How to Find the Best Small Business Opportunity for You

| Posted: 28-04-2008 | Views: 11 | Rating: (112)

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There are many reasons that someone initially decides that it’s time to begin a small business or purchase a franchise. It can be very financially freeing to have additional income on the side, for some the desire to work at home and escape a commute or a cubicle is the driving force behind the decision to begin something new. Whether it’s a way to invest funds into a safe and profitable sector, or simply a passion for a service or product that the new business opportunity will provide one of the most important things in preparing to start a new franchise business is understanding what options are available and which options have the largest potential for success. There are many different kinds of small business opportunities and franchises for sale, but those options can be narrowed down considerably by asking two critical questions that help determine what type of small business opportunity is the right fit.

#1 What is the financial commitment to the franchise, liquid capital, total investment, and overhead cost?

Knowing what costs a small business is going to encounter is the biggest part of researching a franchise opportunity and the most important thing to figure out before any decisions are actually made about beginning a franchise business. Most providers, contractors, employees are going to need payment immediately or in advance for their services, while income from a new franchise or small business can be slow and in most cases will take at least 30-90 days to see any cash flow actually come out of a new business. With this in mind, the total amount of liquid capital available to a new franchise owner must be calculated carefully and understood so that the level of investment and commitment matches the financial requirements to make the franchise a success. For example if a franchise owner has a total liquid capital to invest in a new franchise business of $50,000, there needs to be a careful examination of what the costs will be of purchasing a “low-cost” franchise.

A Liberty Weight Loss franchise may appeal to the investor and advertises that their franchise requires a liquid capital of $46,000-$100,000. And while it’s true that the franchise can be run starting as low as $46,509, an investor with only $50,000 to spend on their investment will encounter extreme stress and an inability to purchase and provide marketing, promotional materials, discounts, and even basic equipment needed to make running their own franchise comfortable and successful. It’s much wiser to not shoot for the limit, but rather to find a franchise that is closer to the low to mid range of liquid capital available and use the additional finances available to insure success and satisfaction to all those involved in the initial phases of beginning a franchise. Something such as CompuChild which is a franchise that teaches basic computer skills and typing in a classroom format to children requires a liquid capital of $20,000, which leaves the investor with plenty of extra capital to use to pay contractors, suppliers, and market their business without needing to see revenue first in order to promote and maintain the new business.

#2 What is the skill set, type of franchise, service, or product that the franchise owner is capable to provide and competent to lead?

The second most critical thing that needs to be answered about a franchise is what type of franchise will it be. Because a DVDNow kiosk franchise fits the right price; range for an investor does not necessarily mean that DVDNow franchises are the perfect fit. There may not be a passion for the video rental business, there may not be a desire to service machines, or a desire to be in a relational business might not be met in a kiosk service style franchise business. It’s important to know that within every price range for investors there are multiple franchise opportunities and the most successful franchises are those that are run by businessmen and women who understand the product or service that they are providing and are passionate about that franchise. Even with a more specific desire for a franchise like being able to work at home, there are many franchise that are home based businesses. Working from home doesn’t mean the franchise is limited to internet based tech services, though there are many of those available. It can also be businesses such as Stay at Home, which is a business that is operated from a home and provides in home care and services for customers that are elderly or homebound. There are tutoring centers like Mathnasium, and community building franchises like Virtuoso music, which teaches music lessons in homes and coordinates community events, concerts, and recitals. All of these franchise opportunities are home based, and each one fills a different niche and requires different skills and passions to operate.

Knowing what the cost will be of a franchise, and not just the advertised cost but the actually day to day operating costs will help narrow the choice to businesses that are affordable and likely to succeed within the financial limits of the investor. And combining that knowledge with the knowledge of what type of service or product the franchise owner is capable to deliver can help focus the choices even more to the type of franchise opportunity that will have greater and greater chances of being a successful business. Being able to work from home and run that small business well can provide all of the things that franchise owner’s dream of when deciding to start their own businesses. The chances of achieving that greatly increase when time and care is put into researching the franchise beforehand with the same passion and care that will eventually go into running that successful business.

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