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