There are generally four ways to become a business owner, each with their own level of risk. The most obvious is to simply start your own business. As 65% of start-ups fail, this is a very risky way to become a business owner.
The second way is to take over a family-owned business. While this can be successful, all too often the transfer produces poor results. The most common problems result from the “child” not having the skill or passion of the business founder. We mentioned the ability to inspire confidence and the need for self-discipline, attitude, vision and definiteness of purpose. Without these, the business will falter. In many cases, running and growing the business is not the “child’s” dream, but taking it over from the parent is the path of least resistance. In some cases, the basic skills have not been developed and the business is of a size where these skills are required. Sometimes selling the business is the better option for both parent and child. I highly recommend getting professional advice prior to making a decision about transferring a business from a parent to a child.
The third way to become a business owner is to buy a franchise. The success rate of new franchise purchasers is around 80%. While the risk is not as great as starting your own business, the rewards may not be as great either. You may find that you need to own multiple franchise operations in order to make significant income. For example, a typical franchised hairdressing salon will make $25,000 to $50,000 per year. Although this may not seem appealing, many operators own multiple locations and owning 10 or 12 locations that each make $50,000 per year may, in fact, be quite attractive.
The fourth way to become a business owner is to purchase an existing operating business with trained employees, existing client and supplier relationships, a proven concept and location, plus training and financing from the previous owner. Working with Sunbelt Business Brokers is the best way to ensure success when you are betting your life savings and the future well-being of your family. We help our clients minimize the risk while offering the opportunity for significant financial return. As with a start-up, the purchase of an existing business may require significant effort and long hours over the first few years of ownership, however you do have a head start and very low risk.
Don Pippin Jr