Difference in
Buying an Existing Business VS Starting from Scratch VS Buying a franchise?
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These sites will get you started on your research,
http://www.southcoasttoday.com/apps/pbcs.dll/article?AID=/20130823/SCBULLETIN/309020305
http://live.washingtonpost.com/business-rx-082013.html
https://www.mywealth.commbank.com.au/strategies/buying-a-franchise-infocus201308
When considering options for business ownership, it's crucial to understand the differences between buying an existing business, starting from scratch, and purchasing a franchise. Here's an explanation of each option:
1. Buying an Existing Business:
Buying an existing business involves purchasing a company that is already established and running. This option provides several advantages:
- Immediate operations: An existing business already has customers, cash flow, and a proven concept.
- Established brand: The business likely has a reputation, customer base, and market presence.
- Assets and infrastructure: Equipment, inventory, physical space, and a trained workforce are often included in the purchase.
- Financial records: Historical financial data can help assess the business's performance and potential.
To find an existing business, you can search through business-for-sale listings, consult with brokers, or network within your industry. The purchase price is typically negotiated based on factors like profit, revenue, assets, and market conditions.
2. Starting from Scratch:
Starting a business from scratch means creating a new venture from the ground up, without inheriting an existing operation. Key points to consider are:
- Idea development: You need to come up with a unique business concept and determine the target market.
- Business plan: A well-defined business plan is essential to outline your strategy, financial projections, and operational details.
- Brand building: Starting from scratch requires establishing brand awareness and attracting customers.
- Resource acquisition: You'll need to acquire funds, find a location, purchase equipment, hire staff, and establish supplier relationships.
Starting a business from scratch offers the freedom of building a concept to fit your vision, but it may require significant time, effort, and investment.
3. Buying a Franchise:
Purchasing a franchise means buying the rights to operate a business under an established brand. Here are key considerations:
- Established brand and support: Franchises offer recognized brands, proven business models, and ongoing support from the franchisor.
- Training and systems: Franchisors provide initial and ongoing training, operational support, and access to established processes.
- Marketing and advertising: National or regional marketing campaigns by the franchisor can benefit local franchisees.
- Royalty fees and upfront costs: Franchisees pay initial fees and ongoing royalties, usually based on a percentage of revenue.
Franchise opportunities are typically found by researching franchise directories, attending franchise expos, or contacting franchisors directly. The selection process involves reviewing the franchise disclosure document, speaking with current franchisees, and understanding the terms and conditions set by the franchisor.
In summary, buying an existing business offers immediate operations and an established brand, starting from scratch allows for creative freedom, while buying a franchise provides the support and benefits of an established business model. Your choice should be based on your specific goals, resources, risk tolerance, and preference for the level of autonomy in business ownership.