If you decide entrepreneurship is for you, you'll have to decide how you're going to get your own business. Here are four main ways of doing so:
- Starting a new business,
- Buying an existing business,
- Buying a franchise, and
- Taking over the family business
Starting a New Business
Starting a new business is a dream many people share. What an exciting adventure! If you start a new business, look for challenges as well as rewards.
The Challenges
No matter how you get into business, you will face challenges. If you're starting a new business, you'll face a few additional ones.
- A new business requires more time and effort than an established business.
- Start-up costs are often high. Start-up costs are the expenses involved in going into business. Examples include renting or buying space and buying equipment, office supplies, and insurance.
- If you borrow money, you'll have to convince lenders that your business idea will work.
- It's risky. No matter how well you plan, you wont know if the business will succeed until you've tried it.
The Rewards
Tough challenges await those who build a business. What are the rewards? Besides those enjoyed by all entrepreneurs, consider these benefits:
- You dont inherit a previous owners mistake's.
- You can try fresh ideas and build your business your way.
- You get personal satisfaction from knowing you built the business yourself.
Buying an Existing Business
If you dont want to start a new business, you might want to buy an existing one. There are many reasons why a business might be for sale. A successful one may be for sale because the owners are retiring or entering a new business. Perhaps business is so good, they can't handle it anymore.
There may also be many reasons why an unsuccessful business is for sale. The bottom line, however, is that it is losing money. Perhaps it's still a good investment, if it can be turned around.
A Fast Start
Buying an existing business can put you several steps ahead. First, you can save on start-up costs by taking advantage of the previous owners business agreements, such as a lease signed when rents were lower. A lease is a contract to use something for a specified period of time.
If the business has been successful, you can build on that success. The goodwill, or loyalty, of customers is one of a business's most valuable assets. You may also benefit from an established reputation and a trained staff.
Drawbacks
Every business has its problems, but if it's struggling, look for the reasons:
- The location may be poor.
- The competition may be taking business's away.
- The market outlook, or potential for future sales, may have changed.
- The building or equipment may need expensive repairs or replacement.
- The business may have a reputation for poor products.
Buying a Franchise
A type of existing business that offers specific advantages is the franchise. A franchise is the legal right to sell a company's goods and services. Many fast-food restaurants and real estate offices are franchises.
When you buy a franchise, you are actually buying the right to sell another company's products. In addition to paying for the franchise, you will continue to pay a percentage of your profits to the parent company.
Like any business owner, you are in charge. However, you must follow the parent company's guildines. These may dictate how to make or distribute the goods or services.
Less Risk
A franchise may be a wise choice for people with limited business experience. Here are some other benefits you'll gain:
- A recognized product name,
- Established management systems,
- A business reputation and customer goodwill,
- Training and support services,
- Advertising, and
- Financing
Less Gain
A franchise is not the right choice for everyone. A franchise may be less profitable because you pay a portion of your profits to the parent company. Since you didn't build the company from scratch, there may be less satisfaction.
Taking Over the Family Business
Does your father, mother, or another relative own a business? If so, it might be a shortcut to entrepreneurship.
Smoothing the Way
Taking over a family business can have the advantages of the franchise without the fees.
- Your relatives might help you finance the business.
- Family members tend to be loyal and trust each other.
- Family members working as a team can achieve more than individuals.
- Relatives can teach you the business.
Bumps in the Road
In addition to the usual hazards of business ownership, a family business presents special ones. To begin with, it's sometimes hard to have normal business relationships with relative. Moreover, when the family is part of the business, you can't always go home and leave the business behind you.
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Originally Posted by About the Author
Josh Reid, a.k.a. Quietdrive, is a sophomore student taking advanced business classes at Mound Westonka High School in Minnesota. He has already received letters from numerous 4-year colleges such as Boston College, Boston University, University of Wisconsin-Madison, and University of San Diego, about attending them when he graduates high school in 2 years.
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Josh Reid 2006. If you would like to use my article please just keep it in tact the way it was written and give a link to
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Please note: This article wasn't written by me. It was written by a member of my staff.
