Owing or Buying a Business

To most people owning a business and being your own boss seems like the ultimate dream come true.  It can be awesome, or can be an absolute nightmare.  Owning a business is not a license to print money nor does it mean that you get to sit back and do nothing while watching the money pour in.  The truth is that business owners work harder and longer than employees do.  While business owner aren’t necessarily shoveling snow or cleaning toilets that does not mean they are not working.  This is the first thing that you should be aware of.  Owning a business means that you will work harder and longer than you ever have in the past (assuming you want the business to succeed).


A Franchise is one way to start a business.  This involves buying the rights to an existing business like Subway, McDonalds, Wendy’s, Tim Hortons, and many, many, others.  The good thing about buying a franchise is that you instantly have name recognition, advertising, and public acceptance.  In addition, you do not have to figure out things for yourself as franchises usually have processes, procedures, and instruction manuals for everything.  The downside is that franchises usually cost a lot of money.  For example, last I heard one of the above franchises cost $2.5 Million to buy.  That is for a single location.  You still have to buy or lease a building get product, hire people, get insurance, business license, food inspection, and on, and on.  There are also rules.  If you do not maintain quality standards, keep up on your payments, etc, then you can lose your franchise.  In short owning any franchise will cost you money just to get started and you will have to pay a certain amount each month or year to the franchisor.

Purchasing Non-franchise business

Similar to purchasing a franchise you are buying a business that someone else has started, established quality and name recognition.  This hard work is what you are paying for, as well as any assets the business may own (equipment, patents, inventory).  You can either buy the “business” or buy the “assets” of the business.  I will cover the tax consequences and reasoning behind this choice in another blog.

Starting your own business

This method of business ownership is the cheapest and easiest to get started.  However, starting a business means you have to do all the trial and error, make mistakes, learn from them, learn from them again, and try to perfect your methods.  You have to devise your own processes and procedures, develop your own training methods.  Starting a business from scratch will take time and effort.  It also usually takes time before you see income coming in that will exceed your monthly business expenses.  This means you better have available cash to get you through the start up period, and the ups and downs that all businesses go through.


Business ownership (no matter which method you choose) comes with a large degree of risk, involves laying out money to get started, involves a commitment of epic proportions, and requires that you have monetary resources available to get you through lean times.  Starting a business may seem easy, but it is anything but.  The decision to start a business should NOT be made lightly or impulsively.  This is not a quick fix for someone who has recently lost their job, and will rarely provide instant cash now.   In fact as stated above, starting a business usually requires spending money, which is the last thing you want to do when you don’t have any.    There are always trade shows, franchise shows, and presentations that will tell you how easy it is to "be your own boss".  The truth is quite the opposite.  It is not easy!  It is not all sunshine and bunny rabbits!  Tread lightly and do not make any desperate or rash decisions.