Is Network Marketing a Better Business Choice than a Franchise?
Common dreams for people include becoming their own bosses and gaining the freedom to do whatever they please. Starting your own business seems like an ideal way to achieve these goals, but it is important to weigh all of the options. One business opportunity is to buy into a franchise and become your own boss. Franchises are more manageable for people who are not too familiar with starting a business from scratch. For those who want more freedom in their lives, network marketing is a great way to create a home-based business while making a difference for others.
Benefits of a Franchise
In order to make an informed decision, you must first consider the benefits of buying into a franchise. With this business opportunity, you gain the right to use a trade name that is already well established in the eyes of consumers. Customers are familiar with the business and accept the products or services you will sell. You do not have to spend the time and money marketing your brand, so you will see profitable returns sooner. Most franchises offer special training to help you succeed with your new business, and you will have readily available support for all types of problems. Starting a new business without this backing can prove difficult, and you would have to rely on your own skills and resources to run things smoothly.
The franchisor will also manage national advertising for you, so all you have to focus on in the marketing department are local ads. A franchise will come with an established system for ordering supplies and bulk discounts. If you ever decide that you want to sell the franchise, the franchisor can help you find a buyer. This business opportunity is a good stepping-stone for entrepreneurs who are not completely familiar with the duties of management.
Why Network Marketing may be a Better Option
While buying a franchise is easier than starting a whole new business, there is a better opportunity that can grant you more freedom and an ideal lifestyle. Network marketing, or multi-level marketing, allows you to create a home-based business with several perks. When you work from home, let's say in a party plan style business you instantly gain a number of liberties. You can let go of the nine-to-five work routine and conduct business on your own schedule. Home-based businesses allow you to spend more time with your spouse and children. The money you save on daycare can be better spent on home improvements and education. When you choose the lifestyle of working from home, you will be surprised at how much extra time you have everyday to do the things you have always wanted to.
Network marketing opportunities like a coffee home party business offer much cheaper start-up and ongoing costs than buying into a franchise. You are the only employee, so you do not have to worry about payroll or settling internal disputes. You will not need to be an accounting genius because there are no accounts payable or receivable. With a home-based business, there is no inventory to manage, so no time or money will be wasted on sourcing products and organizing storage space.
The greatest appeal of MLM style home party plan businesses is the lifestyle benefits. You make all of the decisions and work whenever you want to. Within one to three years of starting a network marketing business, people have seen residual income of about $5,000 per month. That amount of money allows you to afford dream vacations and other lifestyle desires, and you have the freedom of time to take your family to any destination. With a home party plan business, you will no longer be tied down by schedule conflicts. You decide what products you want to promote (e.g. healthy coffee and tea), the hours you want to work and when to take some time off to recharge your battery.
Network marketing allows you to work independently or within groups of other entrepreneurs like you.
This business opportunity does not require you to have any sales abilities, and the large market of consumers already exists. You will be helping other people change their lives while you achieve your dreams by working from home.
Franchising: Is there a better alternative?
Are you ready to start your own business and enjoy greater financial security for your future? If so, you may see franchising as your best option for transitioning from employee to business owner. There is no doubt that many new businessmen and women have successfully changed their financial lives by branching off of successful businesses, but that doesn't mean that becoming a franchisee is the best option for you.
Advantages of Franchising
Beyond raising the start up capital to buy into this type of business arrangement, there is little thought involved when setting up your new business. Your new restaurant or store must adhere to the image already created by the franchisor. Every detail from the color you paint the walls inside your store to the items you feature on the shelves or on the menu will be dictated by the brand already established by the franchisor. This makes it simple to set up a business that has a good chance of succeeding.
Most franchisors provide detailed training to ensure that franchisees develop profitable businesses while conforming to the brand. If this is the first time you have established your own business, you may feel more secure doing so when you have a large company steering you in the right direction. You don't have to trust your own creative mind to come up with solid branding or advertising strategies, and you never have to redevelop your products or menu items. All of this is handled for you as a franchisee.
While many new businesses struggle to attract and retain paying customers at first, franchisees often experience a rush of business from the first day of operation. It doesn't really matter that your location is new because consumers will see the sign outside your establishment and know instantly what you have to offer. Consumers that frequent other locations within your brand will stop into your location when they are in your area. Franchisors work hard to ensure consistency between locations so consumers will see them all the same.
