When entrepreneurs mention they are considering business formation, many advise them there is less risk in purchasing a franchise. But a study by Tim Bates at Wayne State University indicates that independent business startups could be more profitable.AllBusiness.com reports that the study – which analyzed more than 20,000 new small businesses – shows that franchises have become overly saturated and leave entrepreneurs little room for success. New business types, on the other hand, take advantage of holes in existing markets and catch consumers with innovation.
Additionally, AllBusiness.com points out that an independent business gives entrepreneurs the advantage to shape as they will. Venture Hacks suggests that a startup business’ ability to strategically develop around consumer needs is essential to growth. Franchises allow for less flexibility.
Moreover, independent businesses might surprisingly offer entrepreneurs smaller needed startup funds. Bates’ study found that the average capital investment of franchisees was $500,000, compared to $100,000 for independent entrepreneurs.
With this in mind, entrepreneurs who want to get started on their own companies can seek guidance from professionals at an incorporation service to learn how to incorporate their businesses.