There are many choices for starting a business in Saskatchewan. You can choose to purchase an existing business, own a franchise, or start a brand-new business. View our Questions to Ask Before Buying a Business Guide for more information. There are advantages and disadvantages to each of these types of businesses.
Let’s look at each one:
Purchase an Existing Business
|Less risky than starting a new business||Large investment paid all at once|
|Product or service already market tested||Risk of bad reputation; poor location|
|It is easier to secure loans and attract investors||Risk of high competition and declining industry|
|Established brand: customers, contacts, suppliers, goodwill, staff, equipment||Poor fit – It can be difficult to find the right company to purchase|
|Established market for the product or service||Key staff may leave, and risk customer relationships|
|Experienced and trained employees||Major changes may be necessary|
|Faster start-up time||Potential hidden problems|
Source: Business Queensland
BDC has several articles on how to buy an existing business.
A purchased business is LESS RISKY if it is purchased at a fair price, managed well, and has shown a profit.
Own a Franchise
|Product and market research already done||High start-up costs – (initial investment)|
|Proven business model means lower risk||Strict rules and guidelines from the franchisor|
|Recognized brand||Ongoing royalty payments|
|Franchisor support such as training, marketing, and advertisement||Contractual agreements|
|Easy access to financing||Creativity can be limited|
|Access to increased purchasing power||High risk when you buy a lesser-known franchise|
Start a Brand-New Business
|Autonomy: You are your own boss and have full control||High failure rate|
|Flexible hours||Long hours and no guaranteed paycheck every month|
|Possibility to make more money than working for someone else||Managing stakeholders (employees, suppliers, clients) with different personalities and moods can be challenging|
|Job security: No one can fire you||Many responsibilities: doing all or most of the business tasks even if you are not trained to do it|
Source: Rich Dad.
If you are starting a brand-new business, it’s important to begin with a business plan. Visit SK Startup Institute’s Writing your first business plan webpage where you can download our Business Plan Checklist and our Business Plan Template. You’ll learn more about the importance of business planning and the free resources we provide which includes market research.
As a business owner, you will wear many hats: manager, marketer, bookkeeper, salesperson & more. Creating a business plan allows you to think about all those aspects and prepare for the hard work ahead. As a bonus, a complete business plan is an important document to provide to your banker if you are looking for loans for your business.