5 options for starting a business

The dream of becoming an entrepreneur attracts many people, but starting your own business from the bottom up can be daunting. Some alternatives provide many benefits of becoming a business owner while avoiding some of the disadvantages of starting a business.

By exploring some alternatives, you may be able to find a solution that can provide you with the experience you are looking for while minimizing the difficulty of starting a business. If none of them caught the itch, maybe it’s time to roll up their sleeves and build the business from scratch.

Learn about alternatives to start your own business

Invest in other people’s startups

Although it may not have the same appeal, investing in startups and mature companies can be as profitable as operating them. Publicly traded venture capital funds scout and invest in start-up companies to create business portfolios that may expand their scale. With just one investment, you can access a wide range of business portfolios that have been tested by venture capital firms.

Key points

  • Active alternatives to starting your own business-those that require you to put in some sweat, but with much less entrepreneurial effort-include in-house entrepreneurship, finding partners or buying franchise rights.
  • A more passive alternative to starting your own business (a business that you own by investing in a business) includes investing your funds in existing businesses, start-ups, or venture capital companies that fund these start-ups.

At the local level, there is usually an opportunity to directly invest in companies that you have a certain understanding of you, whether in your area or your personal network, these companies can exchange equity for your investment.

If the business succeeds, both types of investment have a risk level that matches the potential return, so it is important to thoroughly study these opportunities. Investing through venture capital funds is the least interference of these alternatives. You don’t have to quit your job, open an office, or hire employees—you just need to buy stocks.

partnership

You can consider becoming a partner of an existing company instead of investing in a company in exchange for equity. This may mean engaging in daily work in a company—focusing on things the founders don’t have time to do, such as marketing or finance—or it can be a more non-interfering role.

This can provide you with entrepreneurial experience, minus the start-up phase, and allow you to choose the type of work you want to do. Even if you are absolutely ready to start your own business, the right partners can make the entrepreneurial phase smoother, depending on the experience and skills they bring.

Intrapreneurship

Another option is to become an entrepreneur in a larger organization. Some companies have structures that encourage employees to develop new business lines in exchange for equity or bonuses. If you can find a company with a strong innovation culture, you can build your own business in it. The advantage is that you have start-up capital from the beginning and you have less personal risk.

You can even start an internal business plan by requiring a certain percentage of your time to be spent on pet projects with a bonus structure. To support your argument, you can point to companies like 3M, Intel, and Lockheed Martin. When intrapreneurship defines corporate culture, these companies have seen some of the greatest growth. Intrapreneurship can provide some of the same benefits as entrepreneurship without forcing you to give up the security of your daily work.

Buy franchise

The business in the box is a way to avoid the many hassles involved in starting from scratch. Essentially, franchise owners are following a script that has proven successful elsewhere. The benefits of franchising include recognized brands, available resources, and economies of scale created by the franchise network.

The disadvantages of franchising are mainly the initial purchase cost and royalties, which can be expensive. People who want a true entrepreneurial experience can also have problems with the restrictions imposed by the franchise office in terms of creative control. In other words, compared with most start-ups, franchising has a stronger support network and generally has a higher success rate.

Purchase an existing business

Buying a business that is already operating and profitable is another shortcut. There are some obvious benefits, such as less time spent in the planning and creation phase, infrastructure (such as already in place), and existing customers that recognize the brand.

The main disadvantage is that the cost of obtaining a profitable business is usually much higher than the start-up cost of similar businesses. This fee reflects the efforts of the founders, plus additional fees charged to prove its viability.

If you choose this route, it’s important to conduct due diligence, such as confirming all revenue data and finding out why the sale of ownership of a seemingly successful business is successful.

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