New Business

Pro

Con

*      Define the nature of the business.

*      Create the preferred type of physical facilities.

*      Obtain fresh inventory.

*      A free hand in selecting and developing personnel.

*      Take advantage of the latest technology, equipment, and tools.

*      Select a competitive environment.

 

*      Problems in finding the right business.

*      Problems associated with assembling the resources.

*      Lack of an established product line.

*      Production problems associated with starting a new business.

*      Lack of an established market and channels of distribution.

*      Problems in establishing basic management systems and controls.

*      Also, the risk of failure is higher in start-ups than in acquiring a franchise or existing business.

 

Buy an Existing Business

Pro

Con

*      Personnel are already working.

*      Facilities are already available.

*      A product is already being produced for an existing market.

*      The location may be desirable.

*      Relationships have been established with banks and trade creditors.

*      Revenues and profits are being generated, and goodwill exists.

*      May be more expensive than starting a similar business yourself.

*      The physical facilities may be old or obsolete.

*      The employees may have a poor production record or attitude.

*      The accounts receivable may be past due or uncollectible.

*      The location may be bad.

*      The financial condition and relations with financial institutions may be poor.

*      The inventory may be obsolete or of poor quality.

 

 

Buying a Franchise

Pro

Con

*      Franchiser brings successful methods of operation.

*      Guidance from experienced people.

*      Available in a wide range of endeavors.

*      Already has many of the requirements for success, including an identified market niche and established sales activities.

*      Franchisers provide resources to help unprepared business owners get started.

 

*      Expensive

*      New franchisees face far greater financial risks that well-established ones.

*      Costs may outweigh the benefits.

*      Not as much independence.

*      Overpriced, poorly run, uninteresting, and white elephant franchises are potentially disastrous.

*      Franchisers tend to hold the advantage over the franchisee.