The
cost of starting a business varies by the type of business you chose.
You have 3 business models.
1) Franchise
2) Mom and Pop Business (Eg, Sandwich shop, Convenience Store, Neighborhood Tune-up shop, or
Grill)
3)
Home BusinessThe Franchise model is the most costly, but typically guarantees some type of "security" if you will. Normally a franchise like Mc Donald's has a guaranteed business model where you're practically guaranteed success, because the
marketing, and name branding has been done for you.
A Franchise like McDonalds will cost you in the millions to purchase. Some of the smaller chains will cost a few hundred thousand. A personal friend of mine, just purchased a sandwich shop franchise, and after it was all said and done, cost $500,000. And that franchise only has 6 total sandwich shops. (The 500k was total for franchise fee, lease, equipment, business license, etc)
A lot of people don't have this kind of dough lying around, and even if they did, it's typically 2-3 years before your out of the red and into the black. Usually Franchises do not fail because of the name branding that has been done for them. The marketing is done for the owner. The business model is done for the owner.
With a franchise an owner is able to plug right in, and
start making money.
The 2nd type of business model is what I call a "Mom and Pop" type of business. This would be a business you create. Usually it's done out of passion, and wanting to do what people love.
It could be a restaurant, a dry cleaning business, pawn shop, music store, etc, whatever it is, usually the business owner is skilled at it. Typically you can get a business like this started for less than $50,000, in some cases, as little as a few hundred bucks.
When you cut out the franchise fee, it costs much less, but you're left out in the cold to do
your own marketing.
Remember how I had talked about "Name Branding". Well that has nothing to do with the
small business owner. The
small business owner doesn't have millions of dollars to throw at commercials during the Super Bowl, and most of the time the small business owner has no idea how to market.
Not knowing how to market is the #1 reason businesses fail.
Mom and Pop type of businesses typically fail in the 1st, 1-2 years. In my opinion the highest risk business to get into if you have zero experience running your type of business.
Here's why?
Small businesses owners typically have to create their own
system for generating revenue. Every business is different, so there's always a learning curve. Inventory, employees, opening times, taxes, lease payments, insurance, employee taxes, property taxes, repairs, customer service issues, etc, and that's just the start of it.
Remember how I talked about marketing.
In my opinion, unless you've studied some
type of marketing, don't get into business for yourself quite yet. It's like a marathon runner shooting himself in the foot.
There's a lot to marketing, both with your existing customers, and attracting new ones. Plus you need to know where to spend your money. Some efforts will be very effective, while others will yield you zero results. Once again why you need to know the difference between "name branding", and
small business marketing. They're 2 completely different types of marketing models.
I don't want to get into the specifics, but there is a huge difference, and its the reason why small old fashioned toy stores, can compete with Wal Mart across the street. Or why Bills local Steak House, can compete with Outback Steak house.
Because not only do they know how to advertise and market locally, but they know how to stay in contact with their customers to keep them buying month after month.
One important fact I also want to point out is how important a business location is. There's reasons some locations are cheaper than others. Because they suck. Yes, I said it, they suck.
One location that sticks out in my mind was located in Tempe, AZ, next to a gym I worked out at for years. I'd seen at least 10 different business come and go bankrupt in a few months, because it was in such a bad spot.
How would you like to spend a few thousand dollars on a lease, and go under in 2 months?
The third business model is the
Home Business, which is the
cheapest to get into and
least risky. I have an internet business that cost $100 to start, and is yielding a significant amount of income.
Most of the time when you are recruited into a
MLM or
Networking Opportunity you are instantly surrounded with positive people, and striving for the same goal.
The cost to get started is rediculously cheap, and you are paid recruiting bonuses, as well as monthly residual checks. It's nice because you are able to start learning how to operate a business. You also understand that if you do nothing, you get nothing.
Many people I have recruited sit on their tuffs and do nothing, and wine and complain when they don't get a check. I ask them, "If you didn't open the doors to your grocery store for a month, do you think you would make any money?" NO, they wouldn't.
This is why I always suggest
starting a home business, before putting it all on the line. Especially if you have never owned a business before, and don't understand how to
think like a business owner, and not an employee.
Some people are not cut out to own their own businesses, and are not self motivated. If this is you, corporate america is where you belong. People that are not self motivated, fail miserably.
I don't pull any punches, facts are facts.
Imagine how much it cost me to open my Nightclub/Bar, and my Stripclub/Bar businesses.
A LOT!!!
And if I fail, I lose it all, that's reality.
Until next time.
Happy Prospecting,
William WhitlowHome Business On Line Marketerhttp://www.williamwhitlow.com
