| Each option involves some element of risk and | | | | A business that is marginally profitable may |
| reward. Whichever option you choose, however, | | | | not be able to both pay off the debt service |
| owning your own business offers a chance at | | | | on the loan and pay you a living |
| more freedom and greater financial rewards. | | | | wage.FranchisesWhen you buy a franchise, you |
| So, you're thinking of going into business | | | | also buy marketing support, business |
| for yourself. You have several options | | | | strategy, name recognition, and assistance |
| available, and all involve some degree of | | | | with site location (if it's a retail |
| risk. Do you want to create a start-up | | | | operation), among other things.However, you |
| operation? Perhaps you are planning on buying | | | | also give up some things. You will never have |
| an existing business. Or, you may be | | | | the final say in all decisions, because |
| considering the purchase of a franchise | | | | franchisors typically retain rights to ensure |
| operation.Start-upsIf you are planning on | | | | that your business is run their way. Also, |
| building your business from the ground up, | | | | you won't be entitled to all of the profits |
| you are taking a bigger risk than if you were | | | | of your business, because franchisors |
| buying an existing business or a franchise. | | | | typically take a percentage as part of their |
| Existing businesses and franchises have some | | | | fees. Finally, you may be limited in your |
| operating history that you can use to gauge | | | | decision-making processes (e.g., some |
| the likelihood of the success of the | | | | franchisors require you to buy materials from |
| business. By comparison, with a start-up | | | | their suppliers).If you are thinking of |
| business, you naturally think that you will | | | | purchasing a franchise, it is very important |
| succeed, but there are fewer guarantees.Most | | | | to thoroughly investigate the company. |
| successful start-ups don't actually begin | | | | Remember, you are doing more than just |
| with a new, innovative product. Instead, they | | | | purchasing a name--the franchisor is going to |
| begin with a proven product or service | | | | be your business partner. Make sure that he |
| (start-up owners often open competing | | | | or she doesn't want only your money and then |
| businesses in areas in which they are | | | | move on to the next potential |
| familiar) and become innovative after the new | | | | buyer.Franchisors are required to disclose |
| venture has generated some level of profit | | | | lots of information to potential franchisees. |
| and success.Because your start-up has no | | | | Do your homework. Talk not only to successful |
| previous track record (even if you have had | | | | franchisees but also to ones who have failed. |
| success in your field), you will first need | | | | If several former franchisees tell you that |
| to raise enough financing to make a go of it. | | | | the company didn't fulfill the promises of |
| Banks or investors will want to see a plan of | | | | the franchise agreement, beware.Make sure |
| attack before they will approve a loan for | | | | every representation is made to you in |
| your start-up. Therefore, your first step | | | | writing before you purchase. Take notes of |
| should be to create a strong business | | | | everything said to you, and have the |
| plan.The business planA well-developed | | | | franchisor sign off on them. That way, you |
| business plan serves several useful purposes. | | | | will have a record of what was represented to |
| It helps to organize thoughts and ideas about | | | | you if things go wrong.Important Disclosure |
| how the business should be developed. It also | | | | NoticeThe material contained herein is not |
| creates a plan of attack that will help you | | | | intended to provide specific legal or tax |
| stay focused. And, it will assist you in | | | | advice.It provides only broad, general |
| getting financing. There are several | | | | guidelines and strategies that may be helpful |
| important elements to a well-prepared | | | | in shaping your financial thinking about |
| plan:Strong introduction: The cover page, | | | | investment objectives and risk management.The |
| executive summary (essentially an overview of | | | | information that follows is intended to serve |
| the plan), and table of contents will be the | | | | as a basis for further discussion with your |
| first elements that potential financiers or | | | | financial, legal, tax and/or accounting |
| investors will see. If these aren't strong, | | | | advisors. It is not a substitute for |
| potential financiers may not take you | | | | competent advice from these advisors. The |
| seriously enough to get to the heart of your | | | | actual application of some of these concepts |
| plan.Business description: Whether you are | | | | may be the practice of law and is the proper |
| using the business plan to get financing or | | | | responsibility of your attorney. The |
| create a focus of how your business should be | | | | application of other concepts may require the |
