Pros and Cons of Starting a New Business vs Franchise Business Philippines

If you had to choose, are you going to engage in a new business or invest in a franchise business in the Philippines? Well, each has its own set of benefits and downsides. The choice between the two depends on various factors such as your preferences, risk tolerance, and business goals. So in this guide, let’s dive into the pros and cons of starting a new business versus a franchise business.

The Pros and Cons of New Business in the Philippines

Starting a new business is exciting but at the same time exhausting because you’re starting from scratch. Below are the pros and cons to guide you in your decision to engage a new business.

Pros of a New Business in the Philippines

Unique Branding
Building a brand from scratch is no small task but it can be incredibly rewarding. When you start a business with a blank canvas, you have the opportunity to create something unique and set yourself apart in the market. With careful planning and a clear vision, you can establish a brand that resonates with your target audience and stands out from competitors.
Creativity and Flexibility
Engaging in a new business lets you have complete freedom to create and shape the business according to your vision. You can adapt quickly to market changes without being bound by a franchise model. Thus, your creativity and flexibility is sky’s the limit without anyone being restrictive on you.
Innovation
Another advantage is the opportunity to introduce new products or services without restrictions imposed by a franchisor. This means that as a business owner, you have the opportunity to explore innovative ideas that could potentially attract a wider customer base and evolve your offerings to meet the customers’ shifting demands and desires.

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Cons of a New Business in the Philippines

Higher Risk
The success of the business depends heavily on your ability to navigate challenges without the support of an established brand. When a business is still new in the market, it requires a unique blend of resilience, resourcefulness, and innovation to thrive amidst competition.
Learning Curve
Along with higher risk, starting a new business lets you face a steeper learning curve, especially if you are entering an industry you are not familiar with. Also, entering a new industry can be a daunting task, particularly if you lack prior experience or knowledge in that field.
Marketing Challenges
In today’s competitive business landscape, building brand recognition and trust can be challenging. With countless options available to consumers, it is essential for brands to differentiate themselves and stand out from the crowd. It requires significant marketing efforts and strategic business planning.

The Pros and Cons of Franchise Business

On the other hand, a franchise business seems easy to manage because everything is already provided from the products to marketing materials. However, before you make that conclusion, get to know its pros and cons as listed below.

Pros of a Franchise Business Philippines

Proven Business Model
Since it’s established already, a franchising business often comes with a proven business model. And it reduces the risk of failure compared to starting from scratch. Plus, your selling mode of products and services here is somehow effortless.
Training and Support
Franchisors play a vital role in the success of a franchise business by providing comprehensive training and ongoing support to franchisees. This training is essential as it equips franchisees with the necessary skills and knowledge to effectively operate the business. Through tailored programs and resources, franchisors guide franchisees in all aspects of running the franchise – from managing operations, marketing, and customer service to financial management and quality control.
Easier Financing
When it comes to securing financing for a franchise, potential business owners often find that it may be easier compared to starting a completely new venture from scratch. This is primarily because lenders tend to perceive franchises as a less risky investment option. The reason behind this lies in the established track record that franchises typically have.

Cons of a Franchise Business Philippines

Lack of Flexibility
Franchisees are often required to adhere strictly to the franchisor’s policies, limiting their ability to make independent decisions. The franchisor establishes specific guidelines and protocols to maintain the consistency of a franchising business process. Also, to ensure that the franchise operates in line with the established brand image and standards.
Franchising Costs
To own a franchise business, there are a lot of fees compared to having a small new business. One is a franchise fee you pay to the franchisor for the right to use their brand and business model, which can range from a few thousand to hundreds of thousands. Also, you need to pay ongoing royalties to the franchisor, a percentage of your monthly or yearly sales.

Lastly, you’ll have to cover the costs of leasing a building, buying equipment, and stocking inventory. These costs can add up pretty quickly, and you’ll need to have a decent amount of capital on hand to get things up and running.
Market Saturation
Depending on the industry, there may be saturation in certain markets, making it challenging to stand out. This saturation often results from a high number of competitors offering similar products or services, making it harder for new franchisees to establish a unique selling proposition. Whether it is the fashion industry, technology sector, or even the food and beverage market, businesses find themselves grappling with the struggle to break through the noise and leave a lasting impression on their target audience.

Which is better? New Business or Franchise Business Philippines

So, whether you’re considering starting a new business or investing in a franchise in the Philippines, it’s important to do your research. Both options have their pros and cons as individually discussed earlier, and what works for someone else may not work for you.

Whether you’re launching a new business or considering a franchise, securing a loan for a much-needed additional funding or business expansion is a viable option. If you want to embark on your entrepreneurial journey with specialized business loans, RFC has what you need!

Empowering Filipinos globally since 1964, Radiowealth Finance Company (RFC) has been a key ally in providing financial access to those with underserved credit. If you’re all set in getting a loan and breathing life into your business goals, click on the link below:

I am ready to apply for a loan with RFC!

Explore further details about RFC and its financing products by visiting www.rfc.com.ph.