A mom and pop business might not be as popular now as it was in the past, but it’s still a profitable investment for retirement. If you’re interested in acquiring a mom and pop, then here are a few tips that you should consider.
In this article:
- Advantages of Buying Mom and Pop Stores
- Disadvantages of Buying Mom and Pop Shops
- 5 Tips For Starting a Mom and Pop Business
Mom and Pop Business: Tips and Factors to Consider When Buying One
Advantages of Buying Mom and Pop Stores
You Get to Set Your Own Rules
For those who are investing for retirement and want more independence and to play an active role in their investment, acquiring a small business is probably one of the best moves.
With a franchise, there are several rules in place that franchise owners must follow. These rules must be followed even if you have different ideas.
Setting your own rules allows you to play around more with what is the most optimal for your business. It comes with risks, of course, but not without its plentiful rewards.
You Have Flexibility With Mom and Pop Products and Services on Offer
Unlike having a franchise business, buying an independent business allows you to choose from a variety of products and services to offer.
With a mom and pop, you’re free to modify your products and services based on your own strategy and preferences. In this way, you can cater to the wants and needs of your customers and adjust as needed.
You Don’t Deal With Royalties or Excessive Marketing Fees
By acquiring a family business, you won’t have to deal with a monthly or weekly franchising fee. In addition to the franchising fee, you’re also spared the marketing fee you should pay if you own a franchise.
The marketing fee is usually based on your monthly revenue. The franchiser will take a cut based on how much you made in a month.
If you own a mom and pop store that’s owned and operated, you won’t need to pay these monthly fees, which can take a considerable amount of money from your income.
Control over Specific Aspects of the Mom and Pop Business
With a mom and pop business, you’re free to expand and make changes to your business. However, this also means you have full responsibility for it.
Since you have full control over it, you’re free to experiment to better adapt to the needs of your customers. You’re also free to take the business in any direction you want, which can allow more opportunities to open up for you.
Disadvantages of Buying Mom and Pop Shops
There’s a Steep Learning Curve
One of the downsides of operating a mom and pop is the learning curve you have to overcome, especially if you’re a newbie to owning and operating a business.
No Franchiser Support
People who invest in a franchise often get the support of the franchiser. Should they need advice on how to deal with specific aspects of the business, the franchiser can help.
With a mom and pop business, you have to work things out through trial and error and experimentation. This may sound like heaven for some, but it’s a nightmare for others who want something more established.
Franchises Often Have Better Brand Recognition Than Mom and Pop Shops
A franchise is established enough that it already has set target customers who may know about the business already. Therefore, you won’t need to build your business image from the ground up.
This comes with a strict set of rules to maintain the type of brand image that the franchise wants to project.
You’re Following a Pre-Determined Formula
For investors who aren’t as confident about managing a business from the ground up, a mom and pop business might not be the best venture.
Since getting a franchise means there are already a set of rules in place, all you need to do is follow them. Unfortunately, this also means following the rules even if you don’t agree with them.
5 Tips For Starting a Mom and Pop Business
1. Look Into the Most Profitable Industries for Small Retailers
As a smaller business, there are particular industries that have proven to be most profitable for independent businesses. These are the food, fashion, and the apparel industry.
Of course, you can start a mom and pop shop in any industry of your choosing. However, if you haven’t decided yet and aren’t set on any specific industries, you can explore the three industries mentioned above.
2. Be Particular of the Location
Since you’re a small business, you should focus on establishing a location in smaller communities. You don’t have to compete with the bigger corporations for retail real estate when you can go straight to the heart of your local neighborhood.
A tip is to look into starting up shop near schools, residential areas, or even transport lines. This can help your business get the foot traffic it needs without being outshined by more recognizable brands.
3. Carve out Your Niche and Target Customers
With a mom and pop business, what’s important is to have a unique charm that commercialized businesses don’t have. You should make sure you have a niche and are targeting a particular group of people as your target customer.
Carving out your niche in the industry as well as creating a target customer profile will make it easier for you to create your business strategies.
4. Create a Unique Ambiance for Your Shop or Business
Plenty of mom and pop restaurants have found success simply by offering good home-cooked food. It might not be a franchise or offer anything fancy, but people still flock to them.
Although creating an ambiance doesn’t always mean just the physical design of your store, it will help if you have a good-looking store that looks photographs well. Getting popularity through social media can help drive attention and traffic into your business, which is an important aspect of doing business these days.
5. Get in Touch With Other Local Businesses in the Area
Unlike franchises, local businesses aren’t your enemies. You might find that the more local business there are in the area, the more attention your business can get.
In terms of local businesses in one area, more or less, it’s about collaboration rather than competition. You can help build up each other’s business.
For example, you can collaborate with them in promotions or marketing campaigns. You can also refer customers to one another.
Either way, it’s useful to create a network of local businesses that stick together.
Acquiring a mom and pop business has its advantages, but it also comes with its own risks. If you’re interested in acquiring a business as a key investment for your retirement, a good choice is starting a small local business.
Not only will you be generating income for yourself, but you also get to help your neighborhood. Plus, you get to find something to get busy with during your golden years.
Thinking of acquiring a mom and pop business for yourself? What industry do you want to go into? Let us know by leaving a comment down below!