Finding the right business can prove extremely challenging. If you don’t want to start a business from scratch there are other alternatives you might want to consider.
There are several existing businesses on the market that might interest you. Sellers often employ brokers to help them sell their company, so you should make contact with reputable brokers like Marc Phillips – Gold Coast Business Brokers.
If you have been involved in buying and selling existing businesses in the past, you might want to go it alone, but if you are new to investing in a business, then having a broker guiding you throughout every step of the process will help save you time and stress.
Investing in a franchise is another popular option. There are several reasons why you should consider purchasing a franchise business instead of buying an already existing business, so let’s take a closer look at some of them.
Why You Should Buy A Franchise Business
Don’t assume all franchises are the same. Before spending your hard-earned money on a franchise business, speak to people who have already bought the same franchise.
Here are some of the reasons people all around the world are buying franchises nowadays:
1. A reputable franchise business will provide its clients with ongoing support. If you buy an already existing company, it is unlikely that you will be able to ask the previous owner for support after the sale, unless you hire them to work for the business after the sale has been completed.
2. They will provide training for new employees and ongoing training for existing staff members.
3. Most franchises have branding, so a lot of people will recognize the company.
4. Franchisees can make contact with the franchisor for help with running the company.
5. The best franchises will have a system in place to help promote the business.
A lot of folks think they can invest in a franchise business, and the business will run itself, which is rarely the case. Although the franchisor can help you with setting up and running the business, you can still expect to work hard.
Why Should You Buy An Existing Business?
The main reason people invest in an already existing business is that the business already has clients. If you think you can keep onto their existing client base, and you can attract more clients, then investing in a business that already exists might suit you.
According to statistics, investing in an existing business is low-risk compared to starting a new business from scratch. Hiring new employees, training them how to do their jobs, real estate, marketing, new equipment, etc. can cost a pretty penny and take a long time.
An existing business might already have everything already in place, so you can save a lot of time and money by taking over from the old owners. If you need to get a loan from your bank, you are more likely to get approval if you are buying an existing business compared to starting a business.
If you are taking on an existing business that already has a team of loyal staff members, they might prove key to your success. If they have been working for the company for several years, they should know the industry inside out and they won’t need any training.
Of course, you might want to make some changes to the way it was running, but you shouldn’t have to spend too long teaching them what to do. Good staff members will help you retain existing customers, plus, they will be able to provide you with key information on how the business runs.
If you strike up a good relationship with the new employees, they should be able to explain to you where the previous owner was doing wrong, and what they were doing right.
Reasons Why You Should Avoid Investing In A Franchise Business
It might seem like investing in a franchise is a no-brainer. But there are few downsides that you should take note of before buying a franchise:
i). Franchise fee: You will need to pay a fee upfront known as a franchise fee. You can expect this one-time fee to cost around $40,000, depending on the franchise.
ii). Royalties: Franchisees will be forced to pay the franchisor a percentage of the gross sales. The percentage the franchisees will have to pay will vary, but it is vital that you know exactly what you know the percentage before you agree to take on the franchise.
Some only charge their franchisees five percent, but others charge over ten percent. If you have to pay over ten percent of your gross profit, you might struggle to generate enough cash to make the business successful.
Plus, your competitors who are not tied into a franchise might be able to charge less than you because they won’t have to pay a percentage to a franchise.
iii). Selling the franchise business might be difficult: If you intend on selling your franchise business down the line, you will need the franchisor to approve the sale.
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.