A repository of acronyms, jargon, and useful definitions perfect for eCommerce founders & marketers like yourself.
A turnkey is a prebuilt business just like a template that is ready to use after applying some customized operations. Just like the literal meaning of the term turnkey, which is turning the key to unlock the doors to execute various operations, turnkey in eCommerce refers to a business setup where the business provider takes full responsibility for making all the required arrangements for the initial setup of the business. This prebuilt business setup is sold by the provider to a new operator after fulfilling all the prerequisites.
A turnkey business provides you with a well-built successful business model that lessens the capital and labor investment. It is one the simplest ways for you to begin a business, it’s like a magical key that you as a business owner have to turn and your entire business model is in your hand as you turn the key. To buy a turnkey business, one must make arrangements for franchising fees, rent, insurance, inventory, etc. As a business owner, you can buy a franchise or a turnkey business and start operating your business immediately.
Most turnkey businesses are built with a particular pre-designed framework. This framework also has already designed supply lines for carrying your products to your customers. Every turnkey business is built on the basis of a model that is already tested and thus turnkey businesses have lower failure rates. However, there is a corporate rule according to which no two turnkey businesses are set up within the same territory to avoid internal competition.
A franchise is an example of a turnkey business. Another example of a turnkey business is any business that is already running successfully in the market but its doors could be opened, that is it could be sold to some potential business owner. Multi-level marketing schemes and certain real estate investments are also examples of turnkey businesses. When you become a part of a Multi-level marketing business, which is a turnkey business, you basically have to sign up for some particular service as a consultant and pay fees for the inventory required to perform the work. Being a consultant you are not an employee of the company; instead, you function as an independent entity, and the profits you make are based on the difference between the supply costs and the price at which the items are ultimately sold. A turnkey business is always a better option for you as a business owner because it has a proven track record, and the risk you partake in when you start a turnkey business is always going to be lesser than the risk you take when you start a new business from scratch.
However, while buying a turnkey business sometimes it is hard to determine the reason behind the sale of a business, also it is hard to find out the appropriate value that the business held before you bought it. To understand the concept of a turnkey business better, consider the example of a turnkey property. Imagine you have a fully furnished apartment and you are willing to sell this apartment. This apartment is a perfect illustration of what turnkey businesses are like, just like a fully furnished apartment that is ready to be lived in by your buyers, a turnkey business is a smartly built business built that is ready to be operated by any business owner who buys it.