Each way of launching a business has advantages and drawbacks. Make sure to choose the way that suits you best.
Starting out with your own idea is the path taken by most entrepreneurs. You have an idea and you alone organize the activities necessary to setting up a business over which you will have full control.
● Greater decision-making freedom
● Changes can be made quite quickly
● The start-up costs can be changed more easily, if necessary
● Start-up planning may be quite long
● The clientele is not built in but must be developed
● Starting from scratch may involve higher risks, depending on the type of business
● Financing may be more difficult to obtain
There are two main ways to buy an existing business :
1. Buy the business’s assets (for example, furnishings, buildings, customer base, trademark). You will then have to choose a new legal form for operating the business, into which you will transfer the assets acquired.
2. Buy the business’s shares (if it is a corporation or company). You then purchase the business as a whole, with its history and its assets.
● You start with an established business
● The clientele and the network of suppliers and distributors are established
● You benefit from the credibility built by the former owner
● Before making your offer to buy, you must conduct serious research and analyze the business’s financial health
● The business risks incurred are often lower than with the other types of starting a business, depending on the business that you are purchasing
● You must respect the commitments of the former business owner
● It is more difficult to make changes to the business
● It is more difficult to establish credibility if the former owner suffered from a lack of a good reputation
A franchise is a licence for intellectual property rights concerning brands, distinctive signs, or existing knowhow regarding sales and distribution of goods or services. Acquiring a franchise gives you the right, for a specific period, to administer your business by using the intellectual property rights of the franchiser.
You must therefore sign a contractual agreement with a franchiser. This contract allows you, depending on the clauses set out in the contract, to sell a product or services generally within a protected territory.
In practice, you own a business and you assume the risks and management while being accountable to your franchiser and paying royalties to it. If you acquire a franchise or dealership, you will probably have to start a company or corporation, depending on the franchiser’s requirements.
● The risks are lower
● The clientele is targeted
● The trademark is established
● The cost of a franchise can be high
● The franchiser’s products and services must be used and respected
● There is little room for entrepreneurial creativity