So, you’ve decided you want to run your own business. Or life has forced your hand and you’re now in a position where you can do something new, possibly starting something for yourself instead of finding another employment. From personal experience I can tell you running a business is a rewarding opportunity for anyone who shares my inclination!
There are many reasons why people start a business: to fulfil a life-long dream, monetise a passion, build a better future, or make a difference through it. This is the first aspect to focus on: your “why” for wanting to start a business. Locking in an understanding of this is crucial, because it’s something you’ll often come back to when times are challenging.
In the UK, there are three main paths for starting your own business:
1. Starting from scratch: May have started as a “side-hustle” initially whilst the entrepreneur formulates the business model and offering, as it grows to such an extent you need to give it your all if you’re going to move to the next level of success.
2. Buying an existing business: Usually when the previous owner is ready to exit the business for reasons like retirement, health issues, or other commitments. The business is already well-established, and investors carry out due diligence into every aspect of the business such as the customer base, finance history, and staff wellbeing to determine future success.
3. Investing in a franchise: Ideal for people who want to be part of a network of supportive business owners as it offers the full business model, training, mentoring, and ongoing support. Investors research the franchise, based on how long it’s been established, franchisee successes, and strength of the model. Joining a franchise also gives you the foundation to confidently move in a new industry and isn’t reliant on your experiences.
Choosing the right path is the difference between loving what you do and regretting your decision. So, let’s look in detail at what’s involved with starting from scratch compared to investing in a franchise in four key areas: personality fit, risk, cost, and support.
Personality fit
Of course, the first aspect of running your own business often comes from the type of person you are. Some people have the dream, but not the drive to make it happen; others have the dream and move heaven and earth to make it reality.
Independent business owners have the vision and leadership skills combined with passion, self-determination, and drive to make an idea happen. They may start multiple business ideas, before finding the one which flies for them. They’re content with being a lone wolf as they start, then as they grow, have the charisma to inspire others to join them in their venture to help build the business, and customers to use the products or services they’re selling. They thrive on the challenge of uncertainty, looking at competitors for assurances they can succeed.
Franchisees also have strong leadership skills and passion to drive their business to success. But they thrive on having a structure to follow which has a more stable approach to starting and growing their business. They love taking control of how they work, whilst supporting their teams and building relationships with their customers; they also enjoy the collective drive and learnings gained from being part of a network of businesses in the same space. They like the assurances the franchise model works, and when challenges come, they don’t have to try and work it out for themselves but will have others to turn to for guidance and advice.
Risk
Risk is not something you can avoid in any type of business. It’s going to be a case of weighing up the risks involved to understand which you are most comfortable with.
As an independent business owner, there are many risks around starting a business, some you can account for, others which can catch you off guard. Once you know what your business is about, there may be consistent suppliers to find, reliable shipping to secure, marketing and promotion to create, financial decisions and people management to master. How do you position your brand above your competitors? How do you find the right customers, and keep them loyal? What are the legal regulations for your industry? There will be places you can go where you can find the relevant information and speak to the right advisers, like your local Chamber of Commerce.
When you join a franchise, whilst there is always an element of risk when starting a business, it’s significantly reduced. This is because you’re buying into a model which has already worked out much of the above-mentioned challenges, building the right supplier or partner relationships, and have made their mark with customers across the network. Finding a franchise with a franchisee in a similar location to where you are can also help you understand how the business will work in your territory. And, as you grow, there will be advisors and mentors within the network who can offer guidance on strategy and growth plans.
Cost
Again, funding is a massive aspect of business ownership, and I’ve sadly seen people not plan for how they’re going to live when they start investing in their shiny, new business.
Starting an independent business can be something people do as a side-hustle, often with reduced costs involved. But if you’re looking to grow and run a business that can support you and your family, then you’re going to be looking at the investment levels to make sure it’s viable. Whilst many of the investments you’ll make in starting a business can be staggered, you’ll be looking to secure the right funds for your supplier and shipment costs, as well as the necessary machinery and equipment to help you stay on top of demand, any location purchase or rental, licenses and permits, promotion and marketing, and, as you grow, staff costs. Of course, on top of all that, you need to live. And the cost of living isn’t as it used to be.
Joining a franchise gives you the benefit of understanding the costs from the outset, as your franchisor will give you an understanding of what finances you’ll need, from the franchise fee, any fittings and furnishings, supplies and inventory, location charges, and insurances, etc. They’ll also be aware of rising costs within the sector you’ll be operating which, for some brands, means negotiating discounts and group buying power on behalf of their franchisees. Once you start hiring a team to work in your franchise, you’ll then be responsible for ensuring you can cover any contracts you have with them; something your franchisor will be able to support you with at every stage.
Support
I wouldn’t be where I am today as a multi-business owner, if it wasn’t for the support of trusted people in my life. Something I strongly advocate for you, whichever path you tread.
In multiple surveys carried out since the pandemic, independent business owners have cited loneliness as one of their biggest challenges in business. When you take into consideration the fact that any kind of leadership is tough, and all the decisions you make as you drive your business forward, finding the right advisers and support network for yourself should be as important as finding the right people to employ. Many entrepreneurs find joining their local business networking groups to be invaluable.
As a franchisee, joining the franchise network gives you instant access to a supportive community. You’ll have the staff at head office, often experts in a particular aspect of running your business with the brand, including people knowledgeable about your sector where regulations constantly adapt, and finance coaches who understand the numbers inside out. Many franchises pair their new franchisees with an established franchisee mentor, and franchisees themselves form advisor groups and peer support groups, based on region and/or business growth margins.
Conclusion
There are pros and cons to any of the routes into business ownership, so you’ll want to feel confident with the one you choose for yourself. Whilst franchising is a stronger route into long-lasting business success, with a 20-year failure rate of under 6%, according to the British Franchise Association, it isn’t the right answer to everyone’s business aspirations. Your level of entrepreneurial independence will help you choose your right path.
As Pip Wilkins, CEO of the BFA says, “In the main, we put the success of franchising down to two things: being based on repeating a successful business model and franchisees receiving bespoke training and support from an experienced franchisor.”
