Starting A Business
The prospect of starting a business is daunting. What exactly are the requirements to start a business? What steps to start a small business are necessary and which are just nice to have? Don’t worry, we’ve got the answers and a great shortcut for how you can skip a lot of the complicated parts of starting a business (spoiler alert: you should open a franchise!). We’ll get to that in a moment, but first, let’s explore how to start a business.
List of Things Needed to Start a Business
- Brainstorm an idea for your business
What do you want your business to be? Maybe you’re passionate about the food or beverage industry, and would love to run a burger joint or create specialty coffee drinks. Perhaps you love teaching math and would like to create a tutoring business to help children understand and enjoy math. Whatever you’re passionate about, there’s probably a way you can turn it into a business. Of course that doesn’t necessarily mean you’ll make any money. It’s important to do your research and make sure your idea “has legs” before investing a significant amount of time and resources into a business idea that might not work. For example, you could conduct market research, poll potential customers, or look at other companies in the same vertical.
- Choose a legal structure
According to the IRS, the most common business structures are:
- Sole Proprietorships
- S Corporations
- Limited Liability Company (LLC)
- Come up with a unique name
While a unique name is important so that your customers recognize and remember your business, it’s also a legal requirement. Do your due diligence and search online to make sure that you aren’t duplicating a name. On the other hand, your state regulations may vary. In Indiana, for example, if you are registering an LLC, it only has to be unique within the state. While that may be good for the short term, if your business booms and you want to open locations in other states, your name might become an issue.
- Define your brand
Figure out what sets you apart from the competition. A strong brand will help you build customer recognition and loyalty. Think about things like what your unique value propositions are, what your vision is, who your target customers are, and what your company provides for them. Remember that a strong brand is one that is consistent and easy to understand. Think about McDonald’s—the “golden arches” are such a strong visual and are linked to a product that just about everyone is familiar with.
- Create a business plan
A business plan is an important document for both internal and external use. Writing down all the details of your business will help you think objectively about what your business will be, how it will function, and where you’re going to take it. Think of this document as your roadmap—it will help you along your journey and make sure you end up where you want to go. An important external use case for your business plan is securing funding, if you decide to pursue investors or a loan.
- Secure funding
Speaking of money…You’ll need to figure out where you’ll get the startup costs from. While there definitely are low-cost ways to start a business, the fact is that you’ll probably need at least a small chunk of change to get rolling. You’ll have to set a budget and secure the money you need to get started. This could come from your savings, a business loan, investors, or a more creative source like a crowdfunding campaign.
- Get your paperwork in order
It’s important to get all the documentation you’ll need to operate your business legally. This could include:
- An Employer Identification Number (EIN) so you can pay taxes
- State tax ID numbers (to be able to collect sales tax, for example)
- A business license (some states require one)
- Any specialty permits (like one for serving alcoholic beverages)
- Set up your record keeping
Accurate and complete records are key to meeting legal requirements like filling out taxes as well as helping you know the status of your business at any given time. Investing in accounting software and setting up record keeping protocols from the get-go are a must.
- Open a business bank account
Keeping accurate financial records is much easier when you have a dedicated business bank account. For some business structures, it’s ok if you use your own personal bank account (like a sole proprietorship), but it’s best practice to have a bank account for your company. Don’t just open one at the first bank you think of! Some banks have better offerings for business accounts and may have special perks. Be sure to explore your options, and keep in mind that you may be needing to visit a physical bank location often to deposit cash. Having a branch in close proximity may come in handy.
- Lease a space
Finding the right location for your new venture is a vital piece of the puzzle. Some questions to consider:
- What is your budget?
- What price per square foot is ideal?
- What size do you need?
- What size do you want?
- How long will this space be suitable for your business?
- What is the parking situation?
- Is there public transportation nearby?
- Does it have the right amenities for your business (for example, you may need warehouse space, a commercial kitchen, or a loading dock)?
- Will your target customers be attracted to this location?
- Does this space fit your brand?
- Will you need to do major renovations to get the space ready for your business?
- Get business insurance
Business insurance helps protect you and your new company from any unfortunate incidents. Enough said!
- Hire employees
Time to get your team onboard—when hiring your first employees, it’s important to have an onboarding process already put in place. Write out job descriptions and determine what their training will entail and you’ll set them up for success from day one.
- Open your business!
It’s finally time to throw open the doors and welcome your first customer—congratulations!
Sound like a lot? Well, it is. Remember that shortcut we mentioned earlier? A franchise is a business that is owned and operated by an individual under a parent company that provides all the guidelines on how to actually do that. Investing in a franchise opportunity gives you a fast track to being your own boss. You’ll have all the tools and resources you need, like an established brand and a proven business model, that will help you start living your dream in no time.
