If you want to leave your current job to start a on your own, then starting a franchise could be one option. Your decision should take into consideration various advantages and disadvantage that a franchise offers before taking steps further.
You should know whether you would like to run the franchise or not? It is possible that you want to start on your own because you do not want do your current job or any job but it does not guarantee that your liking for your own business.
Advantages of starting on your own include:
- Greater freedom over you decisions at work. Decide your own working hours, conditions and arrangements.
- Opportunity to run your own business.
- Working in your own area of interest. Doing something you enjoy, like you can open a retail chain if you like selling something.
Disadvantages of starting on your own include:
- Since you have the complete responsibility of running the business, you would sometimes have to forego the freedom that you have in a job and give priority to your business.
- Your income is not fixed (there is uncertainty) and you only get the money that you have earned for the business. And you might have to live by cutting costs as you might not get enough money at the end of the month to cover your costs.
- If you work from home, you might have family members asking you to commit time to them, instead of work.
- You might have to do some work which you do not like. You might like selling but you would also have to maintain your accounts, work on the legal aspects of the business, sign some contracts etc. As you are the only person doing it, you can not neglect your responsibility towards it.
- In a franchise business you are working independently but still working for/under someone else’s brand name. You would be bound by the rules of the franchise agreement and thus sometimes they might like you to do things that you might not agree with. So if you prefer complete autonomy, you would need to go for starting your own business and not a franchise.
So decide your options of working for buying a franchise keeping the above points in mind.
Options for Avalon’s Board
Best Option: Raise debt capital, pledging whatever assets it can, and use that for two purposes:
(a) do the biotech drug development with a strict performance based incremental investment
(b) start a service based revenue stream that can generate some operating cash.
Avalon Board and CXOs have to figure out what services they can offer to the industry, like taking outsourcing work from other larger companies…they should do something extra along with R&D work if they are serious about keeping the company afloat. There are many biotechs struggling in the market doing pure-play R&D, and equity capital won’t come easily especially with no results to show with the previous $30 million from last year.
Second Best Option: Sell the partial rights of work-in-progress research to a larger biotech or pharma who can afford to use the research, and get cash in return.
Either way, existing investors should be very cautious to put more money into the business at this stage.
Background Business Developments
Thursday, August 14, 2008; Washington Post Page D01
Avalon Pharmaceuticals told investors yesterday that it will not be able to continue operations past this year if it can’t secure more funding. The Germantown biotech said its second-quarter loss narrowed to $5.6 million, from $5.8 million in the comparable period last year. Revenue was $137,000 for the quarter ended June 30, up from $78,000, thanks to its collaboration with Novartis Institutes for BioMedical Research. But Avalon’s cash, equivalents and marketable securities totalled $16.7 million, an amount that restrains its plans.
“We are acutely aware of our need to raise additional capital in the near term and are vigorously exploring a number of options,” C. Eric Winzer, Avalon’s CFO, said during a conference call with investors.
To thin its expenses, Avalon will cut a third of its employees, reducing its workforce to about 35 people. The biotech, which focuses on cancer therapies, will stop work on its most advanced drug candidate and focus on AVN316, a drug that inhibits a cell pathway containing several proteins that play a role in the start and spread of cancer.
Avalon has partnerships with Merck and other firms to investigate compounds to fight several ailments, including cancer. Avalon could receive up to $200 million in milestone, regulatory and other payments as part of its Merck agreement, a partnership created last year to attack a target previously regarded as “undruggable.”
The decision to stop work on AVN994, which targets an enzyme that is sometimes overproduced in some cancer cells, especially blood malignancies, surprised analysts. AVN316 is better understood and appreciated by big pharmaceutical companies, Kenneth C. Carter, Avalon’s chief executive, told investors. “We believe our focus on these other programs will provide better shareholder value in the near term and long term,” Carter said.
Last year Avalon raised $30 million in private stock placements to fund its drug pipeline programs. Shares fell 29 percent yesterday, closing at 73 cents, the company’s lowest since going public in 2005.
Slow clinical drug development, which is typical of biotechs, coupled with poor market conditions, have hampered financing, said George B. Zavoico, an analyst with Cantor Fitzgerald in New York. Like small, struggling biotechs before it, Avalon now faces partnering with another company, debt financing or selling itself. But the big drug companies are losing patent protection on high-revenue products. “There is a little bit of reluctance to enter into partnership as easily and generously as when they were collecting billions of dollars off blockbuster drugs,” Zavoico said. “They see their revenue streams tightening up.”
