Which Option to Choose When Starting a New Business

One of the most important decisions an ambitious entrepreneur faces is whether to start a business from scratch or open a franchise. Both options come with a range of advantages and challenges, and fully understanding each can be crucial when launching your venture.

From simpler business management to operational freedom, from contractual limitations to the risks associated with starting a new enterprise, we’ll explore these two entrepreneurial paths and uncover the pros and cons of each option.

Starting Your Own Business: Advantages and Disadvantages

An entrepreneur who decides to start a business from scratch embarks on a growth journey built on strong confidence in their business idea and ability to position themselves in an ever-changing market. The main advantages of starting your own company include greater autonomy in decision-making: entrepreneurs have full control over all aspects of their business, from strategic vision to managing day-to-day operations. This independence allows you to tailor your commercial offerings according to your entrepreneurial vision while ensuring a fast and timely response to shifting market dynamics.

However, full independence in managing a business also comes with significant responsibilities: entrepreneurs must face every challenge themselves, whether financial, operational, or strategic. Without a pre-established model for addressing challenges, finding and retaining new customers and building lasting relationships with partners and suppliers can be more difficult.

Anyone who chooses to start their own business, unlike a franchise, must bear all the initial investments, which are often substantial but necessary to launch the company. Additionally, the absence of an already established brand requires significant investment in marketing and communication campaigns to build brand recognition and gain the trust of potential customers.

It is therefore not surprising that the failure rate for new businesses is high: according to the U.S. Bureau of Labor Statistics, about one in five newly established companies fails within the first year of operation. Furthermore, the U.S. Small Business Administration identifies the main reasons for business failure as lack of capital, ineffective marketing strategies, and insufficient knowledge and experience to grow the business.

Starting a Franchise Business

If you choose a franchise business, you can launch a new company leveraging the strength and market position of an already established brand. The limitation on decision-making autonomy is largely offset by easier business management: the entrepreneur can focus on growing the business even without decades of industry experience.

In exchange for an initial fee and possibly a percentage of revenue, franchisees benefit from significantly reduced business risk. This includes lower costs for launching advertising campaigns and purchasing equipment and furnishings, which are often provided by the franchisor.

Additionally, entrepreneurs who choose to start a franchise can take advantage of commercial agreements that the brand has already established with partners and suppliers, further supporting business growth. This model is also ideal for those looking to expand into international markets while minimizing initial investments: the brand typically provides the necessary expertise and local partnerships to establish operations in a new country, reducing risks to a minimum.

Finally, franchisees often gain greater credibility when dealing with financial institutions, making it easier to secure funding to start their business. Banks tend to view the established, low-risk business model of a franchise positively.

The Mail Boxes Etc. franchise offers entrepreneurs a secure, proven business model in over 40 countries worldwide. Collaboration with local partners allows us to provide personalized services tailored to customer needs.

MBE’s logistics and marketing services help entrepreneurs focus solely on growing their business, while taking advantage of the expertise and guidance offered by a large network of specialized professionals.