You may well ask how long is a piece of string (11 ¾ inches I have one at home!). Because this really depends on what type of business you want to run. There are several options.
Open a shop, let’s consider the costs, find a business model and research it, find some premises pay out for the lease, stock the premises use your own capital to stock it or get a bank loan if you can. Then there is insurance, rates and utility bills to find the money for. Simple just open your shop and wait for the passing trade to drop in and spend a few quid on the items you have for sale simple.
Well may be not this approach could prove to be very expensive huge amounts of capital tied up in stock especially if no one wants what you are selling plus the added bonus of working 7 days a weeks. If you are not there every minute how can you make any money?
Perhaps an easier way is to buy a business franchise; this has many advantages over going it alone. With a top franchise you are buying into an already successful business model, you will get the support and training you need from a proven business formula.
You may baulk at the price of a franchise but are the very cheap ones worth the investment; unfortunately all franchises are not created equal or indeed offer the same value. Lets take a well know high street brand and a respected franchise Subway.
Why Subway? Well one has just opened in my home town and the shop it moved into was formally a charity shop. This has been fitted out in the Subway corporate image I have no idea how much this has cost but it will not have been cheap.
A subway franchise costs about £6,000 for the franchise fee plus the fitting out of the premises, and all the other costs above. So how much this will cost in the end could be frightening but I saw a figure on a franchise forum listing £120,000.
If the though of preparing all those sandwiches and working long hours 7 days a week is your bag and you have the funds it could be the one for you! NO? How about this?
Clean out wheelie bins, this one is £16,750 now if you charge £6 a bin then you will only have to wash about 3,000 bins to get your franchise fee back! I don’t know about you but I can’t wait to get started on a cold January morning cleaning out stinking bins.
With too many of these franchise opportunities all you are buying is a minimum wage job for years to come. Believe it or not you don’t have to risk your children’s inheritance on the words of Theo Paphitas you can start off for just a few pounds, you can minimise the risk to yourself and you can work the hours you want.
“It sounds too good to be true, but tell me more”.
You can start an eBay business for just a few pounds in listing fees, start by selling the stuff you no longer want or need and use the money you make as your starting capital to purchase some new products to sell. Did you know that you can sell the same products on Amazon? In some categories you will get a better price than you will get on eBay.
To me for the small retailer without a unique selling point and a hungry market the retail model is flawed and you will always be waiting for your customers to come to you.
What about working for yourself online? Easy to use template drive e-commerce packages are available at a very modest monthly cost for most hosting companies, why pay eBay’s extortionate listing and final value fees if you don’t need too when you can keep the profit for yourself. Sound good to you?
Watch out for Part 2 where I show you how to change your whole perspective about business. Rob..
Hi Robert,
YUK – the thought of cleaning out smelly bins ….
I’d want paying to try the idea – never mind giving them a fortune for it!…lol
Can’t wait to see part 2
Randy
http://www.RandolfSmith.com
Blimey, Rob, I never knew franchises were so expensive! I have never bought one, although I have opened 4 shops and can verify that the costs of setting up are huge and it takes along time and hard work to pay off the initial costs. Great post, thanks.
Enjoy the journey.
Mandy
Hi Mandy it shocked the hell out of me too! The wheelie bin one was just amazeing!
Rob
Don’t worry Randy no bins in part 2.
Cheers
Rob
Wow! Great information Rob.
I never knew franchises were so expensive either but I guess it depends on the franchise. There must be SOME out there worth having as it is a successful business model. I think like everything you need to do your research and be prepared to put in the hard work upfront.
Thanks for the great post.
Susan
Hi Rob
Yeah they’re expensive aren’t they.
I did look into it once but soon realised that it was not for me.
So, here we are in IM, and with the low entry costs its a much safer bet-provided you don’t spend the cash on all those so-called guru’s!
Best wishes
Mike
Mister Corrigan,
Right on the money, pal!
If the attrition rate for online businesses is 97%, the real world business failure rate is still out front at 99%.
Break Even Point is a concept most business people not only do not understand, they have no idea how much effort and long term funding is required just to get to that point.
This fact creates much heartache and as we now know, opportunity.
Thanks for this post, pal. This knowledge will change some lives, no doubt.
