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Business Services Franchises Tips
Seven Steps to Evaluate a Business Service Franchise
Buying a business can be hard work even if that business is a franchise. Buying a business services franchise has become one of the most popular and profitable methods of business ownership but it still requires careful consideration, planning and evaluation before taking the plunge.
Business services franchise opportunities have become even more popular with downsizing trends, the growing rate of small business owners seeking to outsource everything from payroll services to advertising, and of course, the need for cost effective short term help. However, not all business services franchises are equal, so depending on your individual situation, certain small business franchises may provide a better “fit” for your individual circumstances.
For example, if you have minimal marketing skills but a particular franchise has a well established reputation in your area, then higher advertising rates may be perfectly acceptable for your specific situation. Likewise, if you have a strong history in a given industry then a lower cost franchise that has been in business fewer years may be a great way to save money while retaining the support and expertise of a franchise.
Use these seven steps to evaluate and compare your business service franchise options.
1. How long has the franchise been operating?
2. What is the average number of outlets per franchise owner?
3. What are the anticipated annual revenues?
4. What is the franchise fee and other initial costs?
Some franchise opportunities are heavily dependent upon the local demographic, geographic and psychographic profiles of the community. It’s important to understand the local and regional characteristics that define your prospective service area when evaluating the viability of a financial franchise operation. For example, will the franchise require an upper or middle class population in order to sustain growth? Use the following criteria to assess your local community when evaluating prospective financial services franchise for your area.
Social class in the United States is roughly divided into the following segments:
01% Upper-Upper or the Wealthy
02% Lower-Upper
12% Upper Middle Class
32% Middle Class
38% Working Class
09% Upper Lower
07% Lower-Lower
To get an approximate idea of how many potential clients your financial services franchise would serve, obtain the community data from your local Chamber of Commerce and then extrapolate the above estimates based upon the percentage of the population of your community. This provides a quick easy starting place to determine if your prospective financial services franchise is the right fit for your community.
Explore a wide range of financial services franchise options at Entrepreneur.com’s Business Financial Services Franchise section; from debt-collection services to cost management consulting, to equipment leasing and financing to corporate cost-reduction services, there is a business support franchise to meet the needs of every community.
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Evaluate Barriers Before Purchasing a Business Support Franchise
The ability to create a business in any given field is often defined in terms of “barrier to entry” or what is required to enter and successfully compete in a given business environment. For example, in a manufacturing industry it typically requires a heavy investment in machinery, distribution channels and other significant start-up costs. One of the attractive features of a business support franchise is the lower initial costs associated with a service related industry.
Still, barriers to entry can be friend or foe for any new business owner so it’s important to evaluate the pros and cons related to the business support franchise you are considering for purchase. