Now that you are considering becoming a business owner, you will have to choose between becoming an independent business owner or a franchisee. There are numerous advantages and disadvantages for both as we will see below.

Starting an Independent Business

Advantages

• Generally lower start-up costs
• Complete independence
• Freedom in operations and locations
• No inherited issues that may plague a company

Disadvantages

• Time and energy required is higher
• Increased risk of failure
• Could take longer to achieve profitability
• More difficult to obtain financing

Purchasing a New Franchise

Advantages

• Lower risk of failure as business model is already proven
• Start-up support from franchisor
• Ongoing training and support
• Marketing/advertising support from franchisor
• Collective purchasing power
• Research and development borne by franchisor
• Association with other franchise owners
• Financing is easier to obtain

Disadvantages

• Start-up costs are higher and
• Ongoing royalties and fees can shrink profit margins
• Limited independence and operational freedom
• Redressal if franchisor does not up obligations is difficult
• Issues faced by the franchisor can negatively affect your business

Acquiring an Existing Franchise

Advantages

• No set-up costs as business is already up and running
• Lower risk
• Most of the infrastructure, staff and operational processes are in place

Disadvantages

• Limitations in design, location and merchandise
• customer/employee ill-will, pricing issues, leasing issues, etc can affect the business
• Generally more costly to buy
• Can inherit legal issues

Steps in choosing the right option for you

1. What type of business works best for you?
2. Does a market exist for your business?
3. Do you have the required finances for the business?
4. Will the business generate enough profits to make it worthwhile?

What type of business works best for you?

While the go-to reason for starting a business is to make lots of money, people often forget to consider if they will enjoy working in the business. Its best to choose an industry that one will enjoy working in 5-10 years down the line.

Some important questions to consider at this stage are:

• What are your interests and hobbies?
• What is your work experience?
• What skills and talents do you possess?
• Which industries require your specific skills and interests?
• What products/services could you market in that industry?
• Would you prefer to sell a product or provide a service?
• Which product/service would you be most interested in selling?

As Valenta provides a wide range of industry agnostic services, a Valenta franchise is ideal for anyone who enjoys sales and possesses good knowledge of any industry.

Does a market exist for your business?

Irrespective of how good a product or service is, a business will fail if there is no market for what they are selling. All successful businesses either solve a problem, satisfy a need or leverage a trend.

Here are somethings to consider during your market research:

• What is the number of potential customers in the business area?
• What need/problem/trend does your product or service satisfy/solve/address?
• What pricing would work for the target market?
• Do you have any competitors and who are they?
• What is their offering like?
• What differentiates your offering from theirs?
• Is there a niche that can be captured?

Valenta has a globally proven business model with clients across Australia, United Kingdom, United States, New Zealand, Canada, Malaysia and Hong Kong. There is significant demand for our services across industry verticals.

Do you have the required finances to run your business?

One of the most common reasons new businesses fail is the lack of money. You need enough money to not just start the business but also to finance it until it turns profitable. The following are critical aspects to assess during this stage.

Accurately estimating start-up costs

• Infrastructure costs
• Pre-labour costs
• Recruitment costs
• Training costs
• Initial promotion costs
• Initial Inventory
• Insurance

Estimating working capital

• Salaries
• Rent
• Utilities
• Marketing
• Interest on loan if applicable
• Living costs if needed

Obtaining the requisite financing

• yourself
• family
• friends
• savings and investments
• a partner
• selling personal assets
• loans

Valenta’s franchise is comparatively low-cost and can be up and running quickly. As all operations are done by Valenta itself, our franchise owners do not have to worry about infrastructure costs, recruitment and staffing, overheads, pensions, etc.

Will the business generate enough profits?

Beyond pure profit (income-expenditures), it is also imperative to include the time and effort that you will spend on the business as well. You will need to make a decision on whether you feel the profits that the business will generate will make it worthwhile to start the venture in the first place.

Due to the flexibility offered by Valenta’s unique franchise model, franchise owners do not need to immediately quit it their current jobs to start building their franchise business. They can develop their business part-time until profitability is achieved which usually takes around 12-18 months.

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