Which is best: starting a business from scratch or buying an existing one? Setting-up an independent operation or owning a franchise? Working part-time or full-time? Each of these options has its advantages and disadvantages and, for the aspiring entrepreneur, each should be weighed against (a) the product he or she wishes to offer, (b) the intended customer base, and, (c) the abilities, character, and work habits of the entrepreneur.
With so many options available the following advice should prove helpful:
− Try a business first before starting one. ‘Before choosing a long-term career path, talk with people who have taken the same one,’ says the owner of Northwest Prototypes Ltd., in Manchester, England. ‘Or volunteer to work part-time in a similar business or industry to ensure that it’s everything you expect it to be,’ suggests the founder of Pamir Production Services in Warsaw, Poland. Another option is to discuss personal needs and abilities with family, friends, and colleagues. They may be able to help simply by stating the obvious. Whichever option is chosen, making a life-changing decision should not be done alone, particularly when it involves others. Ask for advice and opinions of those in the know.
− Would you be willing to spend a lot of money to have someone else set-up a business for you? If so, you may wish to consider buying an existing business or franchise. Note, however, that this does not make running a business any easier. The owner of a McDonald’s franchise in London, England, for example, says that she often stays in her office until ten o’clock at night completing the unending stream of paperwork that running a food service requires.
− How much time are you willing to spend on a business or idea? The amount of time it takes to learn a new trade or skill and get a new business venture up (and keep it up) is considerable. In effect, when starting a business, entrepreneurs begin their professional life all over again – from the bottom.
Business Options
Generally speaking, there are four types of business operations from which an entrepreneur can choose:
Part-Time Businesses:
Most part-time enterprises operate during evenings and/or weekends. Since this type of employment is often an offshoot of a hobby or other interest, the benefits of working in this manner can translate into enormous job satisfaction. Other advantages include not having to leave another job and/or avoiding the financial risk of investing in a full-time business. Tax advantages are an additional bonus for part-time entrepreneurs if working from home can be claimed as a tax deduction. Part-time work also allows an entrepreneur to ‘test the waters’ of a potential full-time endeavor before taking the plunge, thereby providing valuable research and experience and possibly lowering risk.
The disadvantages of a part-time business include the fact that the work the entrepreneur performs often falls behind other more pressing commitments such as a full-time job (which means that the part-time business may never fully function because enough time can’t be devoted to it). Additionally, businesses that operate part-time and require direct customer engagement provide customers with less time to purchase or partake in the product or service being offered. Lastly, a feeling of holding down two jobs can be unhealthy and possibly lead to marital or social problems.
Full-Time Businesses
Fall into three categories: Start-ups, Existing Businesses, and Franchises
A. The start-up business involves building a business from scratch (which often requires years of hard work). If successful, however, many entrepreneurs insist that the results are very rewarding. Much of this book deals with starting a business from scratch so it’s not necessary to go into details here. Suffice it to say that building a business from the ground up is the most time-consuming and arduous of an entrepreneur’s options. According to one self-made businesswoman, the difference between starting a business from scratch and buying an existing one is comparable to giving birth to a baby or adopting one that’s already been potty trained. Either way, hard work lies ahead.
B. Buying an existing business is an alternative well worth exploring, however, before handing over hard-earned cash for a business that’s on the market it’s imperative to first know why it’s for sale. Several years ago, for example, two British entrepreneurs decided to buy a seaside enterprise that was on the market for £100,000. Fortunately, before any money changed hands, a licensed appraiser discovered that it was only worth £15,000 because it was unprofitable, it had no contracts to guarantee future sales, and the equipment that comprised it was outdated and beyond warranty.
The moral of the story is that a sunny climate, a charming setting, or a misplaced romantic notion of business ownership are not valid reasons for buying (or starting) a business. Similarly, it’s wise to be skeptical of stories from sellers about sickness, dreams of retirement or travel, and so on. Many businesses are on the market because demand for their products or services no longer exists. That’s why having experience with related merchandise, equipment, and customers is so important. Before buying, think about procuring the services of a non-biased, outside professional to help determine what an on-the-market business is really worth. The costs involved in running the business and any hidden dangers or debts should also be determined.
C. Franchising is a third entrepreneurship option. The advantages of owning a franchise include being a part of a (supposedly) tried-and-tested operation that can regularly provide marketing and business assistance. Disadvantages include the fact that not all franchises are the helpful, license-to-print-money operations they claim to be.