Turnkey Business - Explained
What is a Turnkey Business?
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Table of ContentsWhat is a Turnkey Business?Turnkey and FranchisingTurnkeys and Multi-Level MarketingOther Examples of Turnkey BusinessesTurnkey Property
What is a Turnkey Business?
A turnkey business is an existing business that, if purchase, would be ready for immediate operation. Turnkey is based on the concept of unlocking doors and beginning operations by turning the key in the lock.
Turnkey businesses are mainly businesses with good strategies and working models that mainly lack capital and labor. Costs involved in turnkey businesses may include franchising fees, insurance, rent, storage and many others.
Turnkey and Franchising
Turnkey franschises are perfect examples of illustrating this business model. Here, an investor gets to buy a ready-made franchise (an outlet) from a major brand who take care of all the resources and materials needed to start the business. Most of these franchises are already built and available to use upon purchase. Also, the provider is in charge of the resources needed to keep business flowing. The investor merely has to turn the key and drive the business up. Franchises are highly profitable businesses, and most brands make it an even better investment by eliminating the chance of competition. Also, they might turn out cheaper than owning your personal brand in the long run. However, franchises are expected to run by the standards given from the major brand. Here, the franchisee is only allowed to offer ads that fit the business's persona, and he or she is not allowed to be too creative. They also cannot decide on what they want in the business, as well as how much supply they need.
Turnkeys and Multi-Level Marketing
In direct sales and multi-level marketing, an individual only needs to register with a particular service as a consultant to start operating in the business. He or she will also have to pay a fee for the materials required to start working. This individual will not be referred to as an employee, rather he or she is an independent consultant whose interest in the company is merely making profits. These profits are made from the differences between the price at which products are sold and the cost of the products which were initially paid for by the consultant.
Other Examples of Turnkey Businesses
Turnkey businesses can also include any firm or business that is already in operation and open to new investors. If the business has a proven track record, it is generally considered to be better than owning your own business due to the risk level, or owning a franchise due to the lack of total control associated with it. It is however important to note that getting correct assessment of businesses can be a hard task, and that a business's past performance does not reflect its future performance. Also, diving into a business which is in need of investment capital and labor might not yield positive returns, as the company's problem may be much more than just capital and labor.
Turnkey properties are generally renovated homes or buildings which an investor can buy and give out to tenants immediately. These properties are actually purchased from companies who renovate older buildings. They also offer advise to investors to reduce the effort needed to give out the property for rental. Investing in turnkey properties is appealing mostly to real-estate investors who love the ideal of home-flipping and rentals, but dont actually have the time or knowledge to run all aspects of this process by themselves. Most investors, however, choose to hire real estate companies to manage these properties.