#9 Investment Under $25,000 for 2007
There are three ways to start a business: start it from scratch, purchase an existing business or invest in a franchise. Risks are high in starting a business from scratch, but startup costs can be lower, and business possibilities—and potential rewards—are limited only by the investor's imagination.
Franchises and existing businesses offer a low investment way to get started. A down payment of $25,000 on an SBA loan will typically allow an investor to qualify for a loan of $100,000 to $125,000.
The lowest-cost franchises will probably be home-based or Internet franchises that don't require costly commercial space build outs, extensive inventory and high initial franchise license fees. Success rates in franchising are higher than those for businesses started from scratch, but they also generally offer a smaller upside potential.
Investors researching franchise opportunities should be aware of the distinction between franchise opportunities and "business opportunities" that are often listed on the same franchise search sites but which are not technically franchises. Such "business opportunities" can include things such as vending machine investments. Overall, business opportunities tend to be much riskier than actual franchise opportunities.
Where to find investments:
Franchise search websites or consultant companies can provide information about price ranges of various franchises. Some helpful search sites include franchisegator.com, franchise.com and franchiseforsale.com. Consultant companies include Murphy Business and Financial Corporation, The Entrepreneur's Source, FranChoice and more. BizBuySell and BizQuest are great resources for finding existing businesses, including franchise resales. (Also see NuWire's list of Top 15 Franchise Investments for 2007.)