Thursday, November 5, 2009
Buying a franchise for a safety business? Hell no!!!
In the investment world, the first principle is, Risk and Return go hand in hand. The lower the risk, the lower return you will have to expect. For someone who just has a big cash fall on his head from the sky, he has several investing choices, mainly as securities markets, opening a new venture, or buying a franchise. Of those choices, opening a new venture generally have the most risk, but also will return abundantly to him if success. Securities markets option, grant him somewhat good return, and the risk is much less than starting a new venture, if he knows how to flat out his portfolio and reduce their risks. Two choices above, I think is the main investing method for people with spare cash. Buying a franchise, however, is so different. Some franchise requires a significant amount of cash initially, and that amount can climb up to several millions of dollars, if you want to buy a popular franchise such as McDonald or Pizza Hut, others vary with at least around $200,000. Of course, buying a already popular franchise is pretty safe, but it wouldn't win big either. The break even points usually can be achieved after several years, and after that, the in flow of cash is not that great. In short, if I have several hundred thousands dollar, I wouldn't consider buying a franchise at all.
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