide whether to go it entirely alone as a start- up or to explore the opportunities that buying a franchise can offer.
So what are some of the main differences between the two options and how do you determine if a franchise is best suited to you?
When setting up a new business on your own – purchasing a franchise takes the ‘solo’ out of ‘flying solo’
One of the hardest things to come to terms with when you set up a business is the fact that you are doing it on your own. As exciting as autonomy can be when you’ve been used to working within a busy office, suddenly having to make each and every decision on your own can be tough.
As a start-up there is a lot of support out there you can access, from local growth hubs and online forums to networking groups, where you can share problems and opportunities with like-minded entrepreneurs.
One of the many reasons why people opt to purchase a franchise rather than going it alone is that you are joining a ready made local, national and often global community of business people, all of whom have been in exactly your shoes.
A good franchise will instantly make you feel welcome and part of their team. If you are concerned about feeling isolated as a franchise start-up, it is so important to do your homework to find out what other franchisees are in your area and what support their network offers, both in the early days and as you start to grow.
A franchise can help flatten the inevitable learning curve and avoid expensive business mistakes
There is a school of thought that if you’re not making mistakes then you’re not doing anything and never more so than when starting a new business and flexing your entrepreneurial wings. But similarly, you can learn a huge amount from someone others who have been in your shoes and have made the mistakes before you, so you don’t have to waste precious time and money on simple errors that can be avoided.
Mentoring is a great thing to tap into when you start a business of any kind, whether that’s via a formal mentoring scheme, tapping into the wisdom of more experienced people in business you know or accessing a franchisor’s mentoring programme.
As a start up, your business will reflect your goals and many of the mistakes you might make along the way will be unique to you and your way of working. What a franchise offers is a way to create your own business that you can put your own stamp on, but with a proven system of running a business that has already learnt from and adapted from mistakes made over many years in business.
A franchise offers a pre-established brand built over many years
Admittedly,for some entrepreneurs the chance to create and build their own brand is one of the most exciting parts of launching a new business. You create the name, the values, the marketing, the logo – the lot!
For today’s start-up there are a huge array of tools and help out there, from low cost logo design to social media training programmes, yet all of them need to be maximised to ensure that your brand becomes what you want it to be. And that’s just the beginning!
Again, you need to know yourself and whether you are happy to commit the time, creativity and energy to networking, social media management and putting yourself out there as the face of your business.
For others, having to launch and build a brand building exercise might be their worst nightmare! What a franchise offers is a ready-made and recognised brand. This is something that can take years and a lot of investment to build up, the value of which for clients and staff can’t be underestimated.
But do make sure that the brand and the accompanying brand values are a real fit with your own – does it reflect your own ideas about eco-friendly practices, fair trade, customer service, staff and client care etc?
In the long term, the cost of a buying franchise could well be the cheaper route
All franchises require an initial franchisee fee which will vary depending on what business you’re looking at and many will have a sliding scale of investment depending on what you want to include. While this will be a considerable investment it also includes everything you will need to get your business up and running – from equipment and uniforms to a website, training and accounts support.
Compare this to an independent business which may not have any initial investment costs but will inevitably incur running costs for premises, marketing, materials, insurance and more, many of which are hard to predict and factor into a business plan.
The costs of a franchise cannot truly be matched against those of a start-up, simply because you are buying into an already successful brand, reputation and operating systems that are almost priceless.
Proven lower failure rates
Franchises have a far higher success rate than start-ups, with evidence showing that 80% of new businesses fail within five years compared to 80% of new franchise businesses which succeed in the same time frame. But don’t just take this statistic at face value – obviously every franchise is different, which is where you need to do your homework.
Another major advantage of opting for the franchise route is that it can be a blueprint for success, with proven systems in place. But like any blueprint, it only works if you follow it!
Of course, high risk can sometimes lead to high reward but buying into a business model that has already proved its worth and for many is considered a much safer bet.
So which option would best suit you? There is no simple answer to that but in making your decision we’d always advise you to talk to the people that really know you well. If you’re fired up with your own big idea and have a good idea of what’s involved in running a business then it could be that the start-up route is right for you. But if you’d prefer to take a more careful, studied approach to running a business and need that extra support and security, then it could be that franchising is the perfect fit for you.