Often a typical entrepreneurial idea would be a formal ‘bricks & mortar’Multiple options and choices will present themselves. By this I mean something like a typical retail store or other business that sells products and perhaps also offers services around that product set.
A business of this nature requires a sizeable amount of startup funds. 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. Often you also have to lease some type of physical premises…
Depending on the market chosen even a pickup van may be needed to perform the services or product delivery. A physical location dependence will be a bind and the business may feel like a job very soon.
We haven’t even explored the possibility of employing staff which, in all plausible situations will be required. This comes with it own set of responsibilities, compliancy and ultimately stress.
On the upside, potentially profits 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 role also.
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 fledgling entrepreneur will think he has found his or her solution. The franchise company usually has a proven business plan, with market research, suppliers, sometimes even included is demand generating marketing, and funding facilities.
These are all formulated into a working business solution that you can pickup and run, and that’s great! This will of course come at a price.Perhaps once off, perhaps as a profit share 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 bound 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:
- Cash flow and Capital
- 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 recruiting additional distributors who would do the selling and sponsoring in the same way. And you may even earn a portion from their business 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 effectively.
You typically don’t have to carry stock, so you won’t have to bank roll 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.
- Minimal running costs.
- 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 most freedom.
More great info and entrepreneur ideas and resources are on my blog at http://richardbaldock.com/entrepreneur-ideas