Researching Your Small Business Start Up

Things to consider before starting your own business

When deciding what business to start-up it is best to first highlight what are your existing skills and experiences. For example, a person who has worked as an estate agent for many years wanting to establish his or her own estate agency is far more likely to succeed than someone entering a completely new business area.

Further, if that person also intends to start-up their estate agency in the same location where they worked for their former employer then their local knowledge will further enhance the chances of success.* [see notes at bottom]

If however you do not have previous experience or cannot gain such experience by working in your selected entrepreneurial sector then your business startup chances of success are greatly reduced and perhaps lead to the consideration of a well known successful franchise.

Things to consider before starting a franchise

What is a franchise? In simple terms a franchise is when a franchisor offers its business model/intellectual property to a franchisee in return for consideration (money). Most good franchisors will support their franchisees throughout both the business set-up and growing stages.

Is it better to buy a franchise or set up on my own? This is a difficult one to answer but certainly statistics indicate that franchisees are far more likely to be in business after 5 years than their non-franchisee counterparts. However, if you already have considerable business experience and do not feel that the added value of having an "established" brand name is sufficient then buying a franchise may not be for you.

Get independent advice Never pay over money for any franchise without speaking to established franchisees who have been in business for a number of years. It is also highly recommended that you try and purchase a franchise which has been "vetted" by the British Franchise Association. Further, do not rush into anything and in particular make sure that you have subscribed to a few months worth of specialist publications such as Business Franchise Magazine.

Is it difficult to raise finance? Well established franchises, often have close connections with banks and other financial institutions so raising money is often easier with a franchise than for an independent business idea. The reason is simply that there is empirical evidence for lending institutions so they are aware of the potential risks which would be more difficult to quantify for an independent enterprise no matter how good an idea.

Should I take out a franchise in my name or form a company? Generally it is better to register a limited liability company as this effectively separates you and your personal assets from those of the company. In addition, in most cases it is also better since UK corporate tax levels - especially for start up's - are amongst some of the lowest in Europe and significantly lower than for individuals.

You can cisit DaltonsBusiness.com for a selection of franchise opportunities:  www.daltonsbusiness.com

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* However, one should always be aware of restraint of trade provisions that may exist in Contacts of Employment but case law would suggest that such caveats cannot be enforced beyond a 12 month period unless the employee was employed in very senior position with access to privileged information. It of course goes without saying that any information, client contacts etc. that may be known to a former employee cannot be used to quick start a new business.