The culture of entrepreneurship is gradually becoming the livelihood choice of many Filipinos today. The economic potential and socio-cultural evolution of the business environment is appealing to individuals who feel that it’s time to leave the corporate world, as well as to those who want to put their investment resources to good use.
If you are a budding entrepreneur who is setting out to trek into the business arena, you’ll first have to decide whether you want to put up your own enterprise or go for franchising. In addition, you have to consider some of the most important factors as you prepare to launch your business. These are the capital, return of investment, logistics, target customers, and marketing strategies among others.
This piece lets you in on the opportunities and challenges that lie ahead for you whether you choose to start your own business venture or become a franchise holder.
The Startup Venture
Most business owners started with a small to medium enterprise on their first venture. Their passion and interest to offer something useful to customers drove them to establish their business.
If you choose this model, specifically single proprietorship, you’ll mostly be managing your business independently.
Benefits to Starting Your Own Business
1. You’ll grow in knowledge and skills
People who are not business majors but are inclined to business have equal chances of succeeding as they learn through and gain experience in operating the business every day.
2. You have complete control
You’re not expected to follow someone else’s system on running the business. You can introduce, update, innovate, and modify your operating procedures as you deem fit. This also includes lowering or increasing the cost of your product or service depending on your marketing strategy.
Challenges in Starting a Business
1. It is costly
You need to have enough capital to launch your business. Capital requirements cover both operating expenses (supplies, space rental, salaries, etc.) and contingencies.
2. You should know bookkeeping and accounting
Don’t just rely on your accountant (if you decide to get one) to record your business’ financial statements. Note that you may be held legally liable if you do not properly keep tabs on the cash flow within your enterprise.
3. The administrative and legal process is very complicated
This may be one of the greatest hurdles that start-up entrepreneurs have to face ever. You’ll be coordinating and dealing with numerous government institutions to secure business documents and licenses. These are necessary for you to start operating your business.
The Franchising Solution
In franchising, you as the “franchisee” intends to acquire the right to use an existing business model from the rightful owner or the “franchisor.”
The business name or trademark, operational manual, and training modules from the business owner are part of the franchising package you’ll need to pay.
Benefits to Franchising
1. The rate of success is high
As a business model, a franchise depends on a tested formula that has made the business grow and succeed. You only need to implement that formula in your franchise.
2. Product recall is easily achieved
Association with a recognized brand will help your customers easily identify and warmly receive your business.
3. The support system is readily available
The franchisor will typically assist you in administrative tasks such as securing a business permit in the Philippines, complying with BIR registration requirements, as well as hiring and marketing concerns. You can save a huge amount of time and effort.
4. Finances lean toward profitability and resale ability
Again, businesses with established reputations have much to do with it. Your franchise is more likely to benefit from a good standing with creditors and asset buyers.
Since you have access to low-cost supplies courtesy of your franchisor, you can also expect higher returns in sale and profit.
Challenges in Franchising
1. Control is not absolutely yours
As a franchise, you’re expected to stick to the existing business model. You cannot just introduce new systems as you wish.
2. Additional costs may be incurred
Apart from paying franchising and royalty fees to your franchisor, part of your monthly revenue will go to the franchisor. Fees for additional services like advertising costs may also be charged to your account.
3. Failed expectations happen
Both you and the franchisor may have to deal with issues that may affect your business relationship with another. On one end, the franchisor might not be able to give adequate support to help your franchise take off in the right direction, and yet, put undue pressure regarding profit distribution.
On the other hand, lack of drive or reluctance on your part in overseeing the day-to-day operations might result in business losses.
Businesses always involve risks. It all boils down to which one has reduced calculated risks that first-time entrepreneurs are prepared to handle. In which case, you’d do well looking around for franchising opportunities to get you started.
Then again, if you feel you have a great business sense, use it to transform your start-up into a more bankable enterprise in the future.