You may dream of being your own boss, but does the thought of starting a business from scratch change your mind? We hear you. We’ve said it before and we'll say it again: starting a business on your own is difficult. Luckily, there are other pathways to entrepreneurship that don't require building a business from ground zero yet offer some of the same benefits.
Here, we provide an overview of five small business alternatives that will satisfy your entrepreneurial spirit, along with the details you need to make your business dreams a reality.
How to Become an Entrepreneur Without Starting Your Own Business from Scratch
The thought of starting a business from the ground up can be intimidating and might not be for everyone, but that doesn’t mean there aren’t ways to tap into some of the benefits of owning a business. There are several ways to become an entrepreneur without starting a business. Let’s explore these in more detail.
Business in a Box - Take Over a Franchise
Owning a franchise offers you a chance to take the reins of a proven business model with an established brand name, vetted supply chain and solid technical support. These positives could be the reason why the number of franchise establishments has steadily grown since 2013.
On the flip side, most franchises require you to operate within predetermined stipulations that may include spending a certain amount of money on promotions each month, which can reduce your take-home pay. Also, the startup costs for a franchise can be an expensive proposition, as the average runs between $50,000 to $200,000. However, these costs can vary significantly, and there are quite a few cheap franchise businesses that require an initial investment of under $15,000.
If you are comfortable operating within established systems and have strong process and people management skills, then starting a franchise provides a quick way to become a business owner. You can assess your readiness for investing in a franchise business using the SBA's checklist.
Invest in Someone Else’s Startup
Do you have funds set aside for a business but would prefer to skip some of the hands-on work required to build a business from the beginning? Why not invest in someone else’s startup?
Perhaps the top advantage of investing in other people’s startups is the growth potential and higher earning power of a business owner. Another benefit is that you can share your experience and knowledge without necessarily getting involved in the day-to-day legwork.
However, investing in another’s startup doesn’t mean you’re precluded from doing any heavy lifting. To ensure your capital generates the desired returns, do your homework on the startup’s business model, competitors, growth prospects and legal/regulatory compliances.
There are multiple ways to find out which businesses are seeking funding. One is to partner with venture capital firms as they are constantly scouring the market for emerging businesses. Partnering with them will give you access to a portfolio of businesses that have passed robust internal checks.
Alternatively, you can invest in startups via crowdfunding. WeFunder, SeedInvest and StartEngine are popular portals in this space that allow you to start investing in pre-vetted startups with as little as $500.
Did you know that you can harness your budding entrepreneurial spirit without having to give up the security of your day job? Yup, it just takes a bit of creativity and effort.
Many large organizations are infamous for allowing their employees to work on pet projects as they realize some of the best ideas stem from them (case in point — Sony’s Playstation was a result of an employee trying to make his daughter’s game console more powerful and user-friendly).
If you’re already working in a company with a strong innovation culture, you can easily build your business by joining the innovation or intrapreneurship program. However, if your company doesn’t have a program in place, perhaps you could make an argument to get it started, touting Google, 3M and Facebook as examples. Intrapreneurship programs are known to boost productivity and engagement, which increase profitability by 21 percent.
If you want to become a successful intrapreneur, we recommend starting out by understanding your company and researching an area that needs “fixing” or improvement within your area of expertise and then expanding to other functions.
Buy an Existing Business
Buying an existing and profitable business is a shortcut to becoming an entrepreneur. The established infrastructure, processes and revenue streams are obvious advantages, especially if you’re one who isn’t heavy into planning.
However, the costs to acquire a profitable business are on the higher side. The reasons behind these increased costs can be tied back to the original owner’s efforts to get it started and running successfully.
You can find businesses that are up for sale via BizBuySell, BusinessesforSale, LinkedIn, classified ads or within your own network of friends and family. If you opt for this mode of transport for your journey into entrepreneurship, then do vet out the financials, business licenses and permits and the reason behind the owner wanting to sell a profitable venture with the help of an accountant or lawyer.
Become a Partner in an Existing Business
If none of the above appeals to you, then consider becoming a partner in an existing business. Joining as a partner allows you to gain entrepreneurial experience without undergoing the startup phase, and you can choose to adopt a more hands-on role in the day-to-day operations of a business or take more of a passive partnership role.
Regardless of which you prefer, we highly recommend you choose a partnership structure and sign a partnership agreement that covers duties, ownership percentage, goals and an exit strategy. Also, joining as a partner in an existing business requires some due diligence. A few questions to ask yourself while considering partnership opportunities are:
- Does the company have any pending lawsuits or debts?
- How transparent is the company's financial health?
- How is the capital that you’re investing protected?
- Are there any tax ramifications for your stake?
Entering a partnership can be tricky, but you can mitigate the risks by first partnering on a small project together. You’ll gain first-hand experience with your potential partner and be able to determine whether a long-term partnership is worth pursuing.
Become an Entrepreneur
If you have an entrepreneurial mindset but don’t want to necessarily take on the responsibility of starting one, our small business alternatives would be worth checking out. Taking over an established business saves a lot of time and removes the guesswork many owners face as they set up processes and attract sales. You can directly jump into the thick of running the business instead of "planning" it. However, do remember to complete your due diligence when it comes to finances, time commitment and taxes to minimize any risks and ensure the model is a match for you.