Pros and cons of 3 best business options for sea changers
Sea or tree changing offers a great opportunity to run your own business and live life your way. No more working for the boss, putting all your effort into someone else’s financial reward. When you’re the boss, you get to call the shots, work the hours you choose and reap the rewards.
But going into business is no light undertaking. While the rewards can be immense, so too are the risks. If one of your sea change goals is to own a business, you need to research the alternatives to see what will work best for you.
Here are the best business options available to sea and tree changers:
1. Take Over an Established Business
An established business is one that’s already up and running. Its product or service offering, customer and supplier base and brand are known. The previous owners are selling and it’s important to find out why. Assuming the business is viable and successful; it’s already proven to be meeting its customers’ needs.
- You’re not starting from scratch. Cash flow will continue uninterrupted by a change in ownership.
- Strong relationships and goodwill with customers and suppliers can be built on from the previous ownership. Investing in an existing business demonstrates your commitment to the community and people will be keen to meet the new owners!
- The opportunity to put your own stamp on it. Look at the business critically to identify what it does well (build on); what it could do better (change) and what else you could offer (add).
- An existing business may initially cost more to buy, based on how much the previous owners have invested, capital, turnover and goodwill.
- The established identity of the business will naturally change under your ownership which takes time and money. In country areas where relationships are often more personal, the locals may take a while to adjust to new owners and any changes they make.
- If you’re purchasing a business which has experienced difficulty in the past, you’re also inheriting its problems and history. Although not insurmountable, it’s worth finding out all you can and developing a plan to overcome any negatives.
2. Buy a Franchise
Franchising is basically using a parent company’s name, offering, trademark, brand and systems. Also known as a ‘turn-key’ business, it is most common in the retail (Woolworths, Pizza Hut), trades (Jim’s Mowing) and service (H&R Block) industries.
- If you’re new to business, franchise models provide much of what you’ll need to run the business. This includes a pre-determined structure, systems, procedures, training, a franchisee support network and a proven business model.
- Allowing it’s a business that is welcomed by your local community (see Cons), the risks are lower. The franchisor (who shares the risk) will establish that there is a viable market and help you get up and running.
- Standardisation is the key to franchise based businesses so there are fewer decisions to make which reduces overwhelm.
- Can be costly to buy. Although it varies greatly depending on the franchise, start up costs can range from $50,000 to $200,000 or more for well established brands.
- Because they operate on standardisation and consistency, the scope to expand your range or do things differently will be limited.
- Well known brands may not always be welcomed by local communities. For example, the small village of Tecoma in Victoria’s Dandenong Ranges has been vigorously protesting against the arrival of a new McDonalds. While it will attract more visitors and provide employment, the locals are worried about the potentially negative impact on this quiet, low key hillside village.
3. Start a New Business
Potentially the riskiest and yet most liberating option, creating a business using your interests, skills, strengths and knowledge is both scary and exciting!
- Opportunity to make a living doing something you believe in and are passionate about. If you know the kind of difference you want to make, starting your own business can be professionally and personally fulfilling.
- Start-up costs can be relatively low and you can grow the business over time. Starting small enables you to learn and expand at your own pace.
- Discover a niche and fill an unmet need within a new community. Sea Changer Andrew Taylor did just this when he moved from Melbourne to Noosa and next month we’ll be sharing his story.
- The survival rates for new businesses are significantly lower than established businesses. However, this depends on how you define failure. Latest statistics suggest that just over half of new businesses are still around 4 years later.
- It’s hard work, particularly in the first few years! Starting from scratch brings a steep learning curve. There are many hours to put in and decisions to make. This may be counter-intuitive for sea-changers wanting a more relaxed, slower paced life.
- Without the right support and information, the risks of getting it hopelessly wrong are much higher. Many business owners will tell you that seeking help early from those who have knowledge and expertise you don’t have, is the best way to create a profitable business.
Whether you’re looking to establish a business as your primary source of income or wanting to build a part-time, lower overhead type business to supplement your income, it’s wise to go into it with ‘eyes wide open’.
If you need help to make the switch from employee to business owner, contact me now at Possibility to Reality to discover your best option.
- Are You Cut Out to Run Your Own Business? – Sea Change Success Quiz
- Franchise Council of Australia
- Which Franchise Australia
- Plan & Start a Business
- Grants & Assistance