How to Invest in a Fireworks Stand

The biggest advantage of a franchise operation is that most of the required market analysis, operating procedures and marketing strategies are based on experience and available to you. Investing in a franchise ordinarily means receiving training, becoming operational quickly and having fireworks merchandise readily available. The primary disadvantages are the cost of getting into business, which typically range from $125,000 to $250,000; the continuing expense of sharing income with the franchise company; and the inability to make many decisions for your local operation. For example, your franchise contract may not allow you to sell online or to compete in areas where other franchisees exist, and it may require you to buy all your inventory from the franchise company.

Decide on the basic form of your enterprise if you are opening your own fireworks business. You can create a sole proprietorship, which provides you have total decision-making freedom but little protection from liability. Partnering with one or more people provides assistance with operating the business and more potential initial funding, but results in shared decision-making. Starting a corporation offers the optimum limitations on liability, but it also requires the most paperwork. A corporation usually provides the best opportunity for obtaining capital from investors and banks.

Whether you opt for a franchise or your own business, you need a business plan for your local operation. Your plan should describe whether you will have a permanent location, set up temporary facilities in conjunction with local events, such as fairs, or do both. It also should describe salespeople and other workers you intend to hire, required licenses, safety policies and where you expect to store your product inventory. Online resources, such as the Small Business Administration's website, and business planning software are available and provide useful assistance.

Adequate financing is essential to the success of your fireworks stand. You must accurately estimate the start-up funds that you require. This amount depends on the money you already have available. As a franchisee, much of this will be determined for you. When you approach investors or banks for funds, be sure you know the amount of funding you need to keep your business going until it begins to be profitable.