Have you ever thought about starting your own business? If yes, then you are like one of the many people in Canada who own a small business. According to CBC, a staggering 98% of businesses in Canada are considered “small business” (employee size of 5-100). Starting your own business can prove to be very profitable, but of course, the flip-side is that the process comes with a fair amount of risk.
Creating your own successful Canadian business can be broken down into a series of (very simplified) steps:
Planning your business – You need a business idea, namely, one that you believe will be profitable. This will require finding a good industry, choosing a business structure, conducting market research, and creating a business plan.
Choosing a business name – Not only do you have to come up with a business name, you need to register and trademark the name.
Incorporating – Now it’s time to speak to lawyers/notaries/accountants regarding actually setting up the business. You will need professional assistance when it comes to getting your business number and tax number, among other things, which will then be necessary to open up a business account.
Business Permits and licenses – Depending on the type of business you wish to create you may very likely need to obtain various licenses and permits. For example, one can’t simply start selling food out of their kitchen.
Obtain financing plus other means of support – Starting a business requires capital, and you’ll either need to have the cash up front, or you’ll need to finance (borrow) the money, or find partners.
Run the business – The last but of course most challenging part. Hiring, training, money management, taxes, balance sheets, book keeping, are just a few of the many, many aspects of running a business.
As you can see, it takes quite some time just to set up the business, not to mention running it, plus not to mention making sure it’s successful. Despite the risks, the rewards of starting your own business can be substantial.
Enter the Franchise. What is a franchise? People hear about it all the time, but how does it differ from a traditional business? Essentially, a franchise is when a parent company such as McDonald’s (the franchisor) allows a local owner (the franchisee) the ability to own and operate a businesses using the franchisor’s name, products, and services. This differs from a corporate business structure, such as Starbucks, where the parent company owns and operates every store.
What are the advantages of starting a franchise over starting a business? If we look back at the requirements for setting up your own business, we can deduce several benefits of becoming a franchise owner, rather than just a business owner. For one, the business idea and name is already taken care of. Assuming that the franchisor has done their due diligence, it is also reasonable to expect the market research and business plan has been done. More importantly, the most critical part of a successful business, that is, running it, has been made easier due to the tried-and-true methods of the previous franchisees and franchisor. Essentially, you have some guidelines in place to ensure your chances of success. A proper franchisor will provide great training for the owner, in addition to having a full set of systems in place in order to help you succeed in your new business. The important thing now would be to decide which franchise opportunity would fit you the best.
Which should you look for when choosing a franchise opportunity? Just like starting your own business, starting a franchise requires you to do your due diligence. The first step is to choose an industry. The industry should have good opportunity, both now, and potential for growth in the future.
Once you choose your industry, the next step is to determine your investment budget. Some franchises can have costs under $5,000, whereas a franchise like McDonald’s can have a franchise costs of over $3 million. Determining your budget will help you narrow down the prospective list of franchises.
Next, think about how much involvement you would want in the franchise itself. Are you more of a hands-on type business person? Or would you prefer the franchise itself to run more like an investment where you don’t need to involve yourself too much? If you want to be very involved in the business, what exactly would you want to do?
One more question you should ask yourself, but by no means the last, if how much support you, as the franchisee, would receive from corporate? What’s their training like? Do they have good systems in place to help you recruit and train new staff? These questions are critical to your success.
The bottom line. To answer the original question, there really is not a single right answer. It all comes down to your personal choices such as the ones listed above. By asking yourself these questions, you’ll be able to determine what will ultimately improve your own lifestyle and wealth. If you’re interested in learning even more about franchising and opportunities, I invite you to contact us to have a chat, and hopefully we can help you in any way possible.