Disadvantages of Franchising
The advantages listed above are actually seen as disadvantages by many people. If you want the freedom to come up with creative ideas for your business or want to establish a business that is unique, franchising is not an ideal business model for you. While you may receive valuable training from your franchisor, the goal of that training will be to keep your business in line with the brand that has already been established.
Beyond the restrictions that come along with franchising, this is not a budget-friendly way to start a new business. The required start up capital can soar well above $100,000 with some programs demanding a million dollars or more upfront. The price you pay to buy into the franchise agreement often will not include buying or renting space for your business and purchasing basic supplies to get your doors open.
One other disadvantage to starting this type of business is the amount of time you are expected to spend getting your business off the ground.
Even though you will have an easier time marketing your business due to recognition of the franchise, it takes a lot of time to set up a brick and mortar business. If you are currently working a full-time job, you may struggle to get your new business off the ground without giving up the security of your day job. In most cases, this is not the type of business that you can operate as a home based business.
A Promising Alternative
There is an alternative to the franchise business model: multi-level marketing, otherwise known as MLM or network marketing. This business model allows you to become a distributor of a product that has already been established by a reputable company. You can benefit from all of the advantages gained as a franchisee while overcoming many of the disadvantages.
You can expect a good MLM product to have some level of branding in place so consumers at least recognize the product or know what your business has to offer. That is an advantage that franchisees also enjoy, but you will have greater freedom to develop a unique structure for your distributorship business. You will have free reign to market your business however you like, as long as you do not represent the products or business in a negative light.
Network marketing requires every distributor to sell the same products, but they are encouraged to do so in their own creative ways. Your network will not tell you what color to paint the walls in your office or what uniform your employees must wear. In fact, you can operate a profitable network business without hiring any employees.
You will not need as much start up capital if you decide to become a distributor rather than a franchisee. You will pay a small fee to join your network, and some networks may require an annual fee or participation in conferences. You may also need to purchase the product in advance so that you can deliver it to your customers as you make sales. There are some network businesses that deal exclusively with digital products so that you do not need to make advance purchases. The total amount of start up capital needed will vary by network, but you can guarantee it is much cheaper than becoming a franchisee.
You can operate your network business entirely online if a home based business fits your lifestyle and personality better. This means you can work out of your home rather than paying for store space. It also means you can work in your free time so that you are not forced to sacrifice the full-time job that currently pays your bills. As your new home based business becomes more successful, you will have the option to go full-time. If you are currently unemployed, then a home based business may be the only thing you can afford to start right now.
You will still need to invest time in your new business, but it is much easier to do that with the flexibility offered by the network business model. You can also get your business started faster this way since you have the option to do it all from your computer rather than setting up a brick and mortar storefront.
Franchise vs. MLM: What Will Work for You?
If you have the start up capital and free time to become a franchisee right now, ask yourself whether you are ready to commit your life to operating a business that someone else has a lot of control over. If you know that you would rather have complete freedom to operate your business as you see fit, then you may want to consider joining a network rather than starting a franchise.
You may also choose network marketing if you want to feel like a member of a team and have great flexibility to expand your business with time. As a franchisee, you are limited to the products and services promoted by your franchisor. As a distributor, you have the freedom to join as many networks as you want. You should start with one good product, but with time you can start promoting other multi-level marketing products to spread your income potential across multiple channels.
If you don't have at least $100,000 to start your business, then MLM is probably the best business option for you right now. Most network marketing distributorships cost less than $1,000 to start, so you can stretch your start-up budget much further with this option.
If you have a full-time job and need to get your new business off the ground before you quit that job, then MLM offers the flexibility you need to balance this new business with your current job. There is much less risk involved if you can keep that job while taking your new business to a profitable level. If you work hard at network marketing, the day will come when you can quit your day job and enjoy the rewards of self-sufficiency.
There are actually quite a few similarities between these two business models. Some franchisors may have relaxed rules that give franchisees more freedom than normal. There are some networks that have strict rules that make distributors feel more like franchisees. You should consider all of your options in both of these business models before you make your final decision.
Ideally, you will start your business around products that you would use yourself and give out as gifts to your loved ones. If you believe in the product, receive the training and support you need for success and can work comfortably with the structure of your business agreement, then you have made the right decision.