Ok, so you want to start a business. You want to establish your own. You had a lot of ideas in your mind now and you are now about to start.

Currently, there are four ways to start a business. You can either start from zero, buy an existing business, get a franchise, or be a distributor. Now, the question is how to choose the “right way” to a successful business? Which one of these ways will you choose? Let’s tackle this one by one so that you can compare which one best suits you.

Start from zero. This is for entrepreneurs who would like to start a business but don’t have much capital for it. It’s very hard to start from zero. You have to be very active and you need to throw 100% of yourself from conceptualizing to marketing your own products or services. However, you can start small and grow big later. You choose your own pace of growth. This approach is common to most entrepreneurs. It is ideal for the adventurous and independent types who take pride in a business they started from scratch and believe they can do it on their own. No one dictates them what to do. For me, this is the best approach that gives the most satisfaction and sense of fulfillment to an entrepreneur. We have seen a lot of rags to riches stories and these are their living testimonies. They all started from zero yet they were able to built huge business empires over the years. However, for the impatient ones who want to quickly make profits, this may not be the best one for you.

Buy an existing business. This approach is in connection with the two words “Mergers and Acquisitions” or M&A in the finance field. It is a short cut route to be in a business but surely it does have some advantage and disadvantage. A typical advantage is that it is already an ongoing current business with customers and clients already in place. You won’t encounter the hassles of buying your inventories and equipments, registering your business, hiring the right employees, marketing your business, and getting customers. The big question will be: Is it worth the tag price? Of course, there must be a reason why the original owner is selling it. Ask for it with the help of an expert such as an accountant to assess the viability of the business. Definitely an existing solid and sound business with good cash flow will require a much higher premium.

Get a franchise. This is another short cut way in entering a business. Because of the success of one business, you are now enticed to “copy” that business. In this approach, you will buy not just a business but a so-called “system” that is already in place. And since this is already an existing business that you’ll be buying, you’ll again escape the hassles of those mentioned above which is again an obvious advantage. However, since this is a solid system in place, it will require you much higher capital called a franchise fee for you to enter. Another thing, a franchise is a marriage of your ideas and the system set up by the original owner and so there are certain restrictions on what you can do. You don’t have 100% freewill.

Franchisers will even require you to either attend seminars or immerse you on the job trainings for you to know how to ‘correctly copy’ their business and imitate their success. Some will even oblige you to require to attend a training in their own school. This is the case for McDonalds, which requires franchisers to attend training sessions in Chicago, Illinois. Another sad things in this way is the royalty fee. Since you were just copying their business, you need to give credit to the original owner. And this is in the form of royalty fees that range from  1% to 10% of your gross sales.

Furthermore, you also need to have your share on the marketing costs which is 1% to 5% of your gross sales. After all, since both of you carry the same brand name of products, both of you will benefit from the marketing of one another. Last but not the least, franchisers are subject to a renewal of franchise. This means that after the expiration of the initial franchise agreement, you need to renew it in order to continue your operations and that’s another cost on your part.

Be a distributor. This way does not require much capital to enter business but you really need to have some excellent skills in sales if you want to enter business this way. This is the concept behind Multi Level Marketing Systems or MLMs. You will build a team of sales people who will provide you with continuous cash flows. This may be a no-no for others but don’t lose hope and confidence in trying this approach as I saw some people earning passive incomes from their successful networking businesses.

Starting a business truly involves a lot of hard work, will power and determination.

For me the best business approach is this scenario:

Start from zero. Put all your efforts into it and as soon as you see that your business is ready to take off and already expanding, then start franchising it. Imagine you have continuous cash flows from royalty fees and franchise fees from all your franchisees aside from the regular cash flows of your own stores. This is coupled with the reduced joint marketing costs shared by your set of franchisees as well. Who knows, in the end, before you knew it, you already built a huge and solid business empire that will last for years.

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