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What are the Pros and Cons of business types?

There are a number of different business models or types which are available to budding entrepreneur. Let’s have a look at the Pros and Cons for the three most common types for small business opportunity, Tradition businesses, Franchises and Network Marketing.

When considering a move into your own business, you should give a good deal of attention to which business model best suits your requirement, situation, budget, goals and desired location.

Firstly lets have a look at the Pros and Cons of Traditional business such as; Retail shops, Trade businesses, Wholesale businesses, Restaurant and cafes. Although these businesses and others traditional businesses can be quite different, many of the pros and cons are relevant to the majority of traditional businesses.

Pros of Traditional business
  1. Independence
  2. Can be very profitable if unique
  3. Give you good status in the community
  4. Make you own decisions
  5. Limited fees
  6. Ability to leverage with employees
  7. Personally fulfilling
  8. Social interaction
  9. Ability for business expansion
Cons of traditional business
  1. No control over competing businesses
  2. Generally skilled based
  3. No marketing support from group
  4. Generally long working hours
  5. Independence, no company support
  6. Can have limited income
  7. High setup or purchase costs
  8. Overheads can be high
  9. Managing employees
  10. Inventory holdings
  11. Accounts receivable

A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. Franchises have become more popular over the last twenty years due many to the introduction of varied low end business concepts with a lesser skill level requirement such as; garden and maintenance services, windscreen fitting services, and general semi skilled services.

Pros of Franchise opportunities
  1. Working for yourself
  2. Higher rate of success
  3. Set territories
  4. Excellent training
  5. More control over competitors
  6. Marketing support from franchiser
  7. Proven business models
  8. Personally fulfilling
  9. Generally low inventory
Cons of Franchise opportunities
  1. Limited territory
  2. Generally long working hours
  3. Not totally independent
  4. Limited income
  5. Can have high ongoing fees
  6. High establishment costs
  7. Managing employees
  8. Inventory holdings
  9. Accounts receivable
  10. Fixed Location

Network Marketing (NM), which includes Multi Level Marketing (MLM) and more recently Direct Marketing (DM) is a business model is where an independent distributor or associate sells products and / or services for a parent company through their own marketing efforts. The NM industry has matured substantially over the last 20 years and is now consider a profession with a high number of participates and successful entrepreneurs.

Pros of Network Marketing opportunities
  1. Working for yourself
  2. No territories
  3. Low establishment fees
  4. Good training & mentoring
  5. Proven business models
  6. Low overheads
  7. No fixed location
  8. Shorter working hours
  9. Unlimited income in many cases
  10. Part-time or full-time
  11. No employees
  12. Excellent residual income (leverage)
Cons of Network Marketing opportunities
  1. Lower rate of success than franchises
  2. Requires good discipline
  3. Requires good motivation
  4. Not totally independent
  5. Training is sometimes ambiguous