What Business Should I Start as a Beginner?
As you can see from the list above, starting a business takes a lot of time, research, and resources. Another factor to consider is the risk—you could pour yourself into this new venture only to have it fail within a year or two. After all, only 78.5% of new businesses survive year one. So, what is the best business to start with no experience and as a total beginner? Opening a franchise can mitigate the risk, as you’re investing in an established name and brand. Not only that, but typically you don’t have to have any experience in the industry. You’ll get the training and support you need from the parent company. Of course, you’ll still have to work hard and there is always an element of risk with any business venture, but a franchise can give you a solid foundation to work with rather than starting your business from scratch.
I Want to Start a Business but Have No Ideas
Many people dream of running their own business and living the life of a small business owner. While some people are able to come up with a unique business idea, others may struggle to think of a business proposition that will make money and be enjoyable. Luckily, you don’t have to come up with something innovative with a franchise. There are many different types of franchise opportunities—while you might think that franchises are all fast food restaurants or coffee shops, the truth is that there are franchises for everyone. For example, here are just a few of our unique franchises:
Remember how fun it was to build LEGO sets as a kid? You can recapture that fun with Snapology, a business that provides educational play to children using LEGO bricks, K’Nex, and other interactive mediums. Through classes, camps, birthday parties, play-dates, and other custom events, Snapology gives kids hands-on, interactive learning activities. Based on collaborative principles, Snapology uses combined input from all their locations to keep ahead of the curve.
- Zoom Room
If you’re an animal lover but aren’t sure how to translate that into a career, Zoom Room might be the right fit for you. Zoom Room is a venture-backed indoor dog training gym with an emphasis on socialization. From training to doggie socialization events to pet products, Zoom Room is a unique take on traditional pet services like doggie daycare.
- Men In Kilts
Yes, they really wear kilts! But that’s not all this franchise does. Men In Kilts is an exterior cleaning franchise that makes home services more fun. With offerings like gutter cleaning, pressure washing, window cleaning and more, all done while wearing a fun and fashionable kilt, Men In Kilts is an exciting business opportunity. Aside from the kilts, other attractive features include little to no inventory and no office space needed.
There are many more franchises we have at Franchise Gator, and you can browse our top 100 list to see popular businesses and get an idea of what you’re interested in.
How To Choose a Business Idea
After taking a look at our many opportunities, you may find yourself with a whole list of franchises that you’re interested in. How do you pick the right one for you? Here are a few questions to help you decide:
- Is there a need for this product or service in your community?
- Will the demand be enduring or will it be seasonal or a fad?
- Will this concept achieve your financial goals?
- Does this idea have a high success rate?
- Can you achieve your personal goals with this idea?
- What is the biggest risk with this concept?
- How much of your total investment will you need to put in?
- Are people who are already in this industry happy and successful?
What Are the Three Main Requirements for Starting a Business?
There are many steps you need to take to open a business from scratch. However, taking a high-level view, there are really just three main things that you need to open a business:
- A plan - Yes, you need to figure out what you’re doing and make a plan. This will keep you accountable and moving forward towards your goal.
- Customers - You need to make sure that there is a market for your product or service and that you’ll be filling a need in your community.
- Resources- Starting a business is tough, and it takes a lot of resources to accomplish. While tangible assets like financial capital are obviously important, other intangible resources are also helpful, like knowledge about the exact legal requirements for a business in your state. You may want to seek out a business mentor to help you navigate this process. With a franchise, you’ll have a built-in support system to guide you through this process.
What Are 3 Things YOU Need to Start a Business?
Starting a business, whether you decide to do it alone or invest in a franchise opportunity, is a highly personal endeavor. There are three personality traits that will help you as you pursue your dream:
- Dedication - This process isn’t a walk in the park, and you shouldn’t expect everything to be easy. You need to be dedicated to following through on your concept and willing to put in a lot of hard work. While being your own boss can give you flexibility and perhaps a shorter workweek, that’s usually a long-term goal, not necessarily something that happens right off the bat as you’re building a new business.
- The right mindset - It’s important to have a learning mentality. You don’t know what you don’t know, and going into this endeavor with an open mind and willingness to learn will help you be successful. Bring a spirit of curiosity! Ask questions and be invested in this learning opportunity. Every lesson you learn will help your business grow and move in the right direction.
- Resilience - Along the way, you’ll most likely experience setbacks. What’s important here is not to get overly focused on preventing these issues, but to understand that it’s natural and that you can and will bounce back.
What Are the Most Successful Small Businesses?
Take a look at Franchise Gator’s top ten franchises and see what you think:
- Mathnasium: Think of the Mathnasium as a gym for your child’s mind, focused on math. Specializing in math comprehension, this tutoring center taps into the after-school educational instruction market.
