Choose a Type of Ownership

There are many forms of business ownership. Each has its pros and cons, as well as its risks. There are three basic ways of going into business for yourself:

• Build a business from scratch
• Buy an established business
• Buy a franchise

Download this chart in printable format (.pdf)

Method	Advantages	Disadvantages
Build a business from scratch	You make all your own decisions You can be as creative as you would like	You have to do everything yourself New businesses are very risky - many don’t succeed
Buy an established business	The business is already set up There is an established client base The business has established name recognition May be less risky than a brand-new business	The business may have problems you are unaware of Your business reputation depends on the reputation of the previous owner, and it may be tough to build your own reputation
Buy a franchise	You receive the support of the franchise network Generally lower risk than the other options The business has an established reputation and marketing plan You may receive training and financial support	Usually offers less freedom than an independent business May be expensive Your reputation depends on the reputation of the other franchise owners

Choose a Business Idea

You might have a sure-fire winning business idea right off the bat, especially if it’s something you’re especially skilled at. On the other hand, your first idea might not be your best idea. Remember your first school-kid crush? See what we mean?

Even if your first idea is your best idea, you’ll sleep better if you know you’ve thought your options through and planned carefully. Take time to explore other options before you race off in pursuit of fame and fortune. For some thought-starters, check out the Business Know-How site.  Remember when choosing a business to look for something that:

• You know about and can do well
• You like to do (you’ll be doing a lot of it!)
• Has a potential market large enough to support the sales you’ll need in order to be profitable

Research Your Business Idea

Asking yourself a lot of questions here will help you spare yourself the agony of asking more painful questions later. Start with these:

• What will you sell?
• How much do you know about the business? Will you have to spend extra time and money teaching yourself the business? Will you need a partner who knows more?
• How much experience do you have in this type of business?
• How unique is your business idea? What does the competition look like?
• Who will buy your product? How often?
• What laws govern your proposed business? (Check federal, state, and local statutes.)
• What will it cost to produce, advertise, sell, and deliver the product?
• Can you make a profit from your business?
• How long will it take to make a profit?

Avoid Get Rich Quick Scams

Remember the age-old rule: if it looks too good to be true, it probably is. The Federal Trade Commission can help you avoid the thieves who prey on people looking for quick, easy money. For information, check out their site.