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NEW YORK — Wall Street fell again Wednesday, though a rally for Microsoft and some other Big Tech stocks helped to limit the losses.
The S&P 500 dropped 15.64 points, or 0.4%, to 4,055.99. The Dow Jones Industrial Average fell 228.96, or 0.7%, to 33,301.87, while the Nasdaq composite led the market with a gain of 55.19, or 0.5%, to 11,854.35.
Wall Street was coming off its worst day in a month, hurt by concerns about the strength of U.S. banks. First Republic Bank lost another 29.8% after nearly halving the day before following its report about how many customers bolted amid last month’s turmoil in the industry.
The worry is that smaller and mid-sized banks could suffer debilitating runs of deposits from customers, similar to the ones that caused last month’s failures of Silicon Valley Bank and Signature Bank. Even without more shutdowns, the industry’s struggles could cause a pullback in lending by banks and sap the economy.
PacWest Bancorp., another bank in investors’ spotlight, rose 7.5% after reporting stronger results than expected and saying that its deposits have grown since late March. That may offer optimism that First Republic’s struggles could be specific to itself.
Traders work on the floor March 13 at the New York Stock Exchange in New York.
Enphase Energy fell 25.7% Wednesday despite reporting stronger profit and revenue for the latest quarter than forecast. Analysts pointed to its revenue forecast for the current quarter, which fell short of some expectations.
Most companies topped expectations so far this reporting season, but investors are paying more attention to what CEOs say about upcoming trends than results for the past three months.
Activision Blizzard tumbled 11.4% after U.K. regulators blocked Microsoft’s takeover on concerns it would hurt competition in the cloud gaming market.
While the majority of stocks fell, Microsoft rose 7.2% after reporting stronger profit than analysts expected for the first three months of the year. It carries a huge weight as the second-largest stock on the S&P 500 index.
Google’s parent company, Alphabet, also turned a bigger profit than expected but its stock slipped 0.2%. It reported its first back-to-back drops in advertising revenue from a year earlier since it became a publicly traded company in 2004.
Chipotle Mexican Grill rose 12.9% for the biggest gain in the S&P 500 after reporting stronger profit than expected.
A report on Wednesday showed orders for long-lasting manufactured goods were stronger in March than expected.
In the bond market, the yield on the 10-year Treasury rose to 3.43% from 3.40% late Tuesday. The two-year Treasury yield fell to 3.92% from 3.95% late Tuesday.
Founding, franchising, or buying: What’s the right option for your new business?
Founding, franchising, or buying: What’s the right option for your new business?
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One silver lining from the COVID-19 pandemic was that it reignited America’s entrepreneurial spirit. In 2019, the Census Bureau tracked about 3.5 million new business applications. In 2022, that number jumped 44%, to over 5 million.
People start new businesses for various reasons, including sudden unemployment, which spiked at the beginning of the pandemic. People also discovered a need for flexible work, and many wanted to create a more fulfilling job and control their destinies.
While tech startups get a lot of attention, there are many types of new businesses that open each year, from a sole proprietorship with no employees to a partnership with multiple owners that employs a dozen staffers.
There are also business owners who might opt to buy a franchise, a company that licenses the use of its business model, materials, and goods or services to investors. These investors, known as franchisees, must pay a one-time franchise fee to the larger company along with royalties. Entrepreneurs can also get into business ownership by acquiring an existing business from another owner.
Thinking of becoming your own boss but don’t know where to begin?
Next Insurance analyzed resources from the Small Business Administration, the Census Bureau, and news reports to outline the pros and cons of entering business ownership through acquisition, startup, and franchising.
Bootstrapping your own business for ultimate control
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Starting your own business from scratch gives you control over your work—from the product or service you sell to the deadlines you set to the people you hire. Startups also give you a lot of creativity to try new ways to bring your ideas to fruition and see how they improve other people’s lives.
When you start with a blank slate, you’re responsible for all of the decisions, from the type of business you want to create to how you will make, sell, and market your products. It’s important to write a thorough business plan to help you think through all of these details so you can set and achieve business goals.
Startups also incur costs before you get your first customer—things like legal fees, licenses, inventory, and various marketing costs you may have to pay out of pocket for years before making a profit. The Small Business Administration recommends listing what they are before you get started so you can get startup loans, investors, and determine when you’ll be able to break even.
Hit the ground running as a franchisee
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When you buy a franchise, you run a business with name recognition with customers, avoiding the expensive and time-consuming costs of bringing a brand-new business to life. While you may think of fast-food restaurants as a franchise, the Census Bureau notes franchise opportunities exist in almost 300 industries, including hotels, beauty salons, gas stations, fitness centers, and day care centers.
In this business model, you pay a franchise fee for the right to open an outlet, royalties based on your sales, and often advertising fees. This may require a significant investment of tens or even hundreds of thousands of dollars—not just in fees but also in the costs of outfitting and opening your business location.
While you do buy into a proven business model, owning a franchise takes away some of the creativity of being a business owner. Franchisors have uniform ways of how their businesses run and look—and you must adhere to their procedures.
You also have no control over how an incident at the parent company can affect your business, such as Papa Johns’ public-relations debacle that caused the NFL to end its partnership with the pizza company.
Buying an existing business and charting a new chapter
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If financial freedom is your goal, buying an existing business may be a low-risk way to reach that goal more quickly. Plus, someone else has done the hard work of bootstrapping the business, so you get the creativity of running your own business without the headaches of starting from nothing.
When you buy another business, you’ll know its operating costs, systems, and procedures, and you’ll also have skilled employees and an existing customer base.
On the flip side, you typically need to have a good deal of money already to buy an existing business. You also must do your due diligence to ensure the business has good financials and know if you’ll be on the hook for any missed tax payments or other debts.
If equipment is outdated, you may have to invest more money to make the necessary upgrades to stay competitive. You should also get to know the company culture to know whether it’s a well-oiled machine or if you’ll have to put in extra work to make improvements.
This story originally appeared on Next Insurance and was produced and distributed in partnership with Stacker Studio.
