Managing your own startup business demands longer hours and more skills than pursuing one's own career.
Be honest with yourself.
Answer the following questions, which should show up any weaknesses in your entrepreneurial armour, before you commit to a life of entrepreneurship:
Sanlam offers a comprehensive range of solutions to assist you the start-up entrepreneur, the business owner and the self-employed professional.
Choosing an avenue for your start-up business largely depends on your resources. Each of the three options below has its own unique advantages and should be thoroughly considered before you embark on your dream business.
Following this route can give you a tremendous sense of accomplishment and ownership. You can set it up precisely as you want it, and you wouldn’t have to work within existing confines.
However, as you're not known and have no track record yet, establishing a new customer and supplier base could be rather tedious.
You may also choose the wrong location, product range and pricing. With new, inexperienced staff it may take a while to get the mix right and reach acceptable customer service and productivity levels. All while the clock is ticking and rentals, staff and suppliers need to be paid.
Can you handle the pressure? Do you have sufficient cash flow to tide you over? If not, deal with your weaknesses first before taking the plunge!
If you have the financial means, buying an existing business makes a lot of sense. It has a track record and hence a reasonable indication of its future viability. Further, the business would have an existing infrastructure, business processes and trained staff, and moreover, a clearly identified market. So you could be off to a flying start.
However, the existing state of affairs could work against you. You may be up against split loyalties from staff, suppliers and even customers. This could seriously derail your best efforts, especially if you want to make changes to the status quo.
The beauty of buying a franchise is that you’re buying into a proven system for running a business and making a profit off an existing and established brand name.
This means you can concentrate on being a manager, and not try to be an advertising strategist or sales expert at the same time. You further don’t have to negotiate for lower stock prices. That you leave to the franchisor.
Typically business owners operate in a vacuum, without support, but franchises have changed all that as you can share with and learn from like-minded other franchisees, and enjoy the support the head office gives you.
At the same time, this primary benefit could also be a drawback. It means less freedom, the obligatory sharing of financial information and the requirement to conform to uniform operating procedures. It is also more expensive. You’re about to buy something so good it has been franchised. It’s going to cost more, and you’re required to pay and keep paying for the privilege by making annual royalty payments to the franchisor.
In summary then, the franchise option works best for individuals who work well in a team environment and have limited business and industry background.