An exploration into the different types of business opportunities in the UK, including franchising, start up and business for sale.
A business opportunity takes many forms and is the chance to leverage a market for entrepreneurial success. There are many opportunities for business in a wide range of sectors. From food to pet, you’ll find business opportunities in every possible sector. If you are looking to get into business ownership, there are a number of ways you can do so. When considering becoming a business owner, you should be prepared to make a financial investment. Making sure you invest in a market that you’re passionate about is a must and how much you need will depend on the sector you wish to get involved in.
While the financials are one of the biggest setbacks and put offs for first time entrepreneurs, getting into business ownership isn’t necessarily as expensive as you may think. There are many business opportunities you can start for less than £10,000. It is also possible to get started for less than half of that. Many banks and financial institutions are eager to help individuals get into business ownership. In fact, banks such as Barclays, NatWest and HSBC are actively involved within franchising, and which ever route you take to business ownership, there are many startup loans available such as the eponymous Start Up Loans from the British Business Bank.
Why Become a Business Owner?
There are many reasons why you might want to become a business owner. Lack of employment satisfaction is usually a primary factor, catalysed by poor salary, lack of flexibility and all round lack of control. Becoming a business owner usually unlocks greater freedom and earning potential and running a business isn’t necessarily as difficult as you might think. There is now more support than ever for new business owners, and whether you choose to go down the franchising or startup route there are plenty of resources out there. Some incredibly useful resources for new entrepreneurs include:
- Federation of Small Businesses – A membership organisation with access to many templates for business owners, whether you are self employed, employer or not.
- British Business Bank – Loan up to £25K repayable over up to 5 years, more than enough time given many franchisees turn over six figures a year.
- British Franchise Association – With regular events to help those involved or looking to get involved within franchising. Members pass rigorous checks to ensure suitability for franchising their business.
Whether you’re someone who is looking for a lucrative opportunity to harness the potential of unlimited earnings, or you’re a parent looking for greater flexibility, there are business opportunities for everyone. Here’s how you can get involved!
Startup Business Opportunities
Starting up a business from scratch is usually the first to spring to mind when one thinks of business ownership. You have complete control over the direction of the business. The brand, what you sell, and how you market is all within your full control. Through creating a thorough business plan, it isn’t difficult to secure finance or loans to help you start up your business if possible. The first biggest risk though is underestimating just how much money you might need to get started. Spend some time thinking about the costs involved with starting up a business from scratch. If you’re looking to run an owner-operated business like an oven cleaning business opportunity, you’ll need to find a supplier of equipment. Not to mention a suitable van lender or seller. If you’re looking to run a high end business like a restaurant, you’ll need a suitable premises. Food provider, store fitting contractor and employees will need to be taken into consideration.
When starting up a business from scratch, it is recommended that you work with a lawyer. For there are many trademarks and legal pitfalls you risk falling in to. The last thing you want is to create a brand that violates an existing trademark. You’ll need to spend time creating a brand that is unique and all marketing follows the same layout.
Carry out due diligence and explore the market. Is your trade in demand? Understand your unique selling points and create a marketing plan to help you.
Pros and considerations of starting up alone:
| Pros | Considerations |
|---|---|
| Full control over the brand | Lack of know-how and training can trip you up |
| Complete flexibility over operating the business | Entering a competitive or saturated market leaves you at risk of lower profit margin when pricing your services competitively |
| No imposed boundaries for operating territory | General survival rate for startups after five years is 40-50% |
Franchise Business Opportunities
Franchising is a great way to get into business ownership, because you are using an established brand and business model. Without having to reinvent the wheel, franchising gives you access to a proven setup. The costs of investing in a franchise usually aren’t too far off what it would cost to set up a business from scratch. Obviously, you’re not unnecessarily risking money with beginner mistakes because when you become a franchise owner, you get full training and support. One of the biggest reasons why new entrepreneurs choose franchising as their route to business ownership is the support.
There are over 1,000 franchised business opportunities in the UK. Pretty much every business model can be franchised if it is commercially viable. Therefore there’s a good chance that your interests in starting up a business from scratch will be fulfilled in franchising.
Franchising is where the brand of a successful business is licensed to a third party for them to run the business in their own area. Perhaps the best known franchise is McDonalds, but there are many different sectors including oven cleaning, children’s activity clubs, dog washing, many more to suit budget and personal interest. Unlike with starting up alone, you’re not reinventing the wheel. You get a streamlined, scaled business model which is simple and sweet. Franchising takes many of the biggest benefits of starting up alone, and combines it with access to a proven brand, full training and support and a “business in a box”.
Single Unit Franchise Opportunities
The most common type of franchises are single unit franchises. For a new entrepreneur, this will be the first step to business ownership. A single unit business opportunity is where you set up and run one business in a single territory. Regardless of what type of business opportunity you invest in, by running one business you are becoming a single unit franchisee. As the most common type of franchise agreement, a single unit franchise applies to almost every running scenario.
A single unit franchise gives you the rights to run the business within your own exclusive territory. The franchise territory will limit your customer base geographically based on towns or postcodes, but franchises are mapped to ensure every franchisee gets a fair amount of potential business. This is to ensure neighboring franchisees do not compete with others for clients.
It’s usually possible to purchase a neighboring franchise territory if a single unit franchisee wishes to further expand their business.
