Starting Your First Business
There are so many exciting firsts to look forward to in life! The first day of school, first car, first job, first apartment you rent or home you own, first love (if you’re into that)—and in your case, maybe starting your first business.
Some people have the goal of starting a business their whole life. Others wake up one day mid-career with the inspiration to become their own boss. Overall, nearly 9% of Americans own their own businesses, with over 1,600 new businesses opening each day on average. First-time business owners are certainly not alone as they set out on this journey… but there’s also a lot to learn. However you arrived at this decision, it’s exciting, inspiring, and yes, stressful too. But this is positive stress, created by stepping outside a typical career comfort zone and trying something new.
How can a beginner start a business with the confidence that they are improving their future, not putting it at risk? One answer is by considering all the different ways to start a business. Yes, you could build a business from scratch, and we’ll start by summarizing a little of what you would need to know to do that. But you could also start your first business through franchising, which is a great way to learn some of the basic lessons of business ownership while sharing the risk with others. In this article, we’ll review both approaches to starting your first business, as well as some of the most unique business ideas in 2022 that you can get inspired by.
How to Start a Business from Scratch
Starting a business from scratch is a unique recipe for each person. The exact process and needs depend on the goods and/or services the business will offer, as well as the competition in the market. The behaviors and needs of target customers also play a major role in how a business should start its operations. Some businesses will need lots of employees right away to meet expectations, while others may be able to operate with a lean team to prove their concept first.
List of Things Needed to Start a Business
To start a business, you need an idea, a name, a plan, money, and to make sure you’re operating within the scope of the law. Let’s unpack each one a little further.
- Business Concept and Structure: To start a business, first you need an idea. What goods or services will you sell? You also need a general idea of the structure: will it be a one-person operation, a partnership, or do you plan to hire several employees right away?
- Name and Branding: What will your business be called? Search to see if the web domain and social media pages for your top few ideas are available. It’s also time to start defining your brand, starting with company values all the way to the details of the logo.
- Funding: Even the smallest at-home operation needs some capital to get started. Define your budget and think about sources like savings, a loan, or fundraising to meet the needs of the new enterprise.
- Licenses, Insurance, and Other Compliance: Lastly, you want to be sure to register the business to pay taxes, get a business license if your state requires one, get any necessary business insurance, open a business bank account—there can be many administrative steps to opening a business, depending on the industry.
- Business Plan: Starting a business requires objective, documented planning to offer a roadmap to yourself and others. Let’s unpack the seven sections that should be included in your written business plan to describe all of the above.
What are the 7 Parts of a Business Plan?
According to the National Federation of Independent Businesses (NFIB) there are 7 essential parts of a business plan:
- Executive Summary: This opening section includes your business’ name, mission, and vision, as well as the specific purpose of the business plan (set strategies, secure investors, etc.).
- Company Description: This section is a high-level view of the business, including how it operates, target markets, growth goals, and how you plan to make a profit.
- Products and Services: This section describes what you are selling, with a focus on the benefits to the customer or end-user.
- Market Analysis: This section is the details about the projected growth in your industry, insights about your target markets and their projected spending, and info about your competitors.
- Strategy and Implementation: This section lays out your go-to-market plan, including how much your product and/or service will cost, supply chain and vendor resources, needed or current employees, distribution, marketing strategy, and more.
- Organization and Management Teams: This section should list the owners, board of directors, and managers of the company, including their names and past experience, as well as their positions and responsibilities within the business.
- Projections and Financial Plan: This section is often completed with the help of an accountant, who can support in the creation of revenue projections and budget forecasts for the first one to three years of operations.
Writing the business plan goes a long way in helping you prepare to start a business from scratch. But for a first-time business owner, there is a lot of uncertainty that takes place between the lines, in the places where you don’t know what you don’t know.
Since the 1990’s, around 20% of new businesses have failed in their first two years of operations. The most common reason for business failure? A lack of research into the market, including failing to correctly identify audience needs. In other cases, there is not enough research into the competition—a similar business may already exist, or have been tried before and failed. Not following the business plan, a lack of funding, and a bad location or bad marketing are more elements that commonly cause small businesses to fail.
What we love about franchising, especially for first-time business owners, is a chance to start a business while getting around a lot of these risks. Franchises succeed because they are proven concepts, and they come with many resources to support owners in surviving their first months and years.
Requirements to Start a Business Through Franchising
Starting a business through franchising means paying an existing company to open a new location of their business in your area. This means you buy into their resources as well, including a business plan, training, marketing collateral, legal and compliance support, and even help choosing and/or opening a location. Here is what is required to buy into a franchise and get a turnkey first business setup.
