In our experience, going into a business which is already an established idea has lesser risks of failure than building a new business with an entirely new idea. This is one reason why many individuals or groups of entrepreneurs, very often pool-in their capital to buy franchises that looks profitable. The business concept has been proven to be sound and successful: your task is to keep the momentum going, manage the business smartly and continue building its customer base. If you are buying a business, you may even be fortunate enough to have the previous owner mentor and guide you in running the business.

The principle is that when the idea is already accepted by the consumers or the public as a whole, your focus will be on employing marketing techniques that will keep consumer's interest in the business and to reach new markets. You will no longer be saddled in orienting the public about your product and convincing them of its many benefits. You only need to highlight the factors that make your business rise above all the rest, because people already know what the business is.

Take for example the business of selling antiques. People understand what an antique is; you just have to inform them as to what kind of antiques you are selling and what sets you apart from the thousands of antique dealers in the country.

Being the first in the field, however, gives you what is called the "first mover advantage." You introduce the product; you set the pace; you are the innovator. If the product is successful and copycats spring from everywhere, your brand still remains strong. Think of Yahoo - they are the first most popular search directory. So when you think of online directory, the first thing that comes to mind is Yahoo. Same with Amazon. These brands became very successful because they were the first in their markets.

Even if you are not dreaming of becoming a world-renowned brand name, starting your own business from scratch entails a lot more risk. You need to find ways to get the word out about your business and struggle (it's always a struggle) to get that first customer. You will not have a support mechanism that someone who buys a franchise or an existing business enjoys.

I suggest that you read our article "Three Roads to Business Ownership" by Steve Ma. Reyna at http://www.powerhomebiz.com/vol18/ownership.htm  to help you understand the advantages and disadvantages of the various entry points to entrepreneurship

Good Luck!

About the PowerHomeBiz.com Guide: 

The opinions expressed in this column are those of the author, not of PowerHomeBiz.com. Users should not treat the Guide's response as legal, accounting, or professional advice as all answers are intended to be general in nature. Such advice can only be properly given by qualified professionals who are fully aware of a user's specific geographical areas or circumstances, such as an attorney or accountant.