| This article looks at pluses and minuses of business | | | | Business |
| purchase and has been written because of the large | | | | Although you obviously want to be happy in your new |
| numbers of small business owners who have plainly | | | | business, it's best to be coldly logical in the early days |
| made a decision to in fact "buy a job" when what they | | | | of assessing various opportunities in order to avoid the |
| had hoped for was a going concern which would | | | | trap of an emotional decision. The "6-Step Due |
| deliver freedom as well as financial returns. | | | | Diligence Process" can seem cold but can spare |
| In buying a business you have a choice between an | | | | endless heartache down the track. |
| independent business, a franchise, or a distribution | | | | No-one would deliberately set themselves up for |
| license. When you purchase an independent business | | | | regret or loss and this simple, initial checking process is |
| you have much more freedom in the way you | | | | good insurance. Once you been through that, then take |
| operate, and whether or not you succeed is solely on | | | | your top choices along to your accountant and your |
| your shoulders and that includes whether or not you | | | | solicitor, and only once they've been through the |
| made the right decision in the first place. | | | | material thoroughly should you begin to think about the |
| Buying into a franchise means agreeing to a legally | | | | emotional side. |
| binding contract with the owner, and you are stuck | | | | First make sure the options are rock solid, then choose |
| with this for as long as you keep running that business, | | | | with your heart from amongst them. |
| doing things strictly according to the operations manual | | | | There are Shysters Out There! |
| and being regularly assessed and judged according to | | | | Especially as the global financial crisis continues to bite, |
| your performance. | | | | people are becoming more desperate to take control |
| This can be great for relatively naive business owners, | | | | of their financial future and achieve security. The world |
| new to the ownership or maybe even quite new to | | | | is awash with tricksters and incompetents all too willing |
| the managerial role, but there are some serious | | | | to offer false hope, at a price. Here are some warning |
| disadvantages and pitfalls as well. | | | | signs that should tell you to run, don't walk, to the |
| In a franchise: | | | | nearest exit! |
| - The operations manual can save you from making | | | | - No physical address, a fake address or just an |
| mistakes. After all it supposedly represents the | | | | anonymous secretary in some serviced commercial |
| "successful recipe" for running that particular business | | | | site. |
| and diverging from it could be disastrous. | | | | - Big on promises but won't put even the most minor |
| - Usually the deal comes with a certain degree of | | | | thing in writing. |
| mentoring and support from head office. | | | | - They want money up front, even before you've |
| - You don't have to build market awareness because | | | | properly looked at anything. The money comes last, |
| the franchisor has done that for you. | | | | absolutely last. |
| So those are real advantages to franchising, but there | | | | - They can't back up their claims with valid 3rd-party |
| are significant disadvantages as well: | | | | evidence - often it's just a bunch of meaningless |
| - There is always a hefty up front fee and unless | | | | testimonials that are impossible to check. |
| you're paying a few hundred thousand, you are | | | | - If they say you'll make big money fast, or with no |
| generally just buying an expensive job, stuck in a | | | | effort, trust me, it's a scam. |
| hands on role. | | | | A Better Alternative to Buying a Business |
| - There are hefty ongoing monthly fees that you must | | | | It's a complex and expensive process to buy a |
| pay for the privilege of being a franchisee, even if | | | | business these days, and the risk is enormous. So |
| you're making a loss. | | | | many small business owners are finding that they have |
| - There's little room for creativity because you've | | | | to borrow more money to keep afloat, or have to |
| basically got to run it as if you're a robot controlled by | | | | work a second job in order to keep the family home. |
| head office. | | | | There is a less expensive, less stressful, and less risky |
| - The stresses involved in running a franchise are not | | | | alternative, and that is to purchase a distribution licence |
| too different from the stresses of running an | | | | for a product or service that has very high demand, |
| independent business - you've still got staff hassles, | | | | and where there is strong support and training, including |
| cashflow stresses, legal and legislative issues to be | | | | personal mentoring, in order to ensure your success. |
| ever mindful of. | | | | Because this system depends utterly on replication (to |
| - If it all goes pear-shaped you could lose everything | | | | build the most sustainable distribution network) once it's |
| you own because most times your personal | | | | been established it absolutely must be able to survive |
| guarantee has been required. | | | | without you, and of course must be able to keep |
| Buying a Franchise - a Lifestyle Decision | | | | delivering profits whether you are working the business |
| If you're thinking of buying a franchise because you | | | | or not. |
| have a belief that this can bring you personal or | | | | Such distribution licenses are often surprisingly |
| financial freedom, think again because this is not usually | | | | inexpensive, with little or no running costs, and where |
| the case. | | | | the company is publicly traded, there is total |
| In most cases the franchise option should only be | | | | transparency in relation to historical earnings. Provided |
| taken if the business itself represents a lifestyle that | | | | you do your due diligence, there is little chance of risk |
| you strongly desire, if you absolutely love the working | | | | or loss. |
| life that it will deliver. | | | | Be careful, but do look around and see what's out |
| Taking the Emotion Out of the Decision to Buy a | | | | there. You might be surprised. |