- FASTSIGNS: Everyone is trying to connect with their customers and FASTSIGNS gives businesses the marketing tools they need with custom signs, graphics, and more.
- Tropical Smoothie Cafe: Who doesn’t love a tasty treat? And even better, one that is healthy and easy to access. With multiple revenue streams and strong franchise support, this opportunity is a popular choice.
- Sport Clips: Specializing in haircuts for boys and men with a sports theme, this haircutting franchise is a home-run for those looking for a semi-absentee business model.
- Visiting Angels Living Assistance Services: With a large aging population, senior care continues to be in high demand. This franchise allows you the opportunity to break into this growing market.
- The Joint Chiropractic: You don’t need healthcare or chiropractic experience to start this membership-based chiropractic franchise. This is a cash based, no-insurance model with the potential for strong cash flow and higher earnings potential.
- Weed Man: With protected territories, strong franchisee training, and a great model, Weed Man is an excellent option for an lawncare business.
- Wild Birds Unlimited: Did you know that the bird watching/pet industry is seven billion dollars? This retail franchise gives you the ability to break into this market.
- Primrose Schools: This franchise provides early childhood education services through a proprietary learning system called Balanced Learning.
- Kiddie Academy: With average revenues of over $1.5 million after two years, this tutoring franchise proves that education services are in demand.
You’ll notice that of these top 10, four are services or products, three are related to children’s education, and two are related to health and wellness. In general, we’ve seen that most successful small businesses tend to fall into these categories. You might also pick up on another similarity: they all have clearly defined and differentiated offerings.
Can I Start a Business With No Money?
Yes, it is possible to start a business without any money. With a solid business plan, strong credit, and a good head on your shoulders, you may be able to get a business loan or attract investors. Other options may include a home equity loan or a disbursement from your 401k. You may even consider bringing on a partner who can cover some of the startup costs for an ownership interest in your business.
With franchise opportunities, some have financing options available to cover part of the franchise costs. This is essentially a loan that you can use your franchise business profit to pay back once you get started. Another thing to consider is that there are plenty of inexpensive franchise options with low startup costs—and we have lots to fill that need! In fact, we even have some franchise opportunities that cost less than $10,000:
- Cruise Planners - $6,996
- Stratus Building Solutions - $3,450
- Buildingstars - $795
- Jan-Pro - $1,250
- Dream Vacations - $3,500
With a lower initial investment cost, you may not need to take extreme steps like reaching into your retirement savings. Look for franchises that have little to no overhead, like consulting, vending, or medical billing. When looking for inexpensive franchises, be sure to consider factors like the franchise fee, royalties, required equipment, staffing, and real estate investments. Browse our low cost franchise category to see what opportunities are currently available.
What Are Businesses With the Highest Profit Margin?
Everyone is searching for low cost business ideas with a high profit. That’s the dream, right? The good news is that you may be able to achieve that dream with a franchise. Keep in mind that profit fluctuates due to a wide range of factors, like current market condition, customer interest, and even the effort that you put into your business. In general, to find a profitable franchise opportunity, you should look for low overhead and the potential for high-volume sales. Keep in mind that needing a physical location typically has a higher overhead due to building purchase or rent, build out, and utility expenses. On the other hand, some of our fastest-growing franchises like Mathnasium or FASTSIGNS do need buildings, so this isn’t always a given.
An important resource for you when trying to determine the right franchise fit is the Franchise Disclosure Documents (FDD). This paperwork will usually give you a three-year insight into the franchise’s unit totals, with performance details and information like how many have been recently added or closed. The FDDs are a great tool to help you determine the potential profit margin and understand your chances for success.
Franchisegator.com: Go Into Business for Yourself, Not by Yourself
Are you ready to start your own business? We’re excited to help you! As we’ve talked about throughout this guide, starting a business can be a scary prospect. There are a lot of unknowns and a great deal of risk. The potential payoff is great, however—the ability to be your own boss and turn a profit is quite appealing. Investing in a franchise opportunity can help you mitigate the risk and enjoy all the benefits of being a business owner. You’ll be able to start your own business while having the support of the franchise behind you. Sound appealing? We think so! Get started today with your franchise search on Franchise Gator.
- Requirements to Start a Business
- Business Ideas
- Starting Your First Business
- Making A Business Plan
- New Business Legal Checklist
- Managing Business Financies
- Interested in Starting Your First Business? Consider a Franchise
- Most Successful Small Business Ideas
- Navigating Your Automotive Franchise Journey: A Data-Driven Guide for All Ages
- Exploring the Regional Landscape of Automotive Franchise Opportunities