Open a franchise production from scratch without risks

Extraction and processing of raw materials, production of goods - from the simplest to the most technologically complex - their further sale to wholesale or retail customers, end consumers, or intermediaries - all this is the production industry. A layer of business with completely different directions. It involves a huge number of people - from private entrepreneurs without employees to the largest manufacturing companies with staff that sell their products not only within the Russian market.

This layer also includes services that ensure the efficient and proper operation of industrial enterprises.

Types of manufacturing business in Russia

As already mentioned, there are a lot of directions in the manufacturing business. Listing each one within the framework of becoming is a thankless and unnecessary task. Therefore, we will simply highlight the main ones.

• Extraction of natural raw materials, logging, water intake, hydroelectric power stations, catching fish and seafood. This industry is not suitable for small and medium-sized businesses, because it requires not just knowledge of the business, but also a bunch of all sorts of permits, licenses and other things. If you are a beginning entrepreneur who is interested specifically in production, then you are unlikely to even think about these narrow specializations. After all, we are talking here primarily about the simple consumer market and the b2b market.
• Manufacturing industry. This includes mechanical and chemical processing of raw materials and materials. This is a field that is already more accessible to the SME segment, but it is aimed specifically at the business-to-business segment.
• Agriculture. Animal husbandry, crop farming, fish farming. This direction has recently become a trend. There are many reasons. Among them is the global community’s focus on environmental friendliness, thanks to which farm stores have become widely popular, and farmer producers have entered the consumer market on a mass scale. These are attempts by the state to increase the level of support for agriculture through subsidies and special tax regimes for farmers.
• Construction, as well as production of building materials. An extensive area whose entrepreneurs produce goods for all markets, including the b2c market.
• Production of consumer goods. From clothes and shoes to baking cakes.
• Separately, it is worth highlighting the considerable market of mini-productions, when one entrepreneur works as a manufacturer of goods. Such production is characterized by minimal sizes, and the products go mainly to the end consumer. Products in this area are varied - from handmade products to building materials for private renovation.

An entrepreneur who is focused on a business in the manufacturing sector, but has not decided on a specific direction, faces a difficult choice. Because there are thousands of directions and each has its own nuances, different levels of required investments and different earning opportunities.

There are also a huge number of factors influencing the success of a business - from the degree of competitiveness of the direction to the demand for the product and others. Therefore, when an entrepreneur chooses a field of future activity, he must conduct a full analysis of his capabilities and third-party market factors. This is quite a difficult task. Especially for businessmen without experience.

Providing services as a type of business

Almost every day we see advertisements for repair shops, cleaning agencies, “husband for an hour”, etc. This clearly indicates the demand for providing a variety of services to the population of large cities. This type of activity is often chosen by novice entrepreneurs. No wonder - the market is large and the range of services that can be provided is almost unlimited.

Special mention should be made of cargo transportation, loader services and dry cleaning and laundries. They are the ones who often attract initial capital investments into their own business. In any case, the initial stage will be to study the service market and choose the most suitable one, both in spirit and in finance.

You can reduce investments and risks when opening a new business if you buy a franchise in the field of services to the public - in this case, risks are reduced and doing business is simplified.

How to choose a niche?

There is no universal way to choose the right direction. Because, as already mentioned, there are many directions, and there are even more factors influencing the success of your business. And in each individual case their influence will be different. But general advice can be drawn up.

1. Decide on your personal preferences. Your success will depend on how much you enjoy doing a particular job and how professional you are in a particular industry. Don't choose something you don't like. Otherwise you will not be able to reach great heights.
2. Your skill level plays a huge role. However, if you don’t know how to do something, this is not a reason not to consider the option. The main thing is to invest in knowledge. Now you can learn everything.
3. The uniqueness of your product. An important component of choice. If you plan to produce something that is already abundant on every corner, don't expect much demand. At a minimum, you will need to come up with why it will be more profitable for the consumer to buy this product from you. Again, this is not a reason to abandon the idea, but you need to adequately assess the market and competition.
4. Demand. You can come up with the production of a unique product, but you won’t see demand either. Why? Because it simply isn't on the market. People don't need such a product. Quite probable and even common option. Therefore, always evaluate not only the uniqueness, but also the degree of demand.
5. Necessary production costs. If the production of a particular product or service requires you to spend a lot of money, then think twice. For a novice entrepreneur, taking out loans and credits is a so-so idea. But investing money from your first net profit is an excellent option. Therefore, think, perhaps even in your choice of idea you can start small, albeit not promising, but then develop a business. The same goes for the staff. Starting with a business that requires a large number of people who will have to pay salaries and who will need to be managed is a task that a new entrepreneur may not be able to cope with. Ideally, you can start a business alone. And then, as it develops, expand and hire staff.

