- December 23, 2020
- Posted by: Strategic Franchise Brokers
- Category: News
Today we had a franchise buyer tell us he wasn’t going to open his own business because he didn’t want to sell his apple stock. He’d done well and you can’t blame him, having owned stock in the infamous tech giant since 2012, he had seen a 900% return on his investment and was almost a millionaire with one stock purchase. I must admit, it was one of those stories when you hear it you can’t help but feel that you’ve missed the boat on your own stock investments.
This got me thinking, how does it compare to have a W-2 regular job (this gentleman was a programmer) and invest in the stock market versus being an entrepreneur or franchise owner and investing in yourself as a business?
Being an employee;
- Relatively low risk – although you may lose your job or put money into a stock investment, you really aren’t betting a whole lot in most cases, the capital lost potential is pretty minimal.
- Peace of mind – for the most part, if you do your job, you will have opportunities as an employee. Although the opportunity is probably capped, you should be able to continue earning a living, even if you lose your current employment.
- Stocks, as an investment, have historically returned about 10%. Apple is an anomaly, but if you just stay the course and put money away each year, there is a consistent opportunity to realize strong rewards for putting money into the market.
Being a Business Owner;
- Higher risk comes with business ownership. Not only are you tying your livelihood and income to the business, but also the capital investment it took to open the business.
- The potential reward is much higher when you own your own business or franchise. The night prior to the interaction with my programmer friend, I spoke with a franchise owner who now owns 65 foodservice franchises and has built considerable wealth and income by just investing in franchises.
- There are tax benefits to being a business owner. As a stockholder/employee, you are taxed on every dollar of profit you make in your transaction if held in a private stock account where as a business owner you have the opportunity to write off expenses and deduct against your taxable income.
- Franchises and businesses that are operated and executed well can outperform the stock market. Good franchise systems aim to have franchises realize a return of 100% of their investment in 3 years, way outpacing the 10% year in the stock market. In addition, when you own your own business, you have an asset to sell in the end.
One thing I’ve realized is that business ownership is definitely not for everyone and the same is true for franchises. But for those who do have that aspiration and vision for more, entrepreneurship could be the key to unlocking a much brighter future full of opportunity.
For more information on franchising, contact Chris Conner with Franchise Marketing Systems: [email protected]