Is Buying a Small Business or Franchise more profitable?

Yes, it is!

You might readily reason out that the initial cash outlay or investment is huge compared to starting from nothing. Well, you are quite right. However, hear me out first why I would recommend it. In my mind, there are at least three major advantages of buying an established small business or franchise:

• Turnkey Small Business Operation

Whenever you purchase a small business or franchise, you acquire the entire business infrastructure that the previous owner has painstakingly built and established, which may readily include the exiting customers, suppliers, employees, equipment, and business management systems as well. These things are not easy to develop over time. Moreover, the previous owner or franchiser can assist you, usually a part of the deal, in getting things started when you take the helm, therefore making the transition for you easier.

You know the best part of a turnkey operation? Your business starts earning as soon as you took over, unlike when you are still cranking-up your small business. In a turnkey business, you will be serving the same customers whose loyalty (most likely) is with the business or the brand image of the franchised business.

• Less Investment

It is more expensive!

I hear you. Again.

Well, compared to starting from scratch with your meager savings, again I'd say that you are probably right. However, look at his way: when you buy an established small business or franchise, you save more time, efforts, pains (and the pangs of starting a new small business) and money. True! Take a spreadsheet and a calculator, and start your calculation and analysis. See? Initially, you will be investing more by comparison; however you also save more in the long haul. When you are starting from nothing, your small business can eat your resources little by little to the last dime. As Linda Morton of Strategic Market Segmentation wittingly remarked in her comment at Handling Small Business Financial Risks and Problems:

It seems that businesses are like children. They always need money, often when you can least afford it.

With a franchise or established small business, you also skip the lengthy process of researching and creating a viable business plan and a profitable brand image; for these things were already taken care of. Franchisers and small business owners offers these things with the whole business package. All you need to do is implement the business plan (probably make necessary adjustments) and maintain (better yet, enhance) the brand image. Get comprehensive franchise information here to guide you on this particular issue.

• Higher Success Rate

A franchised or established small business is already successful at a certain level. All you have to do is manage it to greater heights. Your risks of failure here is lower too, because you skipped the process of experimenting what works or what isn’t. Moreover, with this set-up you can focus more on the expansion and profitability aspects of your small business rather than worrying about how you will meet the ROI (Return on Investment) the shortest possible time.

So, is buying a franchise or established small business profitable? Let us hear from you.

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About the Author

Nor Franco is the Managing Director and Virtual CEO of nextManager.net. He's a former corporate executive whose passion is bringing out the full potential of HR in Businesses. This time that passion is pursued through Virtual Management. He writes and blogs about his management views and insights here. Follow him on Twitter.