15
Jan
2010
Entrepreneur Ideas – Choosing The Incorrect Business Can Break You
Listen, you know its time to go out on your own venture, being totally responsible and show the world what you’re really made of. You have many choices and options. Wherever there is money involved there will be both perils to avoid and advantages to look for. Discover the three essential options for a
successful startup entrepreneur
Often a typical entrepreneurial idea would be a [spin]conventional ‘bricks & mortar’|business[/spin]You have many choices and options.. By this I mean something like a conventional retail store or other business that sells products and perhaps also offers services around that product set.
A business of this nature requires a considerable amount of startup money. There would be items to purchase such as inventory, tools for the services and perhaps a shop fit in the case of retail or a workshop for the services component. This would typically involve signing a lease for premises…
Depending on the market chosen even a pickup van may be needed to perform the services or product delivery. Being to tied to a physical location will make the business feel like a binding job .
We haven’t even explored the possibility of employing staff which, in all eventuality will be required. This comes with it own set of responsibilities, compliancy and ultimately stress.
On the upside, potentially income on services can be good if well managed however, unless you want to be that manager you will need to seek out, employ and retain a top person for that spot as well.
In summary:
Capital & Cash flow
Ongoing overheads
Time and location restrictive
Potentially good returns from services
A franchise can look like a great opportunity and many a developing entrepreneur will think he has found his or her solution. The franchise company usually has a tried-and-true business plan, with market research, suppliers, sometimes even included is demand generating advertising, and finance facilities.
These are all formulated into a working business solution that you can pickup and run, and that’s great! Do not be surprised at the extend though of the premium asked for this.Perhaps once off, perhaps as a piece of the action as a ratio of revenue. Occasionally both may be levied.
Also a franchise is often tied to a physical area so you again could be confined in the same way as a job may restrict you.
All in, a franchise could be summarized as ‘purchasing a job’. It’s normally a business that works, but at a cost.
In summary:
Capital & Cash flow
Ongoing overheads, Royalties or fees
Location and time restrictive
Tried-and-tested business model with support
Now what about the direct sales industry? Depending on the structure sometimes this can also be labeled as Network marketing. I would guess this may be the least researched entrepreneur idea or the three discussed, at least in the beginning, however once discovered it can be quite attractive.
Direct sales / Network marketing is where you earn money by representing a company’s products and sell them in a drop ship fashion for a commission. The business is scalable by sponsoring additional distributors who would do the selling and recruiting in the same way. And you may even earn a partial commission from their turnover as well…
Note though these distributors would be independent businesses and not formally employed by you, so they would not come with the responsibilities of employees. Importantly as they will directly earn for you, it would be in your interest to mentor them well.
You typically don’t have to carry inventory, so you won’t have to cash flow that or provide premises to store it, or transport to deliver it. Customer service, administration etc are for the most part handled by “the company”. Similar to a franchise a lot of proven, working business information and systems will be available to the business owners…
The person who enrolled you into the business may also be incentivised (as described above) to get you and keep you in profit and this to would contribute to a rapid successful result.
In summary:
Stock and staff freedom.
Low overheads.
Low or no restrictions to a physical area.
Scalable.
Proven / Working business model with support.
Out of the 3 business models discussed the direct sales seems to offer the best chance of the best success with the least restrictions.
As a Business & Wealth strategist,Richard Baldock leads by example, teaching self-motivated people to become entrepreneurs and achieve their income goals working for themselves.
Richard Baldock is also the author of a FREE 4 day e-course “24 Rules for Success in Business”. Feel free to visit his blog at RichardBaldock.com – Connecting Entrepreneurs with Information to Achieve Success
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