Should I buy a business or a franchise?

Should I buy a business or a franchise?

Not having an original idea for a business doesn’t have to stop you from being your own boss. Have you thought about buying an established business, or investing in a franchise? To help you, we’ve identified some pros and cons for each option.  

Running your own business doesn't mean you have to come up with a new idea. There are many entrepreneurs successfully running profitable businesses, without having gone through the challenges of starting it from scratch. They’ve purposely chosen one of two routes, to make their dream reality: buying a business for sale, or investing in a franchise. 

We believe it’s important you can make an informed decision, so here’s our advice for both:

Pros for buying an already established business

There are any number of reasons why a business may come up for sale, including retirement, and personal circumstances. They won’t all be about business failure. With this in mind, three reasons you should consider this option are:

1. Cash flow / profit

A business for sale will be able to prove the profitability of their business through their financial records and annual accounts. Business owners will ask you to sign a non-disclosure agreement before they release this information, but it offers a clear picture of how well your prospective new business is doing, and profitability across the year. You have the assurance of cashflow, from day one. 

2. Independence and freedom to do what you want

An established business has already worked out what its customers want, a loyal customer base, good processes and systems and a good set of employees. You have the freedom to decide how you will fit into your new business, including how and when you will work. As the boss, gain the flexibility to structure your working week around your personal goals, by structuring the business to drive it forward with you. 

3. Shape something yourself

Whilst you are buying an already established business, as the new owner it’s your responsibility to develop and shape it for the future. Build on the foundations laid by the previous owners. As you consider the business, think about where you can take it to make it even more profitable for yourself. Give it the injection of your fresh vision to take your new business to the next level. This will have the added benefit of giving you the fulfilment of building something yourself.

Con for buying an already established business

1. You’re on your own! 

Some people find this daunting.

Pros for buying a franchise

A franchise is model for business which is also established, and has been proven to work. You’re investing in the brand. You can buy a new territory, or a resale (which offers the best of both options!). Here are our top three reasons you should consider franchising:

1. A safe option if you have never run a business before

Franchising offers new entrepreneurs a safety net for learning how to run a business, and how to grow from start-up to success. You gain a proven business model, all the training and all the systems and resources developed for the franchise. As your own boss, you gain the benefit of choosing how you want to work, without the stress of starting from scratch. 

2. You’re not alone!

You’re building your own business, but you’re not by yourself. As part of the franchise network, you receive ongoing support of the franchisor, following the initial training, access to business development advisors, mentors – other franchisees who have followed the model, and seen it work for themselves – and other business owners within the network who understand your business. 

3. You gain a reduced risk opportunity to succeed

If you are looking to start a brand new career, where you call the shots, where you are building your own dream instead of someone else’s. The franchisor wants to see you succeed as much as you do, and is invested as much as you are, in the future of your business. When you do well, the whole network does well. 

Con for investing in a franchising

1. You have a model you have to follow. 

Some entrepreneurs may find working within a determined model restrictive. 

Which option is right?

There is no right or wrong answer as to which option is right for you. By weighing up the pros and cons, researching, and carrying out due diligence, you can make the right decision for you. At Transworld Business Advisors, we are both franchise, and business brokers. Speak to your local Advisor who can advise you – in real terms – what is available for you.