We might live in an entrepreneurial age, but that doesn’t mean that long-term business success comes easy, nor that your startup will make it past its first year. The reality of the modern business world is harsh and unforgiving, and only those with a rock-solid business plan and a viable growth strategy will be able to establish solvency in the long run. That said, it’s important to know that entrepreneurship can take another form.
In a saturated market where the competition is numerous and the consumers are tired of new brands pushing their way into their lives, franchises offer a different way for aspiring entrepreneurs to build the success they’re after. With the rapid popularization of franchises, it’s important for you to reevaluate your approach and decide on the best way to build your business. Here are the five considerations that will help you decide whether a franchise or a startup is for you.
Building a brand vs growing a brand
The brand is the soul and substance of a business. This is your unique identity and visual appeal that will set you apart from the rest of the competition, and establish an emotional relationship with your demographic. With that in mind, building a brand should be one of your top priorities as an entrepreneur. The unfortunate thing is that brand-building is not only expensive and time-consuming, it can also be risky.
In a sea of successful brands, there is no telling whether or not yours will be powerful and compelling enough to attract people to your doorstep, or even better, bring customers over from your rival brands. With a franchise, on the other hand, the branding aspect of launching and running a business is already taken care of. Should you choose an established franchise, the only thing you need to do is to follow the brand guidelines and help grow its recognition and awareness in your local market.
The challenges of marketing
Another crucial consideration every entrepreneur needs to keep in mind is the problem of online and offline marketing. First of all, marketing is expensive. It requires constant investment on various fronts, and it requires a devoted and creative workforce that will create amazing ideas and bring them to fruition. This is a time-consuming task, and you need to be ready for it.
You can start preparing by creating a marketing budget that is separate from your startup investment capital. It’s another financial burden, but it’s nonetheless necessary to allocate funds for this task, otherwise you will spend it on something else. Before long, you will have spent your entire budget on launching a company, with no money left to effectuate a marketing plan.
If you choose the franchising route, on the other hand, you can expect to enjoy several perks. The most valuable one being that you will have all of the needed marketing material at the ready. This will help you establish the brand in the local market, and more importantly, it will help you influence the local business landscape from the very start.
Infographic: How Franchises Impact the Local Business Landscape
Investment and financial management
Financial management is the most important element of a successful company, as finance is the lifeblood of business. There is no way around it, you will need to spend money either way, no matter if you choose to build your own company or buy a franchise. However, the amount of money you spend on your small business idea and the way you invest it in its growth can vary greatly between the two options. It will be up to you to decide on the best way forward.
Launching your own company brings with it numerous financial burdens, of which securing operating capital for the foreseeable future is arguably the biggest challenge. Buying a franchise means that you will get adequate financial and organizational support, but not before you’ve invested in the brand. Many aspiring entrepreneurs prefer the prospect of having financial support on hand, especially during those grueling months after launch. From a financial standpoint, buying a franchise would make a more viable solution, even though you would be working as a part of an established brand and will have to allocate resources per the franchise agreement.
Hiring the right employees
Your employees are the driving force behind the success of your business. Hiring the right people for the job is imperative if you are to grow your brand in an efficient and effective way. That said, finding and attracting the top talent in the industry is not an easy task. While a franchise won’t be able to hire people for you in your local area, it will be able to provide with all of the brand guidelines essential for hiring the best candidates.
You will also know exactly what kind of person fits the brand perfectly, and will be able to find them more easily. That said, this does put you in a bit of a bind. The hiring rules you have to follow prevent you from deviating from the SOP and perhaps hiring someone you personally deem worthy. In this regard, a franchise offers safety while launching a startup offers the freedom to bring anyone you want to the team.
Reducing risk with structural support
Lastly, the biggest differentiating factor between franchises and startups is the level of organizational support. With the former, you will be working within a solid infrastructure and enjoy the support you need to grow. With the latter, you will be working alone most of the time or with partners, and will have to carry the burden by yourself for the most part. From finding investors to bringing professionals to your team, all the way to executing a marketing strategy and managing the business in general – one will offer guidance, and the other flexibility.
In the competitive business world, both the startup and the franchise has a chance of succeeding. While one might not be inherently better than the other, it’s important to realize that you don’t have to take the traditional entrepreneurial route if you’re looking for stability and support. With these tips in mind, you can make the best decision for your professional development, as well as the growth of your brand.
You may also be interested in: How to Save Money For a House: A Quick Guide
Writer: David Webb
Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.