Evaluate Barriers Before Purchasing a Business Support Franchise

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How do I evaluate barriers to entry before purchasing a business support franchise?

Evaluate Barriers Before Purchasing a Business Support Franchise

The ability to create a business in any given field is often defined in terms of “barrier to entry” or what is required to enter and successfully compete in a given business environment. For example, in a manufacturing industry it typically requires a heavy investment in machinery, distribution channels and other significant start-up costs. One of the attractive features of a business support franchise is the lower initial costs associated with a service related industry.

Still, barriers to entry can be friend or foe for any new business owner so it's important to evaluate the pros and cons related to the business support franchise you are considering for purchase. Let's quickly evaluate some of the more common barriers to entry while reviewing the positive and negative aspects of each. This short tip list you should provide you with a better understanding:

1. Start-up cost. The initial investment required to purchase a consulting or business support franchise can range from $20,000 for a Business Round Table franchise to an excess of $250,000 for a PIP Printing & Document Service franchise. The higher the initial cost the fewer people can typically qualify, but a great deal depends upon the franchise itself. Many franchise operations provide various levels of financing or have a proven track record that enables the buyer to obtain favorable financing.

2. Prior Training. Individual knowledge and expertise is also a common barrier to entry. Although many franchise operations provide full training and requires little to no prior experience, other franchise operations require specialized skills, knowledge or prior training in order to own and operate. Franchise operations that require specialized skills or training may prove a good choice for those who may desire a change of career or small business ownership. Those with minimal training or who are making a career change would do well to investigate franchise opportunities that provide internal training opportunities.

3. Exclusivity, including geographic territory rights. Sometimes being the first in the area is enough of an advantage to win over all the available business, simply because there isn't another provider!

   

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