Turning your business idea into reality

Thinking of becoming your own boss? Increase your chances of success by choosing the correct route

Fri, Sep 13, 2013, 12:52

Hate your workplace? Tired of your job? Feel like crying when you get your payslip? Why not become your own boss by buying a business?

For those looking to escape their colleagues or their boss, owning a business might be tempting. But rather than starting one from scratch, buying a business or franchise can often be a better route.

Start-up costs aside, buying a successful business or franchise can be an easier option as they tend to have name recognition and a proven business model, greatly diminishing the odds of failure.

Most start-up entrepreneurs build a business around a hobby, passion or area that really interests them. A lot of the time they have seen a gap in the market in an area they are very familiar with.

Colm Healy decided to buy the well-established Skelligs Chocolate Company in 2004, after returning home to Ireland from five years working in the Far East and Australia.

“I wanted to come home, as I missed it to a degree. I didn’t know what I would do job-wise and my sister who lives in Cahersiveen told me there was a pub for sale in the area, as well as a chocolate factory.

“The smoking ban had just come in, so I decided to steer away from the pub. I went down for a look at the chocolate business and liked what I saw, so I bought it.”

Healy was previously self-employed, having set up his own IT business before selling it on in 1999. He says the experience of having already run his own business helped immensely.

“When you buy a business in Ireland, you have to take over all the employees too. I had a fantastic staff and they all knew what to do, which was great.”

Healy says he would recommend buying a business as opposed to setting one up.

“You save time on mistakes other people have made. The previous owners will already have made all the mistakes that go hand in hand with setting up the business. You can save yourself hassle if you buy a business that’s run properly.

“From day one we had money coming in. You don’t have that if you’re setting up a business.”

He bought Skelligs Chocolate with money from savings and so didn’t need a loan. Such was the success of the business that he bought another business in 2008 – Cocoa Bean Chocolates – to add to Skelligs chocolate offering.

“We needed to strengthen up in the area of chocolate bars. We were being asked for bars but our offering wasn’t good enough. We bought Cocoa Bean as their recipes were good. If the recipes weren’t good I wouldn’t have been able to fix them as I’m not a chef or chocolatier.”

Possible ventures
The fear of joining the ever-increasing social welfare queue pushed Juliet O’Connell to become a franchisee for garment alteration business The Zip Yard. ”

“I was working for a company for three years as a marketing manager and the future of my job was in doubt,” she says.

“I researched a number of possible business ventures and it soon became apparent that following the tried and tested model of a franchise would help me to minimise the risk of starting my own business.”

O’Connell says she opted for the Zip Yard franchise, as she wanted a business that would thrive even if people had lower disposable incomes.

“The Zip Yard had 11 outlets nationwide when I decided to set up the Dún Laoghaire Alterations Boutique and I had the confidence they were all extremely successful which limited the risk immensely.”

She said the turnkey franchise business cost less than €50,000 to set up, adding that the Zip Yard’s proven track record has enabled the brand to build a strong relationship with a number of banks.

“Revenue has increased each month since we opened without exception. It’s a fantastic feeling to have seven full-time staff members in Dún Laoghaire when it all started out with me losing my own job.”

O’Connell says the training from Zip Yard headquarters was invaluable, with Caroline Wallace, the national franchisor for the Zip Yard group, coming out to her store to help with the initial set up.

“Caroline moved in to Dún Laoghaire and didn’t leave until she and I were 100 per cent confident to run the business.”

Earlier this year, David McKone took the master franchise for Right at Home in Ireland. Having sold his business to another Irish company in November 2011, he began looking at other business ideas.

“I looked at several franchise models in the US and spoke with approximately 30 franchisees. You get a good sense of the type of support you receive from head office by talking to them.”

He ultimately decided on the Right at Home franchise, which provides in-home care for the elderly and people with disabilities, as it has been successfully adopted into different markets worldwide.

He says the figures for buying into this franchise in Ireland have yet to be worked out, but would be based on the US, where a Right at Home franchise costs $40,000, with $100,000 to $150,000 start-up capital also required.

He says the advantages of buying a turnkey business are that “it takes time and money to work things out when you are creating your own business. With a franchise, that is already done for you.”

Getting started: buying an existing
business or taking out a franchise
So where can you buy a business? One place is Savvy.ie, an online platform for buying, selling or investing in a business set up by accountant Shane Connors and solicitor William Brennan.

They hope to revolutionise the selling of a business in the way MyHome.ie and Daft.ie have transformed the way Irish residential property is marketed.

The website allows people to advertise businesses for sale at a cost of €150 for three months, and also provides prospective buyers and sellers with access to key professionals.

“In the SME community there wasn’t anyone really providing a formal network to match buyers and sellers,” according to Connors, who set up the business 18 months ago.

He says buying a business can be a good route for people who have experience running their own business, and funds either from savings, redundancy money or a loan.

“People can get into business relatively cheaply or they can spend a lot. We’ve got a waste disposal business for sale and it’ll probably sell for €300,000 to €400,000.

“We also have a printing business for sale that will probably fetch a couple of hundred thousand. Then there’s a flower shop which would be €50,000 to €75,000.”

Buying a franchise is another option. Many people have probably stood in line at a fast-food restaurant such as McDonald’s or Subway and pondered the economics of owning a franchise .

Aside from a ready-made business plan and proven model, one of the main benefits of owning a franchise is shared marketing and advertising.

However, it is important to remember that running a franchise can be as much hard work as running your own start-up.

The cost of acquiring a franchise can vary wildly depending on the sector, with most franchisors charging an upfront fee and then a recurring charge based on annual turnover. Some of that goes to pay royalties while some of it goes toward advertising and promotions.

The most recent research in the area of franchises in Ireland was carried out by UCD and Ulster Bank in 2010. It revealed the average initial fee for buying a franchise in Ireland was €24,638.

The research also found that the average working capital for setting up a franchise business in Ireland was €21,873 and the total set-up cost was an average €124,330.