Did you know that, according to IBIS World, the number of US payroll and bookkeeping services is 302,973—and that the industry market size is $66 billion? This is a lucrative industry to be in, so if you invest in a bookkeeping franchise, you stand to make a significant amount of money.
If you’re interested in making money in the bookkeeping industry, then you might be on the fence about whether you should start your own franchise or start your own company. You might be asking yourself questions such as:
“What are the benefits of starting a bookkeeping franchise?”
“How do I decide if starting a bookkeeping franchise is for me?”
“How does a bookkeeping franchise work?”
If you don’t have the answers to these questions, you might be confused about which investment opportunity to invest in. You have all the skills, and you want to make money, but you aren’t sure which choice is best for you.
That’s why we’ve put together this article. Once you know all the reasons why investing in a bookkeeping franchise is better than starting your own bookkeeping startup, you’ll make the right decision. Read on to learn more.
The Pros and Cons of a Bookkeeping Franchise
There are many reasons why it makes sense to invest in a bookkeeping franchise. From being a proven business model that works to being a brand that has wide recognition, a bookkeeping franchise is an easier business to run that will make you money, fast.
Let’s review the pros of investing in a bookkeeping franchise now, after which we’ll review the cons.
Pro: Few Startup Costs
If you’re starting your own bookkeeping business—which we’ll cover later in this article—then there is a lot of money you’ll need to start it. With a bookkeeping franchise, you don’t have to raise all the money yourself to start your own business, even though you’ll be making money from running the franchise.
Of course, there are some costs, such as purchasing the bookkeeping franchise or the franchise transfer fee that some businesses will require you to pay.
But the cost of purchasing the franchise will be far lower than starting your own, and you can always ask the selling franchisee if they can pay the franchise transfer fee instead of you.
Other than that, there are very few costs. Especially with a bookkeeping business, where most of the materials you need are ones you already have—such as a computer and the right bookkeeping software—costs should stay low.
If the franchise you’re based in is an office, then you may have to pay for a few office supplies. But the office itself will already be set up for business, so you won’t have to buy new furniture or lights.
Additionally, if you’re working remotely because of the COVID-19 Pandemic, these costs will be even less, since you’ll be working from home.
Pro: Turnkey Business
Another reason it’s a good idea to buy a bookkeeping franchise instead of starting your own business is that this is a turnkey business. By “turnkey,” we mean that all you have to do to get started is turn the key in the front door—and then you’re open for business.
Usually, when you buy a franchise, the business provides you with everything you need to run the business and start making money.
This includes software systems (such as accounting software), equipment, and facilities. They might even provide you with pre-trained employees. Additionally, you won’t have to put much work into advertising, operating procedures, or raw materials.
Pro: Brand Recognition
The reason many business leaders recommend investing in franchises is because you don’t have to put in any work to put the business onto the map. Customers already know about this business, so you don’t have to pay for marketing or market the business yourself.
Additionally, because the brand is recognized, you’ll start getting interested customers the day you purchase the franchise. This means you’ll be making money in no time.
Pro: More Support
Because the bookkeeping franchise you buy is part of a larger company, you’ll get all the support that comes with being part of a larger business. Customer support, technical support, and other kinds of support will be available to you.
Additionally, the business will offer training in effective accounting services for new employees and management assistance.
If you were to start your own bookkeeping business, you would have to do all this on your own. You might even end up having to pay money to put together employee training.
Pro: Loans Are Easier to Get
If you need capital to buy a bookkeeping franchise, it’s much easier to get a loan than if you were to start your own business. After all, the business model used in the bookkeeping franchise has been proven to work. So a lender will be more likely to think it will be successful—which means you won’t default on your business loan payments
Additionally, there are many franchisors who have lending programs that make it easy for you to get the money you need. There are also lenders who specialize in lending money to franchise business owners.
Con: Competing Franchises
One of the cons of investing in a bookkeeping franchise is that you might lose customers if another franchise belonging to the same company opens up near you. While it is the case that a franchisor will attempt to not oversaturate the market, they might open up another location near you if it’s good for their profit.
