Franchises require a lower initial cost.
While the number of franchises with low investment requirements has increased, the cost to enter a Business Opportunity’s Advantages remains very low. FTC requires $500 minimum investment to make an opportunity a business opportunity. However, there are many opportunities that do not fall within this fee. Most average between $2,000 and $3,000.
Proven system of operation or product.
The existing systems are designed to minimize problems and maximize efficiency. It’s just a matter passing on the best teaching tool, experience. Most people enjoy having their hands held occasionally, regardless of whether they are willing to admit it. The parent company will help licensees get through any crisis. This idea of safety in numbers is popular with many people.
Training programs that are intensive.
Learning is a time-consuming part of any business venture. An intensive training program can help you avoid the most inefficient moves and make your business venture a success.
You have more financing options.
The parent company that offers the business opportunity can often obtain better financing because of its financial strength, credit line, and contractual agreements. In any investment situation, financial leverage is a critical consideration.
Advertising and promotion by professionals
Small business owners don’t have the budget to spend enough money on advertising. Even if they did spend enough money, their efforts were often inconsistent and poorly planned. In order to make a more effective marketing effort, many business ventures provide the buyer with print advertising slicks and radio ads. Many business opportunity ventures may even offer a co-advertising agreement that will allow them to split the costs of TV, radio and print ads. This type of marketing assistance is particularly beneficial for large metropolitan areas, where media costs are prohibitive.
Many business opportunities offer support beyond training. They also offer counseling by experts who can offer advice that is unmatched. To a certain extent, legal advice is available. Experts in the field have designed the most efficient accounting systems, perfect for each business. Some licensors provide free computer analysis of records. This allows you to identify areas of inefficiency, loss, or profitable aspects of your business that have been overlooked.
Assistance with site selection
Site selection and marketing experts use all available scientific tools to choose the best locations. Negotiators who are experts in site selection and marketing use the influence of large organizations to negotiate leases and contracts to their advantage.
The parent company’s buying power and buying strategies can often bring equipment, products and other services to licensees at a lower price than what an independent would ever be able to get.
No ongoing royalties.
A business opportunity is not like a franchise. There are no ongoing royalties that the seller must pay. All profits are yours.
The disadvantages of a business opportunity
Business opportunities can be a great way to start a business, and they are low-risk investments that offer a high chance of success. There are always problems in the world, and that is why there are limitations.
Poor site selection.
Most business opportunities are retail-oriented, consumer-oriented businesses that rely on easy access and visibility. The majority of potential buyers for business opportunities will accept the chosen locations without hesitation. DON’T! You should thoroughly review it. You may even consider hiring an outside marketing consultant to help you evaluate the options and argue with your parent company. A better location could translate into millions of dollars in profits over the next 20 years.
The seller of a business opportunity does not have to provide ongoing support. You may not be able to access any assistance if the seller refuses to provide information or guidelines once your business is up and running.
Do you have to sell only manufacturer’s products? If you do not comply with the manufacturer’s specifications, the licensor may cancel your agreement. It will be difficult to conceal if you buy from other sources. Most parent companies will require that you open your books to inspection at predetermined times. These times will allow you to spot any irregularities. Smart buyers of business opportunities will negotiate a point in the agreement that stipulates sources of supply in the event of inconsistent product quality.
The parent company could also overextend itself and go bankrupt. Although this is less likely in a business opportunity than in a franchise, it can still lead to the loss of the business. This could be because property contracts you have may have been financed by the parent company.