Most people at some point question whether their life is taking them in the direction they had hoped. You might have woken up one day and decided you didn’t like your job, or you wanted more work-life balance than you were currently getting. With a unique set of skills and a need for something new, the idea of starting a new business might have presented itself to you. Put yourself in an ideal position to turn dreams into reality by following some of these steps below.
Choose a Business Type
Think about what you’re good at and where you could make the most difference in people’s lives while you get what you need from your career. There are many home service franchises to consider, such as trades, accounting, pet care, cleaning, and more.
Alternatively, you can look at your retail options, freelancing, landscaping, or even health and beauty. If you are skilled or qualified in a particular area, it makes sense to look at available franchise options in your area.
Look at Business Structures
When you start looking at different business opportunities, considering the most beneficial business structures for your unique situation can be worth your time early on in the ideas and planning stage.
There are four primary structure types: sole proprietorship, partnership, limited liability company, and corporation. Each of these structures can have different classifications to be more or less suitable for your specific needs.
Within the partnership structure, you can be a general partnership, limited partnership, or limited liability partnership. Corporations are structured into two classifications: C corp and S corp.
Choosing the most suitable business structure can require you to look at the pros and cons of each to determine the right model for you. Being in a franchise may make your decision a lot easier.
Sole proprietorships and general partnerships are two of the least ideal options for franchisees. They don’t offer the franchisee individual liability, which means any liabilities brought against the franchise are your responsibility on a personal level.
Franchises with equity investors may find limited liability companies too inflexible, which leaves S corps and C corps. C corps suit franchisors more so than franchisees, especially when it comes to investor equity distribution.
As a result, S-corp may be one of the best business structure options to consider. All profits and losses fall on the shareholders, which means you don’t need to make federal income tax returns. Instead, shareholders report their profits or losses on their personal tax returns and assume tax liability for them.
Write a Business Plan
If you are purchasing a franchise, you may not need to develop a business plan if the business already has one in place. However, if you’ll be securing funding from the bank for your franchise, it may be necessary for lending purposes. Business plans can also be helpful if you decide to start a brand new, independent business.
Such a plan can be a roadmap to your business’s future success. It outlines what you will offer, a mission statement, a location, employee types, financial information, and growth plans.
Typically, a business plan also includes in-depth market analysis, which focuses on a problem that consumers have and how you can solve it. You may even choose to include marketing and sales plans, your financial projections, and any funding requests you plan to make. The more intensive your business plan is, the easier it may be for you to get started with a clear strategy and work towards your business goals.
Choose and Register a Business Name
If you’re purchasing a franchise, you won’t need to come up with a business name, but you may need to develop a ‘fictitious’ name when registering your business in some states. This is because you can only register one business name per state, which complicates the picture for franchise owners.
As a result, many soon-to-be business owners come up with a fictitious name first, followed by what they are doing business as. Typically, it follows the following format in business records:
[Business name] + [registered as] + [ doing business as] + [name + location]
Fake, Inc. d/b/a Fun Franchise of Tennessee.
Your business name will be registered with federal and sometimes state governments.
Organize Federal and State Tax ID Numbers
When starting your own business from the ground up, one of the most critical steps is obtaining your federal and state tax ID numbers or Employer Identification Number (EIN). With these numbers, you can pay federal taxes, apply for business licenses, open bank accounts, and hire employees.
Apply for Licenses and Permits
Whether you’re starting a new business or purchasing a franchise, you may need to obtain federal licenses and permits. Often, this is the case if your business undertakes any activities that federal agencies regulate.
These can be industries and activities like agriculture, alcohol, firearms, fishing, and wildlife. There are some differences between states regarding what you need, so check your state website to find out.
What Are the Benefits of Starting Your Own Business?
When you start pondering the idea of starting your own business, there’s a lot to think about. It’s easy to be scared by the prospect of significant changes, which may even prevent you from making the leap you know may benefit your future lifestyle.
However, as daunting as it can be, there are many benefits associated with purchasing a franchise or starting your own business. To start, you can be your own boss. This means you have complete control over the direction of your business, how you run it, and who you hire.
You can also enjoy flexibility in your work hours, especially if you hire a team to assist with daily operations. Business owners who purchase an existing business or franchise may even get to enjoy a well-established brand and an extensive business plan outlining how to operate the business to be the success it can be. As stressful as it can be to get a new venture up and running, it could end up setting you up for life.
Realizing it’s time for a career change can be scary and daunting, but it can also be refreshing and exciting. By considering some of this information above, you can be on your way to starting a fresh new business that holds your passion and benefits your future.