Are you a budding entrepreneur? With two-thirds of Americans itching to start their own business, millions are running around with dreams of running a company of their own. But do you know where to start? For too many, the challenges that come with starting a business seem insurmountable.
The Inside Small Business Survey by postal giants UPS found that the top reasons why some people were reluctant to start businesses were financial, with a general fear of failure following close behind. However, while all businesses come with risks, some models and industries are less exposed than others.
Franchising has been steadily growing in the US for the past six years, and as of 2018, there are more than 750,000 businesses following this model. Online businesses have also been growing worldwide, and by 2021 e-commerce alone is expected to account for 17.5% of all retail sales.
At the meeting point of these two business models, companies can thrive — and there are several reasons why. Here are four reasons why an online franchise is an ideal business for new entrepreneurs.
1. Business Start-up Costs Can Be Significantly Lower
A key benefit of internet-based businesses is the possibility of making substantial savings during startup when compared to more traditional brick and mortar enterprises. If you’re starting an online store rather than a physical gift-shop, for example, you will save time and money. You will not have to scout for locations or have your franchisor do the same. This isn’t limited to commerce either, as you can run many franchises, such as those in digital marketing from any location you choose.
2. You’ll Have the Support of a Bigger, More Established Business
This advantage is common to all franchises. Franchising involves a bigger business allowing entrepreneurs to sell goods and services under the same brand using a licensing agreement. As a franchisor, you’ll be asked to pay a franchise fee which is essentially your investment in the business.
In return you’ll have a bigger business partner that is as invested in your success as you are, and so will support you with marketing, training, and tips for finding new customers.
3. The Hours You Work Are Totally under Your Control
One of the great benefits of being an entrepreneur rather than an employee is that you can have more control over your working conditions. However, running a digital franchise may give you more freedom over your location and hours of work.
If you started a coffee franchise, for example, you’d be bound to the regular opening hours that the brand has committed to or chosen high footfall times. However, with an online venture, such as a web design company or an online clothing store, you will not be as tightly bound to set working hours. Your working window is less rigid — because your customers and clients could be based around the world.
4. You’re More Likely to Succeed as a Franchise — the Stats Back It Up
Many popular statistics have been floating around for a long time about start-ups and their failure rate. According to data in a Small Business Trends report, 44% of start-ups fail within four years — a conservative estimate compared to claims of 90% failure rate claims.
While perhaps not as dramatic as some claim, the rate of failure for new, unknown businesses is high, especially when compared to franchises.
Franchises are often stated to have a success rate at around 90%. Having the support of a larger brand and a product or service that may be well-known are at least two factors that could contribute to this greater success when compared to start-ups. As someone entering the business world for the first time, franchising is your best bet for success.
James Fell is Online Business Editor at Aceville Publications, overseeing digital projects for What Franchise and Global Franchise. He’s passionate about writing about business and the future of franchising.