Everyone dreams of becoming their own boss. But, most are not quite sure how to get there. What model to follow? Terms like franchising, licensing, royalties, financing, intellectual property, etc. can make your head spin.
But, bootstrapping to build something from scratch sounds even scarier as it carries a lot of uncertainty. For this reason, many entrepreneurs prefer to go down a different path and build their business empire slowly through other business opportunities. But, how can you tell whether something is a good business opportunity or not?
What is a Business Opportunity?
It’s key to have a good understanding of what a business opportunity is. For instance, someone offering to sell you their existing business can be a great business opportunity, but no one will sell you a successful business.
You’re more likely to come across franchising and licensing deals. While they overlap, there’s a difference between the two. Both require you to pay fees and royalties to a brand. Franchising takes a big chunk of your independence, but it comes with a lot of support.
But, even though some studies claim that franchises have a 90% success rates, they are completely unproven. So, don’t think of franchising as a safe bet.
Licensing offers more freedom, but you’re often left to fend for yourself. So, licensing may be a better option for an existing business that has the resources, while franchising may be better for entrepreneurs starting from scratch.
However, this doesn’t have to be the case. Nevertheless, when you research a business opportunity, you need to know how it is categorized.
It’s a good idea to assess your skills and abilities before investing in any kind of business. Can you craft a marketing plan? Are you good with numbers? Do you have organizational skills?
Before you delve deeper into the business world, you’d want to know what your strengths and weaknesses are. How are you going to address your weaknesses? It’s always good to hire someone who can do the work in which you do not excel.
Where Will This Opportunity Take Me?
Another vital question to ask yourself when looking at a potential business opportunity. Will this opportunity help me achieve my long term goals? Or is it merely a good financial investment?
People are told to keep emotions out of financial decisions. But, if you’re investing a lot of money, you need to consider how the decision will affect every aspect of your life. Will you enjoy it? If you don’t think you’ll find happiness in the opportunity, it may be best to keep looking.
What Support Will I Get?
Some licensors and franchisors will allow you to hit the ground running, but this can prove to be detrimental later on. Most franchisors will require a significant amount of training in their techniques and methods, and will request that you strictly adhere to them, but they will also provide you with an existing business model.
While they are not obliged to, some licensors will offer support, but the deal they offer may be more demanding as well. For example, Thorduct is a licensor that offers extensive training and support, as well as a variety of other perks to their licensees.
But, obtaining the license to a fire ductwork system takes much more than simply paying a brand to use their name and logo. Aside from paying for the license, there are other criteria that the potential licensee has to meet, but the benefits could be bigger as well. Whether it’s franchising or licensing opportunity, always make sure to see how you will be supported down the road.
Talk To Others Buyers
Before you start working at a new company, it’s best to see what other employees have to say about the place. It’s no different with business opportunities. To get a good idea about the company your considering making a deal with, talk to other entrepreneurs within their network. Check whether someone has “buyer’s remorse.”
Talk to Industry Experts
For instance, a lawyer familiar with the industry may be able to tell you much more about the pros and cons of buying a franchise from a legal perspective. Such a lawyer could help you find concerns in the contract or perhaps even loopholes that you can use to your advantage.
So, before you sign anything, have a specialized attorney look over the contract. One that has plenty of experience in your niche. It would also be good to talk to the Better Business Bureau and other similar organizations that can share valuable information on specific businesses.
Investing in a business opportunity is a big step for any entrepreneur—aspiring or seasoned. Before making a decision, invest as much as time as you can in researching the company thoroughly. Make sure you are comfortable with each step of the process. Odds are you’ll be happy with the outcome if you do your research on time.