Entering the world of business can be frustrating if you don’t have any idea where to start. But generally, you can begin your business venture by choosing between two important business models: franchising and entrepreneurship.
You might think that entrepreneurship is more ideal than franchising. After all, as an entrepreneur, you are the boss. But in reality, franchising is a safer, more flexible investment with various opportunities in store. From a coworking space franchise to a printing franchise, franchising can be just as appealing as entrepreneurship. But in the long run, which business model is right for you?
The Entrepreneur Route
The basic structure of the entrepreneurial model is that an executive, or group of executives, create a company and are responsible for its growth. This includes production and marketing of a product or service, recruiting qualified employees, securing an ergonomic working space, and other important factors.
A high-risk, high-reward business model, entrepreneurship is a feasible business model if you have sufficient resources to run your own company. Otherwise, you will have trouble securing funds from banks and investors.
Moreover, startups have high turnover rates, with most newcomers closing within five years. But the good news about entrepreneurship is that if you are able to generate revenue, the profit is yours to keep unlike in franchising where there are recurring fees.
The Path of the Franchisee
In this model, franchisors lease business units (franchises) to different proprietors (franchisees). Franchisees are in charge of the daily operations of the franchise and its success but do not own it.
What makes franchising so effective is the training that you receive. Unlike the entrepreneurial model, you get training and support from your franchisors regarding every aspect of the business. In addition, franchising poses less risks as opposed to the unpredictable nature of entrepreneurship.
Franchising choices are also numerous and varied. Suppose you want to open a coworking space, or an arcade, perhaps even a spa. If you can think it, there’s a franchise out there for you.
At the end of the day, it’s your call which business model to follow. The important thing to note is that you should calculate the risks and ensure that the one you choose is best suited for your immediate financial situation.