BY DANIEL FEININGER
You’re an entrepreneur on your way toward amazing business success with a head full of ideas from leaders like Jeff Bezos and a great business plan.
You have more than a couple of important key concepts for how to balance your budget, find customers, and build a reservoir of product or service offerings. Small businesses form the backbone of the American economy; this is a common refrain from consumers and politicians alike, and there’s a good reason why it’s so often repeated. There are over 33 million small businesses across the United States, accounting for 99.9% of all firms in the nation. It’s a key feature in any local community, and many provide a personalized service that can’t be replicated in the interactions between huge conglomerates and the customer.
Offering a key good or service and doing it at reasonable pricing is a great way to build rapport in your little slice of America. First you’ll need to establish yourself and your brand locally (or its equivalent in the digital sphere). However, there are still plenty of pitfalls in any business plan. From paying for inventory to managing marketing and expansion, there’s lots to plan for moving forward. Yet, the first hurdle that business owners have to navigate is the business itself. Plenty of businesses have become obsolete in recent years, and there are many ways to set yourself up for catastrophe right out of the gates. If you’re considering a new business, steer clear of these kinds of enterprises.
Opening a franchise
Franchise business opportunities offer entrepreneurs a unique avenue into the business world without having to establish their own brand power and user base. Countless businesses in the American corporate ecosystem offer franchise opportunities to interested prospective business owners, including shipping giants like UPS and restaurant titans like McDonald’s. Opening a franchise location gives you access to an existing client base that knows and trusts the brand. You’ll also gain access to the company’s proprietary or signature recipes, product offerings, and workplace processes. It’s easy, therefore, to think that franchise opportunities make for a great start when considering the launch of a new business.
But franchises come with plenty of strings attached that can stifle growth or even doom your business venture from the start. To launch a McDonald’s franchise, for example, you’ll need at least half a million in liquid capital, and should expect to spend over $1 million to launch (perhaps even over $2 million). Operating costs on existing franchises routinely reach over the $1 million threshold once established, so the going doesn’t get easier as you find your footing. Franchises can take in over $2 million in sales annually without batting an eyelash, but the expenses required to run a McDonald location severely eat into the profits you stand to earn. Launching a franchise means starting with some helpful resources but trading a large hunk of your profits for the pleasure. As a result you’ll be operating on the back foot from the beginning.
ATM networks
Setting up an ATM service network can seem like a uniquely profitable opportunity. ATM operators don’t need to physically trade in any specific business space, and these machines don’t function in the same sense that a brick and mortar store does. You won’t have to pay potentially astronomical rent prices to set down an ATM in a new location, and staffing the facilities isn’t an issue either. However, ATM’s offer razor thin profit margins and earning your money back (before turning a profit, that is) appears to require a time scale ranging between four and seven years.
In addition to the lacklustre financial performance that managing an ATM network provides, the actual business of managing these machines isn’t nearly as easy as you might think. ATM machines need to be refilled constantly, especially if they’re located in areas that see high traffic and plenty of cash usage like in a neighbourhood housing a sports arena. If your ATM is out of cash you aren’t making any money so refilling the machines is your main priority. Another potential sticking point comes into play here in the reality that you’ll need to cart around a lot of cash to do your job. This could possibly make you a prime target for criminal activity, putting you in jeopardy and placing your business in financial jeopardy at all times.
Print media companies
Digital is where it’s at these days. Print media companies large and small are experiencing significant downturns in physical readership, with a concerted shift to the digital media landscape taking priority across the marketplace. Print media is by no means dead, but its role in the marketplace of ideas, the news cycle, and in entertainment spaces alike has shifted dramatically over the last few decades. With the rise of the internet and the truly amazing kaleidoscope of roles that social media and search engines can play in the modern information age, print media is simply too slow to keep up. This isn’t to say that physical production in the contemporary world of information sharing doesn’t have a place. There’s something uniquely special about holding a book or picking up a newspaper, but getting into this business is ill-advised.
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Feature Image Credit: PeopleImages.com – Yuri A/Shutterstock