Con: Less Control
If you want to have control over the business you’re running, then a franchise might not be for you. However, when it comes to bookkeeping franchises, these businesses are only going to vary so much. For the most part, you’d be doing the same thing in a franchise as in your own business—so you might as well go for the franchise option.
The Pros and Cons of Starting your Own Bookkeeping Business
Now that we’ve reviewed the pros and cons of investing in a bookkeeping franchise, we’ll review the pros and cons of starting your own bookkeeping business. While it will ultimately be up to you to decide, it’s likely that by the time you reach the end of this section, you’ll decide that a bookkeeping franchise is a better choice.
Pro: Creativity and Original Thinking
If you have a bookkeeping franchise, then you’ll be required to do everything according to company rules and culture. If you’re a business leader who enjoys being creative and original thinking, then you might find this limiting. In this case, starting your own business is a better option.
If you provide customers with creative solutions to their problems or have an alternative way of offering bookkeeping services, then it’s better for you to start your own bookkeeping business.
Additionally, it’s a better choice if you prefer to work with your own ideas than with someone else’s.
Pro: Freedom and Development Options
With a franchise, you can’t change up the way you do things in the business. You can’t open up another branch; you’d have to go through the franchiser to do this. You’ll also be limited to working when and where you’re required to.
If you have your own business, then you have the freedom to do whatever you want with your business. You can also decide how you want to establish your work-life balance.
Additionally, you can develop your business however you see fit. If you want to completely transform it, you can. You can add new products and services or change what type of customer you serve. With a franchise, you won’t have this flexibility.
Con: Failure Rate
One of the biggest problems with starting your own business, however liberating it may be, is that your likelihood to fail is incredibly high. In fact, according to Investopedia, 90% of startups failed in 2019. You might have put all of your aspirations (and your money) on the line when starting your startup, only to have to face failure.
If you really are committed to starting your own business, then an alternative, safer option is to first run a bookkeeping franchise.
While you do this, you can make money, during which you can work on your own business on the side until it is successful enough for you to run it on your own.
If you choose to do this, be sure you review any non-compete clauses that might get in the way of you doing this.
Con: Harder to Get Loans
If you’re starting your own business and need to get capital, then you’ll probably look into getting loans. However, according to Fundera, less than half of small businesses looking for lending are able to get their financial needs met.
This is because startups and small businesses are seen as risky in investing in for many lenders.
Especially when there are so many bookkeeping businesses out there already, why would they want to invest in yours? The smarter choice here is to invest in a bookkeeping franchise unless you already have the capital for starting your own business yourself.
Con: Higher Startup Costs
A startup will also have higher costs. After all, you’re starting a business from scratch. You’ll have to rent your own office space, spend money on recruiting employees, and pay for your own bookkeeping software.
Con: No Guarantee of Business Model Success
When you invest in a bookkeeping franchise, you know that it’s likely to do well. This is because the business already has a business model that works. All you have to do is have the skills required to manage it properly. If you do this well, you’ll make money.
If you start your own business, then you’ll have to reinvent the wheel. You’ll have to come up with your own business strategy, which could end up failing.
Additionally, because you’re reinventing the wheel, you’ll also have a lot of work to do when it comes to customer acquisition. You’ll have to slowly build up your business, which means you’ll struggle financially for the next few years.
With the bookkeeping franchise alternative, you’ll already have paying customers coming who want to use your services.
As you can see, once you balance the pros and cons of buying a bookkeeping franchise versus starting your own bookkeeping business, it’s best to invest in a bookkeeping franchise. Even though you may not have everything you want in a business, you’ll still have the freedom of managing what feels in many ways like your own business.
You won’t, as you would when starting your own business, have to deal with many of the associated risks of doing so.
Need More Information?
Now that we’ve reviewed the pros and cons of a bookkeeping franchise versus starting your own bookkeeping business, you might need more information. Maybe you want to learn about which bookkeeping franchiser is the best option for you, or you want to learn more about the ins-and-outs of running a bookkeeping franchise.
Whatever information you need, we’re here to help. At BooXkeeping, we’re experts when it comes to running bookkeeping franchises. You can also start franchising with us. To get in touch, contact us here.