What are 5 Things You Need to Start a Business as a Franchisee?
- An Understanding of the Business
It’s important to understand franchising in general and how it differs from traditional business ownership. Depending on the franchise you consider, you may also need past industry experience or training. Most franchises will offer this to you, but past experience certainly helps.
- A Full Sum of the Costs
Costs involved in franchising include both start-up costs and ongoing costs like royalties and marketing fees paid to the parent company. You often need a certain net worth or amount of cash in the bank to open the franchise to begin with. Low-cost franchises start between $5,000 and $10,000 and certain high-profile brands are many times that.
- A Personal Reckoning with the Commitment
Some of the hard work of launching a business is easier with a franchise because they come with several resources, but that doesn’t mean owning a franchise is easy. Before making such a large investment it’s important to do some personal due diligence and make sure you are ready for the adventure.
- A Relationship with the Franchisor
It’s important to get to know the parent company as well as the other franchise owners in your region. These will be your collaborators and possibily mentors, so you must get along and share trust.
- A Realistic Expectation of ROI
Like a business started from the ground up, franchises can also take a few years to become profitable. Don’t go in expecting to get rich quick! Even if you’re opening multiple locations of a national brand, it will take you some time to ramp up and get your footing, as well as make back your initial investment in the franchise(s).
12 Unique Business Ideas You Can Franchise
These 12 franchises are a unique small business ideas list encompassing a variety of industries. It bears mentioning that these are also some of the Franchise Gator Top 100 Franchises of 2022!
- Time To Eat Delivery: Time To Eat Delivery allows you to offer local grocery and food delivery through an app. You are assigned a territory and the parent company helps you establish relationships with area grocers and restaurants.
- Apricot Lane Boutique: Become the fashion destination in your local market with Apricot Lane! You hand-select and curate the latest styles in limited quantities for a true boutique experience.
- Dog Training Elite: Dog Training Elite owners have a chance to make a difference in the lives of dogs and their owners. No previous training experience required—in fact, it’s preferred so you can learn their method.
- Pillar to Post: Do you like to look at houses and help others? Pillar to Post is the fastest-growing home inspection company in North America. Technology, training, and connections to realtors are all included!
- Young Engineers: If your community needs after-school programs for kids, Young Engineers is a great service to start providing. Kids love these LEGO-enabled, entertaining STEM programs.
- Bath Tune-Up: Bathroom remodels are one of the most popular home investments, and with this franchise you’re there to make the process stress-free. National buying power for supplies and lifetime training are more benefits.
- School of Rock: Did you know the movie and musical School of Rock were both inspired by a franchise? These locations have been helping students of all ages meet and greet their inner rockstar.
- Elixir Muscle Recovery Center: Youth athletes are playing and training harder than ever, and Elixir Muscle Recovery Centers are committed to helping them avoid injury.
- Tailored Living: Help people get more organized and live better as a Tailored Living owner! This brand has worked with HGTV and has a strong national reputation for elegant design and quality installation.
- VentureX Coworking Space: Start a coworking space in your community with the tried and tested processes of VentureX. Each location offers multiple membership options to maximize your revenue with all types of workers.
- CTi Concrete Technology: Help homeowners save on repairs as a CTi Concrete Technology dealer. Since 1992 homeowners have trusted this company to update their homes and yours could be the newest location!
- WaveMAX Laundry: Bring a clean, professional, coin-only laundromat to your area as a WaveMAX owner. This parent company is looking for partners ready to share their pride in a beautiful business.
How to Start a Business from Home as a Franchisee
The opportunities above are not necessarily businesses for people sitting at home. If you plan to invest in a franchise and have someone else run it for you, then any franchise technically could be passive income! But if you’re looking for profitable home business ideas, these franchises might be more up your alley.
- SystemCentric: SystemCentric helps you set up and stock an eCommerce store on Amazon. They also handle customer service, returns, bookkeeping, and more!
- Medical Billing Opportunity: Start and grow your own medical billing business within 12 months using Medical Billing Opportunity’s proven program. This is less a franchise and more of a business framework for you to take and run with.
- The Lending Network: The Lending Network is an opportunity to start a business in financial services with access to the training and experience the industry requires.
Browse Business Concepts on Franchise Gator
If you want to see more unique small business ideas, check out our full A-Z franchise directory. Let us know if we can share more information with you about any of these franchises! Good luck with your new business venture.