Area Developer Franchise Opportunities
A step up from being a single unit franchise owner, an area developer franchisee is given the rights to open up multiple units within a given area within a given time. Depending on the franchise practices, you may recruit take on franchisees for these franchise units, or run them yourself. Area developer franchises usually take the form of premises based business opportunities like restaurants and retail. The area developer pays an initial fee for the development rights to the territory and then additional fees for each unit that is opened. The financial terms, including the royalties and marketing fees, are outlined in the franchise agreement and can vary based on the franchisor’s policies and the specific business model.
Master Franchise Opportunities
A master franchise differs from an area developer franchisee somewhat. Master franchise agreements enable a franchisee to bring an international brand into a new country’s market. For example if a UK based franchisee wanted to bring a USA or other country’s franchise into the UK, they would become a master franchisee.
Master franchise agreements allow the UK based franchisee to open up a unit within the UK and garner the rights to sell sub-franchises. As a master franchisee, you would be in charge of recruiting franchisees within the UK for that brand. A big commitment, you will sizeable capital to market the franchise opportunity within the UK and progress in accordance with the timescales agreed with the franchisor. Ultimately, master franchising enables you to become the franchisor for that country. The master franchisee knows the market and demand in their own country a lot better than the franchisor, harnessing a master franchisee enables the franchisor to tap into this experience.
All types of franchises, single unit, area developer or master franchisee, are all great business opportunities. If you’re a new entrepreneur looking to get into business ownership, your main interest should be in opening a single unit franchise. Where starting up a business alone can lead to unexpected costs, costly mistakes or simple cost projection errors, investing in a franchise gives you much clearer predictions on where your expenses are likely to lie.
Pros and considerations of becoming a business owner via franchising:
| Pros | Considerations |
|---|---|
| Access to an established brand name and existing brand reputation | You will need to pay ongoing royalty fees, usually monthly, for continued access to the brand. However this does have greater benefits, like national marketing |
| A business in a box, everything you need is provided, from training/support to equipment and suppliers | Understand the territory you will be given for each franchise of interest and where potential limitations may arise |
| Costs can be cheaper than going it alone, both initial and ongoing | You don’t have full control over the brand, you must abide by the franchise agreement and operations manual |
| Success rate is much higher than starting up alone, around 93% |
Purchasing an Existing Business
Another route to business ownership is by purchasing an existing business for sale. By buying an already trading business, you get immediate cash flow from day one. This is because the business already establishes itself within the local vicinity and has an existing customer base.
As you’d expect, buying an established business for sale costs a lot more than what it would cost to start up from scratch or invest in a franchise. The business owner’s hard work and capital has been invested in getting the business into a successful position so it is only to be expected that they will want to get a return on that investment. Many businesses for sale are valued in the six figure range.
If a business for sale is part of a franchise network, this is known as a franchise resale. Franchise resale business opportunities enable you to benefit from the same benefits you would investing in a new territory. With buying a franchise resale, you get access to the proven brand and network of suppliers. There are many reasons why a franchise owner may wish to sell their territory, you still need to carry out due diligence before investing.
Pros and considerations of becoming a business owner through purchasing an existing business for sale:
| Pros | Considerations |
|---|---|
| Cashflow from day one | Initial costs will be substantially higher |
| The business already has an established presence within the community, benefiting from local customer recognition | Lack of full control, if you change what works you could risk damaging the future of the business |
| Franchise resales benefit from the continued support from the franchisor | Success will rely on your own experience, can you handle taking the reigns of an already running business |
What are the Most Affordable UK Business Opportunities?
Everyone will have their own definition of what is considered an affordable business. Some definitions will vary greatly to others. Generally a low cost business opportunity will be one that requires a personal investment of less than £15,000. Home and van based businesses are usually the most affordable, and franchises of these often require an investment of less than this figure.
Owner operated franchises that cost less than £15K can be highly profitable too, thanks to their low overheads. Running a business by yourself means you can fit work in flexibly to your own schedule, choosing how many hours a week you wish to work. If you’re looking to start up a low cost independent business, some of the markets which show good potential include mobile coffee, pet sitting and dropshipping. There are also a number of low cost yet high end food franchises in the UK. Franchises like Black Rooster Peri Peri and CUPP Bubble Tea both have low franchise investment. The bulk of the cost is store fitting and as explained earlier, banks are eager to help new entrepreneurs. Especially franchises, in which these banks are actively involved, thanks to the fact franchising has a higher success rate.
What are the Most Profitable UK Business Opportunities?
When it comes to determining the most profitable business opportunities and franchises, there are several factors that come in to play. Firstly your own efforts are the main factor that influence success. If you’re interested in investing in a franchise, the franchisor will be able to provide you with profit and loss projections based on existing franchisees. This document shows where money comes in and where it goes out. You can scale these projections based on your own ambitions to determine how profitable a franchise will be for you.
For retail and food franchise units, location of a business in proximity to high footfall areas will also determine the profitability of the business. Using online food ordering apps like Deliveroo, Just Eat and Uber Eats can massively increase your earning potential. Coffee remains a top choice for those looking to invest in a market with unhindered potential. While the growth of big franchises like Costa show no signs of slowing, independent coffee businesses have shown strong resilience. Whether you’re looking to invest in a franchise or start up a business alone, making sure you’re entering a market which you’re interested in is probably the biggest influence on profitability. If you enjoy what you do, the earning potential can be staggering.
Interested in becoming a business owner? Take a look around our website to learn more about franchise business opportunities in the UK.