Summary of Ways to Build a Business/Wealth

So I just thought I would summarize some various ways to build a business, or wealth anyway:

Franchising and Chaining: This is where you build a business where you create the initial unit, systemize it to make it able to be replicated, and then begin expanding via opening additional units via chaining (where you put up the capital and open additional company-owned units), franchising (whereby you sell a franchise to another person who puts up the capital, assumes the risk, and operates the business according to the systems you have established, and then pays you a franchise fee), or some combination of the two. This can be done with many different types of businesses, in particular with restaurants, hotels, bar shops, hair salons, gyms, car dealerships, etc...new franchise concepts are being created all the time.

Create Brands/Franchises: This is what they tend to do in for example the toy industry, i.e. create franchises whereby in addition to the toys, a whole slew of additional merchandise can be created. Creating such a brand/franchise that is very popular is the Holy Grail in this kind of franchising. Some prominent examples could be Spin Master's Bakugan toys (with a cartoon and tons of merchandise) and Dora the Explorer (a cartoon which Nickolodeon franchised into a whole bunch of merchandise, thus making it a billion-dollar brand).

Although I can't think of any off the top of my head at the moment, I would imagine that franchising in this sense doesn't just apply to toys and cartoons though, it can be applied in other industries as well.

Roll-Up: This is basically where you start a business in a fragmented industry, or buy a business in a fragmented industry, or even buy multiple businesses in a fragmented industry and combine them together, then you take the company public, and use the stock to acquire other companies in the industry to build up an organization with economies of scale, that is greater than the sum of the parts. Like any method, this can be risky though, and I am no expert, but from my understanding there is more to it than just finding a fragmented industry. Two things to remember about a fragmented industry are:

1) Why is it fragmented? Is it fragmented into a bunch of smaller companies just waiting to be consolidated and no one has done so yet, or is it fragmented because the industry is simply structured whereby large firms do not have the advantage?

2) By "fragmented," one means a single, definable industry that is around $10 billion to $40 billion size. For example, the rubber industry is fragmented, but that is a highly-misleading way to look at it, because the rubber industry consists of many smaller actual industries, which can be consolidated. For example, the tire manufacturing industry is part of the rubber industry, but it is consolidated.

There are strategies and ways to go about finding fragmented industries that are good targets for building a company in.

Buy-and-Build: This is very similar to the roll-up strategy, but is done by private equity firms, and instead of taking the company public and using the stock to purchase new companies, they use forms of financing such as debt to be able to buy companies. Again, this has its own share of risks (if the economy bottoms out and the company is in a recession-prone industry, what was a manageable level of debt can very quickly become unmanageable). Private-equity firms will usually use buy-and-build strategies to build up a company that is greater than the sum of the parts, and then either sell the company to a larger private-equity firm, or take the company public via an IPO. Much of the consolidation that has occurred in the various fragmented industries throughout the economy over the past few decades has been due to private equity firms.

Automated Internet Business: This is a business in which is to a good deal automated and exists solely on the Internet, providing a service. I do not know much about these types of businesses, but I am sure that there is much potential for creating such businesses, just one has to think up new ideas. This type of business is one that can be very easy to start, or at least easier to start (requiring no major expenses on land or a building or capital for example), but yet can generate a lot of money for the owner.

Something to remember---the Internet is still very young. Thirty years from now, there will be a whole slew of new Internet businesses that were created whereby many people will be thinking to themselves, "Why didn't I think of that!?" But one doesn't need to try to create the likes of the next Google or Facebook, if anything, that might be involve too much competition. What I am talking about here are small Internet businesses, for example one that you could grow to generate say a few million dollars in income for youself a year. It has been done, although I have no idea how to do it (and if I did, I wouldn't tell the idea for obvious reasons :D), but I mean that would be an awesome amount of money, so what I would suggest is just do what I am doing, i.e. research and brainstorm constantly.

Also keep in mind that if you find an un-filled niche in a type of Internet business that is easy to start, you will very quickly end up having a slew of competitors, many of which may have no inhibitions about blatantly copying your website and service. If you can, try to find a business with harder barriers to entry.

Ecommerce: There is still a lot of potential I think to create a sizeable business via ecommerce as well. Amazon may be dominant, but that doesn't mean other companies can't be started to compete. Build a really good and sizeable company and Amazon may even buy it, for example they purchased Zappos (footwear ecommerce business) and Quidsi, Inc (owner of Diapers.com and Soap.com, along with some other brands now).

There are other ways to build a fortune or business I am sure, but these are all the big ones off of the top of my head for now.