Let’s face it, we all dream of being our own boss. No more working to make someone else’s dream come true. We get to do things our way. We’re in charge of our own destiny. Sounds great! And yet the reality of financing a business and taking a risk scares most people, so the dream remains only a dream.
But then there’s you. You know the risks and the hard work it takes to start your own business and you’re excited about doing so. You’re looking at becoming a franchise owner and the question is not will I start my own business, but how? Do I buy an existing franchise or do I start my own? Before answering that, consider the differences of both to determine which is better for you.
Having a History vs. Breaking New Ground
Unless you happen to luck into being able to purchase a thriving franchise, chances are there is a reason why it was available. A decline in profits? More competition? The neighborhood is deteriorating? All reasons why the existing franchise is available need to be examined before you buy one.
But if you’re confident these hurdles can be overcome, an existing franchise will provide a history you can study to help you build your path to success. If your entrepreneurial instinct is strong and you want to start from scratch, or you’ve successfully run a similar business before and know what it takes to win, starting a new franchise may be the way to go. You’ll have a blank canvas and be able to set the course the way you want to do it (depending upon how stringent the company’s franchisee rules are). This is a critical question to ask yourself, which environment am I more comfortable operating in?
Different Costs/Different Duties
You’ve determined how much money you have to invest. Now you need to ask yourself: “How am I comfortable spending that money? What am I best at in managing a business?” The budgetary expenses for an existing franchise will be greatest for upkeep and maintenance and in back taxes/charges if you bought a distressed franchise.
Do you relish working on altering the course and setting the ship straight? Then maybe buying an existing franchise is right for you. Would you rather spend time growing a new customer base than reintroducing the business to an existing customer base? Then maybe you should start a new franchise. Are you comfortable dealing with building permits, city codes and contractors? Because that’s what you’ll be initially spending your money and time on when you start your own franchise.
Before you take either course, ask yourself the right questions that allow you to tap into your greatest business strengths.
What Industries and Products are You Passionate About?
So you’ve determined whether or not to buy an existing franchise or start a new one. What business is the franchise in? If you know you’re better off buying an existing franchise, but the only one available is a beauty salon and that industry does not interest you, hold off. Same with starting a new one.
If you’re a savvy entrepreneur and can’t wait to open up a new franchise, make sure you’re just as excited about being in that industry as you are to open up a business. If you have the opportunity to open a food franchise but don’t have a passion for the industry, pursue something else. Because the initial joy of starting your own business will fade once the harsh realities of an industry set in. If you don’t love the industry, you won’t love your work. And if you don’t love your work, your franchise may not succeed.
To Thine Own Self Be True
Not only is this a memorable line from Hamlet, it is sage advice for anyone looking to run a business. Whether you are buying an existing franchise or starting a new one, the cost and time you will need to invest is similar, but how you spend those dollars and hours are not. If you know what you like to do and what you are good at, you have a much better chance for success if the circumstances of your franchise allow you to do what you love.
You will also make better use of your money if you are comfortable with the areas you are investing in. Both your money and your work ethic will be wasted if you are not playing to your strengths. So the ultimate question is not which is better, buying an existing franchise or starting a new franchise? The question is which is better for YOU? Getting the right answer to that question is the biggest component to your chances for success.