We love that the new year has started, that the world is finding something resembling ‘normal’ again (the current wave or Omicron notwithstanding), and that all around us there are indeed green shoots of recovery if you’re prepared to look for them.
You might well be thinking that this is not the time to start a new opportunity, but for many of us as business owners or entrepreneurs, we might not have a choice, and the good news is that there are still very lucrative business opportunities to be exploited all over Nigeria and beyond.
At some point, entrepreneurs have faced the question of whether to go the route of the independent retailer, hospitality provider, or services provider – or, whether to take on a franchise opportunity. Both of these scenarios have unique properties that are well worth exploring, so we’re going to take a look at a few of them.
THE BENEFITS OF OWNING A BUSINESS FRANCHISE
It starts, with business assistance.
Especially useful for relatively new players in the business game, most good franchisors will offer potential franchisees a lot of business assistance that covers everything from getting set up to turning the lights on. Training and development and in some cases, even recruitment.
You will need a good Franchise contract lawyer to help you understand all of this.
The terms of the franchise agreements will lay all of this out, but you’ll usually benefit from having a brand, equipment, supplies, and an advertising plan as standard – just about everything you’ll need to operate the business. This will differ from franchisor to franchisor of course, but in all cases, you will get the knowledge of your business from the people who created it, and you can’t put a tag on that.
Possibly one of the best benefits of franchising, is that you’re taking on a brand that is usually already well established within local or domestic markets – and in some cases, even international markets. Starting a business from scratch means that all of the brand credibility and currency that an established brand has to be developed from the ground up. This could be to your advantage if you mean to take your brand statewide yourself, but otherwise, a franchise offers this benefit off the bat.
Lower failure rates
Franchises tend to offer lower failure rates than startups, and it’s because of that brand recognition, supported by solid business leadership from the franchisor, and generally increased profits as a result of more aggressive buying and negotiating power. That’s why starting up as a franchise operation is often a good place to ‘cut teeth’ for new entrepreneurs.
THE BENEFITS OF STARTING UP AS AN ‘INDEPENDENT’ BUSINESS
The most obvious benefit to buying or starting an independently run business is that you have direct control over the ownership of the business. You have the first and final say in how your business is run and marketed, where you buy your goods or services from, and how much you’re prepared to pay for them.
Cost to purchase or invest.
Independent businesses are usually more expensive to start up, buy or invest than franchises, so this is something to think keenly about, however, you will also have more control over the investment decisions that need to be made and the timing of those decisions. If you’re planning on operating in food or hospitality, as an independently owned business, you can decide when to remodel, shut down, reopen or rebrand – as a franchisee, not so much.
In this case, franchisees usually have something of an advantage over independent business owners. However, a solid advantage that independents have over franchises, is that they get to determine where the brand goes to, what spaces the brand moves in, and subtle changes that can be made in real-time when local market conditions and current affairs turn or change. With franchises, you’re not likely going to have any input in this area at all.
Often touted by franchisees as the main reason people go into business at all, the reality is that you do have a boss – two actually, your customers and the franchise holder. Because at the end of the day, while you have some autonomy in managing the day-to-day aspects of your business, you have precious little control over sourcing, buying, branding, promoting, and marketing.
Independent business owners are truly their own boss – at least once they’ve taken care of their customers.