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Business Savvy: Own Your Own!

If you’re between jobs or contemplating retirement with more dread than enthusiasm, consider a career move to a franchised or licensed business.

Tony McInnis, owner of Tasty Daylight Donuts, relishes the freedom of owning his own business. He’s often found in one of his Chattanooga stores, serving customers or teaching employees to make donuts.

According to McInnis, the joys of owning a business make the challenges worthwhile.

“You have to understand that owning a business is a job,” McInnis says. “It takes a lot of time and energy. Also, you have to be properly capitalized. For instance, the donut business is seasonal. People eat fewer donuts in the summer. We had to learn to anticipate that.”

On the other hand, says McInnis, he loves his work.

“The smiles on customers’ faces are a huge reward,” he says. “Also, in the food business, you often have young and impressionable employees. You can teach them skills that will help them for years to come, whether they’re selling donuts or sitting behind an executive desk. Owning a business offers the opportunity to make a real difference in the community.”

Do You Have What It Takes?

To buy a business license or franchise, it’s important to ask yourself the following questions:

  • Are you willing to invest long hours, even nights and weekends?
  • Have you researched the market, customer base and locations?
  • Is your business plan properly financed?

A consultation with a banker who understands your market and your organization can be invaluable as you take these first steps. McInnis, for example, was able to secure a line of credit with First Tennessee that he uses to help maintain and grow his businesses.

Franchise or License? Deciding between a franchise or a licensed business should be weighed against how you balance comfort and risk. A franchised business, such as a Waffle House, is essentially a store in a box. Recipes, signage, even fixtures must follow the chain’s established pattern. That means less work with research, development and marketing. However, according to The Wall Street Journal, franchise owners don’t have the freedom to stray from formula, systems or business plan. If you own a franchise, you must be willing to strictly adhere to direction.

Licensed businesses provide more freedom, but that autonomy also involves more risk. According to the Houston Chronicle, a licensed business is typically based on a finite agreement focused on intellectual property, such as a brand name or logo. McInnis, for instance, has a Daylight Donuts license, but he can create recipes and control his marketing strategy in his local markets. Eventually he hopes to franchise Tasty Daylight Donuts to other owners.

“Being able to have freedom in the kitchen is worth the extra effort,” says McInnis. To learn how First Tennessee helps small businesses thrive, visit our Business section.

Sources:

SmallBizChron.com, November 2012; DaylightDonuts.com, November 2012; WSJ.com, October 2012

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