Three Disadvantages of Building a Startup

Entrepreneurs building a startup

Nowadays almost every person with even the smallest business proclivity has their eye on building a startup. Instead of purchasing a franchise from a tried and tested brand, they prefer the idea of making something from scratch.

What their business enthusiasm fails to factor in is the many drawbacks of such choice. For instance, these three:

1. Building a business operation model

The best thing about buying a franchise is you get an existing business operation model included with your purchase. This is most beneficial if you do not have sufficient background in business administration.

Starting a business from scratch, on the other hand, means you will have to whip up a business model — from daily operations to small business marketing — that may or may not succeed in your chosen market.

2. High marketing costs

With a startup, you are introducing a new brand. This means you are on the starting line in terms of marketing. Marketing costs can easily take up as much as 25 % of your initial investment.

With a franchise, you have the advantage of an already known and trusted brand that does not require a gargantuan marketing budget to generate sales.

3. Lack of big business support

Building a business from scratch means autonomy. This also equates to you not having access to big business support. For instance, you are responsible for training your pool of employees and therefore are responsible for developing a training programme — something easily at your disposal with a franchise.

The idea of a startup always looks good on paper. But, it is an entirely different creature once transposed into the real world of business.

Not only are you competing with already established brands, but you also have to deal with other startups intent to take your share of the remaining business pie. If you want more security for your investment, franchising is your safest bet.