Franchising as a form of business.
Franchising - a business arrangement where by an individual obtains right from a larger company to sell a well-known product or service.
There are three basic types of franchises. In a product franchise, the franchisee pays the franchising company for the right to sell trademarked goods, which are purchased from the franchiser and resold by the franchisee. Car dealers and gasoline stations fall into this category. In a manufacturing franchise, like a soft-drink bottling plant, the franchisee is licensed by the parent company to produce and distribute its products, using supplies purchased from the franchiser. In a business-format franchise, the franchisee buys the right to open a business using the franchiser’s name and format for doing business. The fast-food chains typify this form of franchising.
The role of small business in foreign economies and in the Belarussian economy.
Small businesses are a continuing source of dynamism for the American economy. They produced three-fourths of the economy's new jobs between 1990 and 1995, an even larger contribution to employment growth than they made in the 1980s. They also represent an entry point into the economy for new groups. Women, for instance, participate heavily in small businesses. The number of female-owned businesses climbed by 89 percent, to an estimated 8.1 million, between 1987 and 1997, and women-owned sole proprietorships were expected to reach 35 percent of all such ventures by the year 2000. Small firms also tend to hire a greater number of older workers and people who prefer to work part-time.
A particular strength of small businesses is their ability to respond quickly to changing economic conditions. They often know their customers personally and are especially suited to meet local needs. Small businesses -- computer-related ventures in California's "Silicon Valley" and other high-tech enclaves, for instance -- are a source of technical innovation. Many computer-industry innovators began as "tinkerers," working on hand-assembled machines in their garages, and quickly grew into large, powerful corporations. Small companies that rapidly became major players in the national and international economies include the computer software company Microsoft; the package delivery service Federal Express; sports clothing manufacturer Nike; the computer networking firm America OnLine; and ice cream maker Ben & Jerry's.
Of course, many small businesses fail. But in the United States, a business failure does not carry the social stigma it does in some countries. Often, failure perience for the entrepreneur, who may succeed on a later try. Failures demonstrate how market forces work to foster greater efficiency, economists say.
Organizations that help entrepreneurs
The Small Business Administration, or SBA, is a United States Government agency that provides support to small businesses. The SBA was established in 1953 by the United States Congress with the passage of the Small Business Act. Its functions are to make loans to small businesses unable to obtain financing from private sources on reasonable terms; to help small firms sell their products and services to the federal government; to make loans to small business concerns affected by natural disasters; to license and regulate privately owned investment companies that make loans to small businesses; to develop and improve the managerial skills of prospective and current small-business owners; and to provide aid and support to women and minority groups in order to increase their participation in small-business ownership. The head of the agency is appointed by the president with the advice and consent of the Senate.
The SBA has directly or indirectly helped nearly 20 million businesses and currently holds a portfolio of roughly 219,000 loans worth more than $45 billion making it the largest single financial backer of businesses in the United States.
The SBA has survived a number of threats to its existence. In 1996 the then Republican-controlled House of Representatives planned to eliminate the agency. It survived and went on to receive a record high budget in 2000. Renewed efforts by the Bush Administration to end the SBA loan program have met congressional resistance, although the SBA's budget has been repeatedly cut.
The SBA has been subject to criticism on several occasions. Businesses applying for SBA loans are supposed to have previously been turned down by at least two banks. Designed to avoid direct competition with banks, this provision allows the most promising projects to be funded by the private sector leaving higher risk projects to be picked up by the government resulting in the government holding a higher share of non-performing loans.
The SBA has most recently been criticized for the manner in which it disbursed loans earmarked for businesses directly affected by September 11th. Lax oversight resulted in widespread abuse of the program as the low-interest loans were awarded unaffected business.
Props and cons of self-employment
Pros
Decide your own work hours
One of the most common reasons for taking up self-employment is a desire for better work hours. How many times have you thought that you needed that extra hour of sleep in the morning? When you?re self-employed, you decide when you want to work. Take a holiday whenever you want, finish earlier in the day – all up to you. Flexibility over your work hours also comes with a downside though…
Work where you like
Many small businesses can be operated through the use of just a mobile phone, computer and internet connection. Self-employed people running these types of businesses can work anywhere in the world they like. You can work from your bedroom in your pajamas or beside the beach – now that?s freedom! Even if your business requires an office, practice or shop, at least you can choose its location.
More control over your income
You?ll never complain that you should be paid more because you?re responsible for your own income. This could provide you with more of an incentive to work harder because there?s more of a correlation between your effort and your income.
Choose the people you work with
Self-employed workers are not forced to deal with frustrating clients or be around co-workers they aren?t comfortable with. They have the power to decide who they associate with.
Do what you love
Instead of being given dreaded tasks by your boss that make you feel undervalued, you can do what you feel you do best and are most passionate about. You are free to carry out more fulfilling tasks that you believe best utilise your skills.
Cons
Time not working is time not earning
You may enjoy your time off work less when you think this time could be spent earning. You might also worry that you?re letting your clients/customer?s down when you?re not working. You may end up working far more hours than you did as an employee.
Possibility of irregular pay
When you?re self-employed, your income can be quite varied. There may be periods where you are very busy with clients and other times where you have ?droughts? with no clients. The irregularity of your pay can make settling regular bills and loan repayments difficult. Irregular pay can also make it more difficult to obtain a home loan – although there are a good range of competitive low doc loans available in the market. You can compare low doc loans here.
Do your own bookkeeping
Methodical bookkeeping is required for all small businesses and it can take up a lot of your time. It can also be stressful if you don?t know how to do it properly.
No sick pay, annual leave or company benefits
Sometimes you can?t afford to be too sick for work because you?ll potentially miss out on earnings. Being self-employed you also aren?t eligible for things like paid annual leave and company benefits such as gym membership, dental insurance or company cars.
Isolation
It can be lonely for self-employed people working entirely on their own. You may miss teamwork and not being able share your work?s victories and frustrations with colleagues. Without the get-togethers, social clubs and sports teams that a company has to offer, you might become more of a hermit – totally engrossed in your work.
No superannuation payments
Superannuation isn?t automatically set aside from your pay. You?ll have to be disciplined and set aside money for your retirement yourself. It can be tempting to withhold from your superannuation contributions when your business is going through slow times.