“I’ll take one pound of ham and one-no make that two-pounds of thinly shaved smoked turkey,” said a slim elderly woman who was little higher than the full cart of groceries she had pushed over to the meat counter.
Sam nodded as he picked up the last pair of latex gloves. It was a long, hot day. And he was just glad that Mrs. Parnick was his last customer. Normally he didn’t mind filling in after butchering for the day, but today seemed so long and boring.
While driving home, Sam began to muse over the situation. How could he make more money? What skills did he have other than butchering?
Then while waiting at the last stop light, his eyes caught the scene at the corner sub shop. “Look at that woman’s carryout bag-must be dinner for the family,” he thought. “And Grandma and Grandpa are heading in for dinner-whoops Pa not so fast; Ma’s trying to keep up.”
Scrutinizing the place, Sam thought, “It’s fairly well kept, and business is solid. Moms, Dads, kids, and managers-all sorts of people-bustle outside with their dinner. They are satisfied. The owner is, too, and boy do I wish I were the owner!”
Perhaps Sam’s fantasy is quixotic, but he has it, nonetheless, and he’s probably not alone. How about you? Has the thought of owning your own fast food restaurant, auto body shop, or retail store ever crossed your mind?
You can ascertain whether or not franchising is for you by asking some of the owners of your local franchises what the cons are. (Bring a notepad and pen.) To help you get started, here are few as compared with a typical home business.
Investment Requirements
First, let’s compare standard investment requirements. Franchise investments usually run anywhere between $60,000 and $500,000. This includes basic things like your land, building, machinery, and office equipment. That’s a lot of capital, especially in today’s financially turbulent times.
A small but solid home-based business will cost you considerably less because you won’t have the added expenses of land and building. Start-up cost is typically between $1,500 and $3,000.
Operating Expenses
In a franchise you will have to pay employee payroll, payroll tax, workers compensation, insurance/inventory, liability insurance, utilities, freight/postage, ad valorem tax, licenses/permits, advertising, telephone, franchise fees, depreciation, and sales tax just to keep the lights on.
For a home-based business, your expenditures are reduced but still existent. You will usually have to pay for liability insurance, utilities, telephone, advertising, and depreciation (e.g., office equipment).
Additional Considerations
And here are a few additional things to consider: Your gross franchising profit generally averages 30-40% with a net profit of around 5-10%. You will work at least 50 hours per week-closer to 70 and maybe even more. You shoulder 100% of the risk factor and leverage none of the compensation from others-that’s what you’re doing for your chain store. You will have tax advantages, but these will be offset by your unchangeable time commitment, need to supply products, and confinement to a fixed location as well as limited income potential which averages out to $35-85K.
With the right home business, you can make more gross and net profits working a flexible schedule and leverage your income to unlimited potential.
The light turns green. As Sam pushes the accelerator, what would you tell Sam to do?