For many becoming a business owner is often synonymous with the American dream, and there isn’t just one path to entrepreneurship. The three main options for entrepreneurship are starting up a business, buying a franchise business, and buying an established business. Each of these options differs in their main pros and cons, but the following guide will help you begin to explore your best option for entrepreneurship.
Option 1: Starting Up a Business
Starting a business from scratch certainly has its pros and cons. Starting up a business takes a good amount of capital and a lot of tenacity for building the foundation of the business. The success rates of starting up a business are also not in your favor, as 50% of businesses fail within the first 5 years. What starting up a business does provide is the opportunity to pursue a business you’re passionate about and control the formation of the business every step of the way. And if the business idea is especially unique, it is unlikely there would be an alternative option for starting up a business.
Option 2: Buying a Franchise Business
Buying a franchise business is a great option for entrepreneurship. Franchise businesses have higher success rates because of their already proven business model, and they come with corporate support for many key items like training, and advertising. However, not all franchises are created equal so it is important to do your due diligence when choosing a franchisor to work with. One of the cons of buying a franchise business can be the lack of control a business owner has over their business.
Option 3: Buying an Established Business
Buying an established business offers a number of pros for a business owner. Purchasing a business provides immediate access to cash flow, reputation, and business history. Depending on the size of the business, it may already have skilled employees and management in place, which is definitely a perk when compared to the cost of hiring and training employees for a startup business. One of the cons of buying a business is that you have little control over everything that has already been established, and upon purchase, you can’t make too many initial changes.
As outlined in our guide, there are pros and cons to each of the three options for entrepreneurship, and if you’re unsure which option is best for you, we invite you to visit our website at www.tworlddenver.com.
Jessica Fialkovich is a M&A expert, and an award-winning business owner, and Springsteen fan whose mission is to help business owners leave their legacy and exit successfully. Jessica has overseen $60 million in transactions, was involved in 150 deals, and mentored 1,900+ business owners on buying and selling a business. Currently, she’s the President of Transworld Business Advisors—Rocky Mountain.
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