Why Startups are Riskier than Franchising?
Looking
around to open your own business? You can either go with a unique business all
the way, or choose to be a franchise owner. Both options have advantages and
disadvantages. However, startups are riskier than franchising.
Here’s
why.
Reason 1: Risk of Building
Your Own Brand
Building
your own brand from scratch is a challenge, and time-consuming as well. When
you are busily involved in improving your business, you are unlikely to have
the time or resources in building a new brand.
This
is a bottleneck which every business have to face. However, franchise
businesses already have an established brand.
Reason 2: Risk of Designing your
own Operating Model
If
you are a startup, you need to research, design, test, and establish your
business model.
It
might take a lot of time to establish a stable business model whereas, in a
franchise business, everything is planned and tested in advance and ready-to-go.
Reason 3: Risk of no
Operational Support
In
order to work seamlessly and find success, businesses need internal and
external support systems. If you are a startup then there is no support system to
begin with, and you have to figure out solutions on your own.
Conversely,
in franchising you can avail support from franchisors and other franchisees.
Reason 4: Risk of Making
Critical Mistakes
In a
startup, you alone are responsible for your business success and failure. One
crucial decision gone wrong can spell doom.
In a franchise system, most of the likely mistakes have already been addressed and solutions found, reducing the risk of failure.
Reason 5: Risk of Finances
Every
business needs to have a workable plan that will be acceptable to banks. If you
are a startup, you will not have an exact idea of how much money is required
for starting your own independent business.
On
the other hand, franchises receive support from day one from their franchisors,
including a business plan, operating procedure, assistance with site selection, funding, and more.
To know more about the risks involved with startups and the advantages of franchising, Contact Us.