Another important point when choosing an idea that should never be missed is franchising. If you are always looking for business options because you are not confident in your abilities, pay attention to what franchise offers are on the market (hint: there are a lot of them). What is it for? Firstly, you can find a franchise that is suitable in terms of investment level and direction. Secondly, you will be able to evaluate popular and already implemented ideas. But we will return to the advantages of franchising in production a little later.

What's relevant in the capital

Among all the possible offers that the catalog of franchises in Moscow provides, the most popular among those who decide to open their own business are two areas of activity: trading (mainly in the franchisor’s goods) or providing services to the public. This is due to the highest payback index and minimal investment.

As a rule, a trading business is the easiest to organize. The franchisee only needs to find a suitable premises and equip it in the image and likeness of existing stores. In addition, the franchisor often helps in choosing and arranging the premises - after all, for this he has his own designers and corporate identity. All that remains is to purchase the goods (or take them for sale, which is the practice) - and the business is ready. A well-known brand will itself attract customers - all that remains is to maintain the quality of service accepted in the retail chain. The usual payback period is two to three months, which especially attracts beginners.

A more complex franchise option in Moscow is a service business. First of all, this is due to the need to purchase certain technical equipment adopted by the parent company. The donor company usually helps in purchasing them from well-known suppliers: they are much more willing to give a discount to an already familiar company than to an absolute newcomer. In addition, trained personnel are also necessary, because it is impossible to imagine the same hairdresser or beauty salon without specialists. Naturally, the qualifications of employees and their compliance with accepted standards are checked by employees of the parent company.

Popular areas of production among budding entrepreneurs

As a rule, novice entrepreneurs strive to produce a product that is in demand everywhere. Not even that. A product for which everyone can see demand. For example, children's toys, clothing, home and garden products, furniture, cosmetics, etc. At the same time, ignoring the areas of production of goods for business that are not so noticeable to the end consumer.

It is not surprising that the list of the most popular directions for beginning manufacturers consists of goods for the end consumer.

• Construction and repair work.
• Food industry.
• Clothing and textiles for the home.
• Goods for children.
• Goods for pets.
• Automotive equipment. (It is worth noting here that this industry belongs almost entirely to large automakers. And small private businesses are content with small parts - anti-freeze fluid, seat covers, etc.).
• Goods for tourism.
• Furniture manufacturing.
• Agriculture.
• “Natural” perfumes and cosmetics.
• Handmade goods.

Pros and cons of a manufacturing business

Like any type of business, manufacturing has both advantages and disadvantages, which an entrepreneur needs to begin to combat at the stage of preparing a business plan. We will briefly go over common options, since each direction has its own characteristics, and it will not be possible to talk about them all.

Manufacturing market trends after 2020

The crisis affects all types of businesses. And the crisis that marked 2020, in addition to the fall of the ruble, was also added by the regime of general self-isolation. A huge number of entrepreneurs have suffered from bans on work and receiving clients. And some did not even return to activity, having gone bankrupt. This was especially noticeable in retail and catering, when shops, cafes, and restaurants were forced to rely only on delivery and online sales. But what about production?

The closure also affected this industry. Those who produce goods for the end consumer, as well as representatives of other industries, had to close their stores. On the other hand, such bans did not greatly affect the production itself. Especially private entrepreneurs without a large staff. That is, the primary problem at this time is the sales market, and not the ability to produce goods. Of course, there were cases when production stopped because there were problems with the supply of consumables. After all, borders were closed, and supplier factories could go into quarantine. However, this problem was not as noticeable as in other industries.