Hey Rob
Good to have you on board 🙂
Franchises are a great thing…well they will be when we are successful enough to be selling our own 🙂
I’ve never really been sure about buying into a franchise, some of them are so expensive and like you said you’d be working for minimum wage for a long time…and others are cheap enough not to warrant doing…
and of course there’s nothing to stop you setting up your own business using a similar model without paying all the franchise fees…now if only I had a dozen ideas I could kick around that didn’t cost a fortune.
Cheers
Steve
Thanks guys, the “gurus” have had far too much of my dosh franchise NO WAY!! Unless anyone knows of a really good one…
Cheers
Rob
Hi Rob…
Ha ha about the Wheelie bins! As for me…I don’t want any business unless it’s online! I’ve gotten spoiled and now I don’t think I could ever think about trying to start something offline.
I am truly after Freedom and working online will be my ticket 😉 I simply won’t give up until I have achieved my dream…I am very tenacious!
For anyone wanting an offline business…whoa to the cost of those franchises! Not for me!
Looking forward to reading the second part….
Good luck Rob…it simply would not have been the same without you 😉
Kathy
Hi Robert,
I agree with you that starting a traditional business does has it’s drawbacks as far as start up capital. Also a lot of those types of businesses fail for the same reason that online businesses never make it. The reason is lack of planning and market research. Just because you may thing people in the area where you live would like a certain restaurant, doesn’t necessarily mean that they do.
Proper planning and control is the key to any business whether it’s online or offline.
Take Care,
Steve
Hi Robert,
Funny you should mention franchises. I was talking to a chap about 4 months ago. He had just taken over a KFC just outside Bristol. I asked him just out of interest how much one was, $250,000 was his answer. WOW I thought, that is some investment. That’s a whole lot of chicken you have to sell. The story thickens. This guy has made millions buying existing franchises that aren’t doing to well. Gets the takings up then sells them on. He reckoned on a healthy profit margin. No figures tho.
Pete
Hi Kathy I really agree with you that the only way I am going to do it is to work online. Glad everyone talked me out of the wheelie bins ;-(
Rob
Hi Steve, planning is absolutley essential the advanatge of online is that you can really limit the risks, but its the planning part that is the crux to success and also just having a go!
cheers
Rob
Hi Pete, I think I agree with you that that sort of cash is too rich for me, it would be interesting to know how that guy managed to turn around the franchises. Perhaps he could make some money selling the plan to those that are struggling.
Cheers
Rob
Hi Robert,
There are Business and there are Business.
I used to help out my mum and uncle during my school holidays, at a Chinese Food Stall they run in Singapore. Business was great during that time. I was asked to help to wash the dishes, which seems forever during the peak lunch hours.
I HATED IT! The buckets and pails just kept coming.
I HATED IT! Especially when I had to clear the left over food before I can wash the dishes.
That horrible experience affect for more than 25 years til now!
But I am grateful for that experience because it made me to decide NEVER to be involved in the food business, franchise or no franchise. I love food, and I do share some passion in cooking, but food business, I have to say no thanks.
I think people wanted to start their own business for different reasons. Franchise and Subway is just one of the many ways.
But Real Entrepreneurs can never really consider to join a Franchise business because they love to be creative and always want to re-invent and do things different and better. This is not from me, but what I learned from Rich Schefren, the guru of gurus in a seminar playback video I watched.
Thanks for sharing this post and I look forward for your Part 2 to arrive.
Cheers
Jason Ser
Hi Robert, good post. Starting a traditional business costs most people their life savings. Then there is the risk, business is business. When starting any business there is always a chance it may not work because no one has a crystal ball. You must do research and make an intelligent decision.
Research and make an intelligent decision with an online business. The costs are almost nothing compared to traditional business so if it doesn’t work out you don’t lose your life savings. If you fail, you can even try again without giving up.
Terry Conti
Excellent post Robert, the problems you outlined is precisely why I like Internet Marketing. There are costs, but they’re miniscule compared to any other business.
Funnily enough when I closed my last Company down, I looked at all the franchises you mentioned. I also looked into the now-bankrupt Threshers retail chain. They wanted £30,000 franchise fee, plus you needed at least £20,000 for stock. So they wanted me to risk £50,000 for the priveledge of working 7 days a week, and employing myself for perhaps a £20,000 wage, if I was lucky….. NO THANKS!
Internet Marketing is the bees knees. 8)
John
Hi Terry the costs of an online business failure is really small in comparison to a traditional business, which reall makes it a no brainer for me.
Rob
Hi John its amazing that anyone will want to risk these amounts of money on franchises or even setting up there own new business, its just scarry if it all goes wrong.
Cheers
Rob
Hi Jason,
nice to get the perspective of someone who has been there and done it. I agree I think what you were doing would reall put me off this sort of business too.
I had the good fortune to vist Singapore a few years ago and I thought it was excellent, I have it penciled in to go back again.
Cheers
Rob
Hi Rob, How on earth do the franchises sell for that sort of money? Surely people realise the work that has to go into it, but i suppose having a big name over the door is pretty tempting for some.
As for bin cleaning, i have enough difficulty doing my own so wouldn’t relish the thought of having to get out of bed and do other peoples all day every day.
Looking forward to part 2 Rob.
I’ve created a twitter list to go with this challenge Rob, could you let me have your twitter name so that i can add you to it please?
R&R, Barry
Hi Barry,
don’t yet have a twitter account (dozy sod) but on the franchaise thing I do know of some body that bought into a property let franchaise about 7-8 yeras ago for £20,000.
It is quite likely that in another 7-8 years he will be a millionaire, they are out there but its finding the right one in the right area and making it work
Cheers
Rob
I guess it all comes down to find a need and fill it. That works online too. Still haven’t gotten it worked out, but I haven’t given up yet. Happy to be joining in with merry band. I see some names I recognize from the 100 comments challenge 🙂
Hi Rob,
I don’t know about buying a franchise to make the sandwiches myself for a living, but I could certainly eat them (that’s got to be cheaper) and still have some pounds left to start working online.
Let part 2 come.
Jose
Hi Rob,
It is quite a expense getting into a franchise…a Macdonals franchise I am told cost around 1 million dollars here in Australia.
It is so hard to believe that people spend so much money and time to go into business… Why not start from scratch…still cost a heap more than an online business.
Look forward to part 2…Good to meet you here… this is a fun idea the 100 post challenge..time consuming but great
Cheers
Bryan
Hi Bryan, I have learned so much from the challenge trying to get part 2 up today it will have soem great free content.
Cheers
Rob
Hi Robert
I’ve owned a couple of ‘brick and mortar’ business in the past – high risk, high overheads, long hours, never again!
I agree that eBay and Amazon are a good way to start an online business, lots of traffic there with credit cards at the ready. Then move on from there if and when you are ready to.
Best Wishes
Lynn
Hey Robert
Excellent post! You have done a great job in pointing out the pitt falls of running any kind of business.
Many people say that online marketing is easy, but I would beg to differ with this. Its true the initial set up cost can be low, but it is extremley competative and there are loads of so called Guru’s promising every thing under the sun but delivering very little.If it was that easy we would all be millionares.I Look forward to your further tips.
Hi Robert,
Great Post! Makes you stop and think, if I spend all that money on a Franchise business will I ever see a profit. Even more import, will I ever see my family and friends.
If I had to choose between cleaning wheelie bins and sitting at a computer, I certainly know which one I would choose.
Looking forward to Part 2.
Good luck with the Challenge.
Take care.
Robyn
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Hi Stan,
online is definatley not easy it took me over 6 months to crack eBay and 9 to become a powerseller, but this is harder much harder than that.
Then again there is always the smelly bins!!
Rob..
Hi Robyn it was a tough one but the coputer won out over the bins!!
Rob
That should be computer!!
Hi Rob,
Read part 2 as well.
I think I’d prefer a subway franchise to wheelie bin cleaning, horrible smelly things but now many houses in the UK have multiple bins, blue,green, brown etc just like Smarties; so you can call at the same house every day of the week I suppose?
I choose the PC as I had tried and lost too much money in conventional business however early days to my internet fortune.
Thanks again for the insight.
See you soon.
Richard
You can follow me on Twitter if you dare http://twitter.com/rich1d
Hi Robert
I had read that the top name franchises were expensive, but a wheelie bin setup for $16750, must be using vodka to wash the bins out, can’t be water at that price.
