Advantages of Starting Up a Business

Advantages of Starting up a Business * Being your own Boss  Ã¢â‚¬â€œ you can make your own decisions, keep your own time and not have to answer to â€Å"The Boss† * Hard Work & Know How  Ã¢â‚¬â€œ If you are a hard worker and / or have immense industry know how, you may want to benefit from the long hours you do or the knowledge that you have acquired over time. * Financial Independence  Ã¢â‚¬â€œ One day, you may realise your dream of financial independence * Creative Freedom  Ã¢â‚¬â€œ no more restrictions, you can do what you like and have the freedom to work, design, create, build what you think is best – your way! Goodwill  Ã¢â‚¬â€œ you don't have to pay for it (as if your would if you were buying a business) – you get to build it * Location, Premises, Building Fitout  Ã¢â‚¬â€œ you get to choose it all * Staff  Ã¢â‚¬â€œ your not lumped with staff you don't want. You hire and train from scratch – your way * No Bad Name  Ã¢â‚¬â€œ a fresh bu siness, a fresh start. Your name has no bad history with suppliers or customers. If you buy a business, you may find some people just won't deal with the business because of past dealings * Business Image  Ã¢â‚¬â€œ you create the business image you want. Your way. Disadvantages of starting your own small or medium business can include: * Cash Flow  Ã¢â‚¬â€œ your business may not have a positive cash flow for two years – how are you going to cover that? * Competitors  Ã¢â‚¬â€œ you may invest all this time, money and effort into your business and a large competitor targets your customers and offers them a similar product / service at below your cost – until your business has failed. While this may be anti – competitive and contravene sections of  The Trade Practices Act 1974, it may be too late for your business * Homework  Ã¢â‚¬â€œ have you done it? You may do it all and then find when you are all set up, that something from left field becomes apparent and significantly alters the outlook of your business * History  Ã¢â‚¬â€œ If you buy a business, you are buying something. You are buying history of the business trading, you have staff in place, equipment and premises in place, customers ringing in with orders on your first Monday morning. If you start a business, you have no history. Everything must be generated from scratch. * Married to the Business  Ã¢â‚¬â€œ this is a common hrase from small business owners. It basically means, your hours of work and level of commitment is such that you cannot take a holiday, your business is always with you (day, nights ; weekends) and basically your neck is on the line. You can't just throw the keys back and give it all away if it gets too hard! * Suppliers  Ã¢â‚¬â€œ Suppliers may not extend you credit as your business has no history, so you may have to pay upfront for your goods, and you may not collect money from your customers for those goods for 90 – 120 days. This is very detrimental to cash flow. Can you sustain this? Have you factored it into your budget? * Family  Ã¢â‚¬â€œ is your family situation such that you can undertake this huge venture of starting a small business from scratch? Think carefully about starting a business from scratch. It often means a huge sacrifice with no guarantee of reward. Your current employed situation may actually be a better position than starting a small business. Good luck, in whatever you may decide. Please think about the advantages and disadvantages of starting a small business. Our list above is only a starting point, each situation will be different. If you are seriously considering starting a small business, Rogerson Kenny Business Accountants offer a free initial consultation, so you can discuss with us your ideas! Advantages and disadvantages of buying an existing business Advantages * Some of the groundwork to get the business up and running will have been done. * It may be easier to obtain finance as the business will have a proven track record. * A market for the product or service will have already been demonstrated. There may be established customers, a reliable income, a reputation to capitalise and build on and a useful network of contacts. * A business plan and marketing method should already be in place. * Existing employees should have experience you can draw on. * Many of the problems will have been discovered and solved already. Disadvantages * You often need to invest a large amount up front, and will also have to budget for professional fe es for solicitors, surveyors, accountants etc. * You will probably also need several months' worth of working capital to ssist with cashflow. * If the business has been neglected you may need to invest quite a bit more on top of the purchase price to give it the best chance of success. * You may need to honour or renegotiate any outstanding contracts the previous owner leaves in place. * You also need to consider why the current owner is selling up and how this might impact the business and your taking it over. * It's possible current staff may not be happy with a new boss, or the business might have been run badly and staff morale may be low. Advantages and disadvantages of franchising Advantages * Your business is based on a  proven idea. You can check how successful other franchises are before committing yourself. * You can use a recognised  brand name  and  trade marks. You benefit from any advertising or promotion by the owner of the franchise – the ‘franchisor'. * The franchisor gives you  support  Ã¢â‚¬â€œ usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice. * You usually have  exclusive rights  in your territory. The franchisor won't sell any other franchises in the same territory. Financing  the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation. * You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network. * Relationships with  suppliers  have already been established. Disadvantages * Costs  may be higher than you expect. As well a s the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor. The franchise agreement usually includes  restrictionson how you can run the business. You might not be able to make changes to suit your local market. * The franchisor might go  out of business. * Other franchisees could give the brand a  bad reputation, so the recruitment process needs to be thorough * You may find it difficult to  sell  your franchise – you can only sell it to someone approved by the franchisor. * All profits (a percentage of sales) are usually shared with the franchisor.