Owning a Franchise - The Price of Success

A fundamental rule of business is that it takes money to make money. In other words, unless you are prepared to make an investment in a profit generating enterprise, the likelihood of success is remote. What differs, however, is the amount of that investment, and how it is leveraged. Some business opportunities provide a much greater degree of leverage, and hence a much better return on investment (ROI) than others.

We'll talk about some of these investment options in a minute, and they are pretty straight forward. What's not so clear-particularly to fledgling entrepreneurs however-are what some business people call "soft costs." Soft costs are expenses that are incurred but not actually paid for in terms of writing a check or handing over cash to someone. But they are very real costs just the same.

An example of this kind of expense is an opportunity cost. For example, when launching a new business, the entrepreneur faces a learning curve in terms of how to profitably operate the business. The money that vanishes due to this trial and error process is an opportunity cost-in other words, if the entrepreneur already knew how to run the business without making mistakes, they'd make more money, earlier in the process.

So now back to business investment. Many entrepreneurs choose to purchase a franchise in order to eliminate the opportunity cost involved with the trial and error approach to running a new business. Not only does the franchise business model allow the business to become profitable very quickly, it also-in theory at least-enables the business to reduce longer term risk of failure. By buying a franchise, the entrepreneur is essentially paying for expertise. Sometimes the approach works-and sometimes it doesn't.

The problem though is that most traditional franchise business opportunities are designed to be run as brick and mortar businesses, and here's where the investment soars through the roof, because anything involving bricks and mortar is expensive. Owning a franchise is a capital intensive way to start a business, and even at that is not a guarantee of business success.

Instead of this approach, today more and more entrepreneurs are learning how to make money on the web, using a system such as CarbonCopyPRO. Although a modest capital investment is required, it is far less than that of a typical brick and mortar franchise, along with a much higher probability of success. For anyone who wants to launch a business without spending several hundred thousand dollars, it's a highly recommended approach.

Zack_A_Miller

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