Requirements to Start a Business
Starting a business is no small feat, and not a decision you should make lightly. There are all sorts of things to consider, from legal requirements to necessary steps and processes, risks versus reward, and more. It can be daunting trying to tackle it all on your own. Fortunately, at Franchise Gator, we are here to help. We can provide the inside scoop on starting a business and let you in on a little secret…one of the best ways to start your own business is to open a franchise.
What are the Basic Requirements to Start a Business?
There are all sorts of requirements to start a business. Depending on if you are considering a franchise or a small business startup, requirements may vary a little. Let’s look at some requirements for a traditional startup and things you need to start a business either online or in person.
How to Start a Small Business
Some people will ask things like, “What are the 9 steps to starting a small business?” Let’s take a quick look at a general guide for how to start a business from scratch.
- Figure out what you are selling: What is your idea? What are you passionate about? What product or service are you offering? What’s your secret sauce? There is an old adage that basically says, “If you get good enough at anything, you can make money doing it.” The same is true of your passion. If you enjoy doing something and are good at it, you can likely monetize your passion.
- Choose a legal structure: There are several different types of business from a legal perspective. The main types of legal classifications (aside from non-profits) are: sole proprietorships, partnerships, corporations, S corporations, and limited liability corporations.
- Come up with a name and brand: Once you know what you are selling and how you want to be legally classified, it’s time to hone in on your company's identity. What is your name going to be? You will want to make sure it makes sense to customers and isn’t already owned by someone else. As far as your brand goes, you should focus on your value propositions. Why should customers come to you in the first place, and why should they stay loyal? Beyond that, branding involves things like your values, logo, tone, and voice.
- Create a business plan: A key part to starting a business is creating your business plan. Your business plan is basically your roadmap for your company, and should detail what you hope to achieve, what you will require to do it, and how you plan to actually execute it.
- Funding, funding, funding: Starting a business costs money, and therefore, securing funding will be a big priority for you. You might be backed by individual investors, crowdfunding, or even by securing loans from a bank.
- Records and paperwork: Before you can get started, you must ensure you have the appropriate recording, documentation, and paperwork all set up. This will include things like tax forms, licenses, accounting records, and more.
- Find your space: No, this is not some metaphor for figuring out your market. This step is about finding a physical space to rent or buy for your business. Of course, not all businesses will require the same kind of space (or even any space outside of a home office) so think carefully about your needs before committing to a location.
- Get insurance: Before opening up, you will want to get insurance for your business, from equipment to merchandise, to in-store accidents. Be sure to cover your bases, it’s better to be safe than sorry.
- Hire employees: While you may not need to hire an employee right away, if your business succeeds the way you envision, you will likely have to hire help. Not only will you need to pick out the right people, but you will also need to onboard them and get them up to speed quickly.
After you complete these general steps, you are as ready as you will ever be to open your own business. But here’s the thing, these steps are not easy. They require lots of time, money, resources, creativity and effort. It can be incredibly difficult and daunting to start your own business from scratch. In fact, many people shy away from opening up a business because there are just so many hurdles. Other times people will say things like:
- I want to start a business but I'm not good at anything
- I want to start a business but I don't know what to sell
- I want to start my own business but don't know what to do
- I want to start a business but have no money
Between those statements and all the work that goes into starting a business, it makes sense to be hesitant. It might even lead you to ask questions like:
- How can I start my own business with no money online?
- How can a beginner start a business?
- What is the best business to start with little money?
Fortunately, there is an answer to these questions, and there is a better way…buying a franchise.
What are the Basic Requirements to Buy a Franchise:
There are many things to consider when buying a franchise. First and foremost, it’s important to understand the differences between buying a franchise and starting a business from scratch.
The Pros of a Franchise
There are all sorts of pros to buying a franchise. They include:
- Buying a company with a proven model. This means a high likelihood of success and a model that supports growth and scaling.
- You get support from the parent company at every step of the way, meaning you are truly never in it alone. They will give you tips, advice, and the necessary support system to succeed.
- The option to buy multiple franchises means you can own as many or as few businesses as you like. That basically means there is unlimited potential.
- Instant brand recognition and audience loyalty, especially if you are buying a well-known franchise. With a franchise, it’s that much easier to bring business to your doorstep from day one.
Cons of a Franchise
Like anything in life, there are some compromises with owning a franchise. They include:
- The initial investment of starting a franchise can cost a pretty penny, especially if you are looking to open up a well-known store.
- Royalty payments are a foundational pillar of the franchise model, with a percentage of your gross earnings going into the parent company’s pocket each month.
- Franchises come with limited creativity or flexibility, so if you are looking for an entrepreneurial outlet to do things your way, a franchise might not be the best fit. The thing is, franchising works because it’s a consistent business model with repeatable and operational processes. If you veer too far from the model, you might be jeopardizing your franchise and, in turn, the parent company.
Steps to Start a Small Business in the Form of a Franchise
The steps for buying a franchise are notably different from just starting your own proprietary business. The process entails several steps.
- Research: Look into different franchise opportunities in your area and begin to identify ones that align with your needs and circumstances. Some will require more upfront investment than others, while some may promote a more recognizable brand. It is important to be sure you pick the right franchise to buy. One good resource for this is Franchise Gator.
- Contact the franchisor: Reach out to the parent company and ask for their specific requirements and franchise arrangements. If you like what you hear, submit your application. It is not uncommon for companies to ask for proof of good partnership, meaning the application might be pretty extensive.
- Review the franchise disclosure document (FDD): The FDD will outline the exact relationship between the parent company and franchise and explain the nature of the model, including fees, commitments, etc.
- Create a business plan: Hey this one looks familiar. Just like before, creating a business plan or roadmap for your franchise will lay out projections and goals for the performance of your business.
- Financial and legal review: If you are wondering, “What are the legal requirements to buy a franchise?” you aren’t the only one. At this point, you need to reach out to an attorney or accountant to ensure that you completely understand the legal and financial implications of your franchise agreement. If everything checks out, you can go ahead and sign your contract and pay the fee.
- Find your space: Another familiar step, you will need to understand the requirements of the franchise and locate an adequate location to set up shop. This location will need to be approved by the parent company. Once they give the green light, you will collaborate with them on the development and design of the location.
- Franchise training: While things are still underway with the development of your franchise, you will go to training to learn the ins and outs of how to run the business. This often requires traveling to company headquarters, so be prepared for travel expenses.
- Prepare to open: Once training is over, you can put the finishing touches on your location, hire your employees, and build up the hype for your grand opening. Once everything is set up and the staff is trained, you are ready to open your doors.
Franchise Gator, Because There is No Business Like Your Own Business
If you feel like you’re ready to start your own business, but don’t want the risk and hassle of going the startup route, franchising might be right for you. With the support from Franchise Gator and the franchisor, you can get into business for yourself without having to do it all by yourself. Get started today by heading over to our website and finding available franchises near you and franchising resources.