| run, you need to present a clear vision of | | | | guidance of a tax or accounting advisor. The |
| what your business will be. The description | | | | company or companies listed below are not |
| should include how you want your business to | | | | authorized to practice law or to provide |
| be positioned in your industry, what will | | | | legal, tax or accounting advice.Although |
| make your business unique, the products or | | | | great effort has been taken to provide |
| services that you will provide, and how you | | | | accurate data and explanations, and while the |
| plan on pricing within the industry. Do you | | | | sources are deemed reliable, the information |
| want to be the low-cost provider, or the | | | | that follows should not be relied upon for |
| high-end specialist? | | | | preparing tax returns or making investment |
| | | | decisions. This information has neither been |
| Market positioning: If you want to attract | | | | audited by nor verified by the company or |
| investors to your business, you need to | | | | companies listed below and is therefore not |
| convince them that a need in the marketplace | | | | guaranteed by them as to its accuracy.This |
| exists for what you are proposing. This | | | | information includes changes made by the |
| section needs to include details on the size | | | | Economic Growth and Taxpayer Relief |
| of the potential market for your business, | | | | Reconciliation Act of 2001 (EGTRRA). Many of |
| how your business can benefit through sales | | | | these changes phase in or out according to |
| inside the market, and how you plan on | | | | varying schedules and ultimately all of the |
| succeeding against your competitors.Financial | | | | changes made by EGTRRA are scheduled to |
| objectives: This is perhaps the most | | | | expire at the end of 2010, unless Congress |
| important part of your business plan. Here, | | | | takes action in the interim.Long-Term Care |
| you need to convince your potential backers | | | | Insurance material may NOT be used with the |
| or lenders that your business will make a | | | | public in the following states...Alabama, |
| sound investment. You'll want to show that | | | | Arizona, Arkansas, California, Delaware, |
| you have evaluated the attendant risks and | | | | Florida, Georgia, Idaho, Indiana, Kansas, |
| rewards of your proposed business. You'll | | | | Kentucky, Louisiana, Maryland, Michigan, |
| also need to project cash needs and expected | | | | Minnesota, Montana, New Mexico, North |
| income, and present a cash flow | | | | Carolina, Oklahoma, Oregon, South Dakota, |
| statement.Other areas: A good business plan | | | | Texas, Utah, Vermont, Virginia, West |
| will also cover in some detail your marketing | | | | Virginia.Securities and Investment Advisory |
| plan, a discussion of how you plan on | | | | services offered through: |
| developing products to bring to market (if | | | | |
| the business is a manufacturing concern), and | | | | New England Securities Corporation |
| so on.Buying an existing businessThe obvious | | | | |
| advantage to buying an existing business is | | | | Member NASD, SIPC |
| that it has a proven track record of success. | | | | |
| But that doesn't mean that there are no | | | | 501 Boylston Street, Boston, Massachusetts, |
| possible pitfalls that you should | | | | 02117Insurance Products Offered through: |
| avoid.Perhaps the greatest problem in buying | | | | |
| an existing business is that you might not | | | | New England Life Insurance Company |
| acquire the expertise and services of the | | | | |
| existing owners, who have often accumulated | | | | 501 Boylston Street, Boston, Massachusetts, |
| goodwill with their customers or clients. | | | | 02117Long Term Care Insurance Offered |
| However, when a business is bought, it is not | | | | through: |
| unusual for the previous owners to stay on | | | | |
| for a period of time to assist with the | | | | Metropolitan Life Insurance Company, New |
| transition and to make introductions to | | | | York, NY and other unaffiliated insurers |
| clients in an attempt to transfer some of | | | | through New England Financial, Boston, MA, an |
| that goodwill.Consult qualified professionals | | | | affiliate of Metropolitan Life Insurance |
| to properly evaluate the information that the | | | | Company.Please note that most long-term care |
| owners of the existing business may provide | | | | insurance policies contain certain |
| you. Also, make sure that the reasons why the | | | | exclusions, limitations, waiting periods, |
| business is on the market are true. Is the | | | | reduction of benefits and terms for keeping |
| owner really planning on retiring to Florida, | | | | them in force. Your representative can |
| or is he or she just trying to escape the | | | | provide you with full details and cost |
| crushing debt that the business has | | | | information.L06019MJM(exp0108)MLIC-LDHarvey |
| accumulated over the last few years?Also, | | | | Davis J.D. is a financial advisor with the |
| keep in mind that you may be taking on a | | | | Chesapeake Financial Group. |
| heavy load of debt in acquiring the business. | | | | |