I have tried the ebay route and the Amazon method, whilst these are fine, you are tied into their policies and restrictions. I gave up on ebay last year during their policy change frenzy, just could not be bothered with it any more, plus my motto for ebay now is – ‘we have a fee for that’
Going on line and creating your own business is the way forward, this allows you to build better business relationships on your own terms, whilst avoiding the hassle of the delivery services.
igor
Hi Robert:
Nice post you have here.I know frehcise business is that expensive but you make decent money from the very beginning in it. Besides there is service frenchasing. It is less expensive. You do not have to work that hard, but hire minimum wages help to do the work and make profit from commission. You become the manager. Well that is the case with all frenchising business. You borrow the money for starting the franchise, start the business make profits and pay to the loan and frenchise expense. The rest you use.
That is why working from home is becoming so popular. But then if more people worked from home…. This tipic will never end. Back to our world of informative products and workig from home. Rober now I will like you to read my blog post and write a comment on my blog.
Talk again
Fran Aslam
Hi Igor these are really the things that have put a lot of people off eBay in particular thata why I have gone down this route, I do still use eBay but mostly as a lead generator these days.
Cheers Rob..
Hi Fran thanks for dropping by, I take your point about minimum wages startups and franchaising. Thats why I have turned to IM marketing where I am only responsible for myself and no one else.
Thanks
Rob
Hi Rob
We are so lucky to be living at a time when the internet gives us this choice.
I believe that true entrepreneurs will make it happen with or without the internet (as they have done for generations) but the low cost of online business gives the rest of us a chance we wouldn’t have had otherwise.
Hi Robert,
I would vouch for an Internet Business all the time. As I have both. My offline business does cost a lot but it is the bread winner at the moment.
There is far more advantages with an online business. Your shop window is out there for the whole world too see, not just restricted to your local high street.
Research, research, plan, plan and a little more planning. I know its boring but if there is no body there to buy your best stripy, digital loudest blowing whistle, how do you expect to sell any????
Cheers
Craig
Hi, Rob,
I am no longer wanting to trade hours for income. There is never enough time to make the desired income without sacrificing time spent on other areas. I prefer to trade products for income. I am learning how to leverage my time to create sites that will allow much more income than trading time for dollars.
Great examples in your post,
Fran T
Hey Robert,
Good blog post.
Franchises are always an interesting business model to look at but they don’t really interest me (for the reasons you listed).
Good read and good post.
Peace,
Darren L Carter
Hey Robert,
I think the cheapest way to start a business is with an 87 cents domain name and a hosting account with hostgator. A person could literally get started making money online for less than $2. I put together some videos on how to do it here.
Much Success
J
The Cartoon Coach
Hi Rob,
A great thought provoking post.
As someone who has ran a few conventional businesses I can vouch for the capital outlay required. I lost £30K on one and decided to return to my original service business – little capital required but very time consuming.
I retired awhile ago, got bored and decided to look at franchises in detail. The one I liked the most had a spend of £25K, I researched it and found I could set myself up in a similar start up for around £5K!
The other thing about franchises is most franchisors want 10% of the franchisees turnover plus a hefty franchise renewal fee every few years.
I only wish IM had been around all those years ago, it could have saved me a fortune and a lot of physical effort. It’s no contest really, which is the best way forward.
Regards,
Bill
Hi Stuart I agree I started by trading on eBay like yourself and expanded, I dont think I would have got so far just with a conventionalbusiness.
Cheers
Rob
Hi Craig I agree its boring but thats why so many of these fail, people just think you throw up a web site and the world will come to your door, they forgat about the promotion and driving traffic its an ongoing thing. We live in an instant society and people want instant results.
Cheers
Rob
Hi Bill, that does not suprise me I often think that soem of these are over priced. For someone with common sence and a bit of experience I am sure they could be done very cheaply indeed wheelie bin at £16,750 what for? Or a dog wash at £12,000 whats wrong with a hosepipe and some shampoo, about £10?
Cheers
Rob
Hi Darren, I know there are some good ones but it seems to me these are few and far between, then theres staff!!!!
Cheers
Rob
Hi Robert,
Good post and job comparisons.
In my opinion, it does not matter what you do as long as you do it well. You will find in every business you need to build it to reap the rewards. If working 7 days per week is what is needed to get your business off the ground then so be it.
In my experience this is the same for online businesses too. The more work you put in the more you get out!
Thanks for the good read Robert.