While entering in a business, the foremost point of consideration is whether the concerned person actually wants to own and run a business. A business requires a lot of physical and mental investment, once launched there is no way to shut it down immediately. If it is done, there will be a tremendous loss to the owner. Proper R D should be done regarding the nature and the size of the business before executing the business model.
The entrepreneurs can choose whether they want to establish their own business, they wish to buy an existing business, or they want to invest in a franchise business. Choosing the type of business is again a complicated task. The following points can be helpful while choosing the type of business:
• Product search and identifying a proper business idea is the first step. It can be found using current market trends, reading books, and analyzing the customer demands.
• If the similar product already exists in the market, the person can opt for the franchise of the same.
• If the product is entirely new, a new business should be launched.
• Social and business conversations with people of personal network can be helpful.
Besides above mentioned general points, the entrepreneur should have a clear vision and understanding about the types of business. Starting one's own business is great but time-consuming idea. Buying an existing business is like purchasing a settled entity with established markets and a loyal customer base. Buying a franchise provides partial satisfaction of ownership and partial satisfaction of already planned business model.
It can be concluded that the entrepreneur should decide whether he has enough time to settle a new business. He/she should also observe whether he has enough capital sources to buy an existing business or franchise. Along with this, he/she should examine potential of him/her and try to align the same with the type of business to be started. If these things are clear, people won't take time to decide what they wish to start.
Franchising is marketing concept which is adopted by an organization with the purpose of expansion. A franchisor is the one who provides license of its know-hows, brand name, intellectual property, and business model to the franchisee owners. It is a two-way profitable model. The franchisors and the franchisee both get good returns.
Franchising is growing globally because of multiple benefits it possesses. Some of the reasons are stated below:
• It provides one of the best ways to use capital. The franchisee owners provide royalty to the franchisors and buy a well-planned business model to work upon.
• Effective management of the franchisors convinces the entrepreneurs to buy the reputable and established franchisee chain.
• Success and growth can be achieved within no time as the brand name and business model of the franchise do more than half of the work.
• Promotional strategies of any of the franchisee seem favorable and profitable to all.
• There are limited risks and liability which each entrepreneur wishes to have. Since, the franchisor first establishes the brand name then only starts to offer franchisees to the outsiders.
• Since, franchising can be done across countries as well; it has provided the entrepreneurs enormous opportunities to grow.
All these factors compel people to start franchising. Many big organizations have also invested in the same. Franchising has made business easier for those people who have capital but do not have business ideas. Also, the entrepreneurs who wish to expand their business internationally can do so without being in the other country physically.
It can be concluded that franchising has open doors for many opportunities. If proper set of standards and practices are followed, there is no model which can beat the model of franchising. Many stores are able to make their presence in other countries because of the flexibility and feasibility provided by franchising.
The case depicts the hard work of a Person L who has successfully established his consultation firm with 18 full-time employees. The firm deals in designing telephone, data and video systems. He has identified the right opportunity in Region B which is 35 miles from his hometown.
After working as a manager and a sales trainer, Person L has identified the niche market where he has established his consultation firm. He identified the right niche market after a lot of research. The market lies in Region B and so he decides to open his firm there without thinking about the distance and the time it takes to reach from his home.
The distance between the work place and the home town are 35 miles which takes around 90 minute to reach. Although he justifies the timing by stating that he use cellular phone and the beeper to work on way, he should be advised to shift to Place L. If he misses his hometown, he can go there during weekends or once in a while. Shifting to a new place not only saves time but the transportation cost also. He will be able to put more efforts for the growth of the firm.