Despite this, the trends that emerged and developed at the beginning of 2020 against the backdrop of the pandemic and crisis will affect the entire business, including production. Therefore, it is especially important for beginning entrepreneurs to focus on new realities. Among the main noticeable trends in the modern market are:

Online course. Until 2020, this was a trend that was gradually affecting industries and entering the everyday life of the end consumer. In the spring of 2020, this was a forced, accelerated reformatting of the business, which hoped to maintain at least part of its sales using the Internet. After the end of the pandemic, the online sphere will become an integral part of the entire society. Physical stores and outlets will not disappear anywhere, but business will have to exist in two forms at once. And if earlier some could ignore working online, working the old fashioned way, now it has become clear that how well a company develops online depends on its security and perception by others. Manufacturing businesses also cannot ignore this course. A company, even if it produces highly specialized products, must present its range and profile at least on social networks. Plus it's just useful. We live in an age where online presence increases trust in a company. And the size of the potential audience is greatly increasing.

Delivery rate. Now it is becoming more and more difficult for a business without delivery. And as 2020 showed, it is well-developed delivery that can save revenue from a sharp drop in emergency situations. For example, those cafes and restaurants that realized it late and began to massively use the services of food delivery aggregators were unable to correct the situation. Because the commission of aggregators is rather large, and there was no longer enough time to organize our own delivery. In this regard, it is easier for producers. Those that make goods for business usually offer delivery services anyway, because the goods are purchased in bulk and competition is high. And goods for the final consumer are usually delivered by express delivery services like SDEK. However, a new entrepreneur needs to think about delivery options in advance and predict the costs that he will incur for this service. Well, and income, of course. Because delivery must be justified.

Directions for small businesses

The modern franchise market in Russia offers a huge number of areas of activity in which a small business representative can achieve significant success and earn good capital.

If you decide to start a business, then carefully study the market and determine the shortage of a specific service or product. Or maybe you have something you like, something that brings you pleasure. Or there are areas that are supported at the regional level. This will greatly make the initial period easier for you.

The main areas in which franchises are offered to small businesses today are:

• tourism and hotel business;
• production of food products;
• production of manufactured goods;
• production of building materials;
• collection and disposal of waste and garbage.

All this is just a small list of suggested directions. The choice is yours, and we wish you good luck!

Temporary production trends

Separately, it is worth noting that it was 2020 that became indicative in terms of temporary production trends. Thus, a large number of entrepreneurs, both operating in certain areas and beginners, decided to take advantage of the situation with a shortage of hygiene products and personal protection. As a result, production of masks, gloves and antiseptics began to appear here and there.

Is this behavior successful from a business perspective? Perhaps a good answer would be an example that we could observe several years ago. We are talking about anti-stress toys - spinners. The wave of popularity of spinners arose spontaneously, spread throughout the world and also unexpectedly subsided. Also, at the peak of popularity, entrepreneurs appeared like mushrooms after rain and opened their own production of these gizmos. What's the result? Some even managed to get rich. But these are just a few. Most productions were closed without receiving anything, or even going into the red.

This happens with all current trends. You can earn money only in a limited period of time, acting very quickly and almost at random. Fast trends will continue to appear, but this strategy is not recommended for new entrepreneurs. The chances of success are minimal.

Business ideas for production. What kind of production should I open?

Returning to this issue again, let's repeat. There is no separate universal advice and there cannot be. This business is a complex system that is influenced by a huge number of factors. We wrote above tips that could make the choice easier. And now we would like to suggest paying attention to specific business ideas that are somewhat popular among beginners. You can find a list of ideas and recommendations for them in the special material “Business Ideas for a Manufacturing Business.”

And now it’s worth returning to what we already mentioned once. Franchising. Why shouldn’t entrepreneurs avoid it?

Open a franchise business

Before purchasing a franchise, you should determine the scope of your future activities.

After this, it is worth carefully studying the existing offers in this market.

Compare them with each other and choose the best option that your available capital allows.

You should not choose the “franchising-licensing-leasing” option. Despite the very attractive initial conditions, you will have to pay significant interest at a later date. If you choose between this scheme and the traditional one (buying a license, purchasing equipment yourself, renting premises), the first one will cost your pocket much more.

When concluding an agreement with the franchisor, pay attention to the following points:

• Do you have the exclusive right to produce this brand of product in a specific region? This approach will eliminate competitors and generate high incomes.
• There are certain requirements for production space. Quite often, refusal to sell a franchise is due to the lack of own premises.
• Features of the drawn up contract. It happens that when buying a franchise, a company hides a lot of pitfalls in the contract, which only experienced lawyers can deal with. Don't skimp on their services. This will save money and nerves in the future.
• The presence of a significant number of restrictions, according to which you cannot work with certain suppliers, purchase raw materials or equipment on more favorable terms, offer your recipes, services, etc.

The presence of such conditions in a franchise sales agreement requires a serious approach. They should not be taken lightly. Ultimately, they can cause significant harm to your pocket and nerves.

Franchising in production

Franchising is one of the tools that helps companies develop and entrepreneurs create a business with less risk. Now the level of Russian franchising is high, despite the lack of a well-developed legislative framework in this area. But more importantly, franchising is becoming a salvation for many entrepreneurs in the post-crisis period. This happened after 2008 and after 2014, and this is what is happening in 2020.

The thing is that the crisis and difficult economic situation affects people’s determination. A person begins to perceive with caution the opportunity to earn money by opening his own business. Because risks increase and the ability to predict decreases. A franchise, being a ready-made business strategy and assistance from the head office, gives hope that this same strategy will work for the franchise buyer.

Even at a time when the self-isolation regime has not yet been lifted, the demand for some types of franchise offers is growing. Entrepreneurs are ready to buy strategies for opening a pharmacy business, delivery services, and distance learning. After the end of quarantine measures, demand will increase for other franchises that have experienced difficult times.

Manufacturing franchises are also proving popular, of which there are as many in 2020 as in other business segments.

Therefore, we strongly recommend that you pay attention to the offers that are posted on this page. And to make it easier for you, we have compiled a short comparative table that will make it possible to understand what experience the franchisor has and what financial investments will be required from you as a franchisee.

The only thing you need to remember is that a commercial offer is only part of the information from the franchisor. And in order to invest money in a franchise, you need to fully understand what the franchisor expects from you, and what you can expect from him. Therefore, we recommend that after familiarization, you contact company representatives and ask questions directly. This can be done directly in our catalog and without intermediaries. Just click on the “get a business plan” button on the page of the selected franchise.

Franchising in the service sector

The franchisor provides the opportunity to work under a brand already well-known in its field, which has received recognition and respect from its customers. Thanks to this, a franchise in the service sector has the chance of developing much faster than running a business on its own, which often takes months to win its customers.

Well-known service companies willingly sell the right to use the trademark, while expanding their own network. However, it should be remembered that the terms of provision are quite strict - the parent company will require mandatory compliance with all recommendations related to doing business. First of all, this is compliance with the corporate style, the correct selection and training of personnel, the availability of certain branded services, and wearing a corporate uniform.

However, the slightly intimidating conditions are more than offset by the benefits that franchising services provide to the public. First of all, you should not wait for the promotion of the brand. The specialists of the parent company will help in selecting premises and personnel, matching the interior and training of employees, take care of the availability of special equipment and constant support in various matters of doing business.

Manufacturing franchises in the Businenessmens.ru catalog

Product manufacturing franchises

Manufacturing Services Franchises

Franchise for the production of auto chemicals "SOZH Sintez - Business"

The franchise is represented on the Russian franchising market by a company specializing in the production of auto chemicals and a number of other chemical products. Investment volume: from 700 rubles inclusive. Lump sum fee: 30 rubles. Fixed royalty rate: 15,000 rubles. Under the terms of the franchise agreement, there is no need for advertising and marketing funds. Requirements for room area: from 100 square meters.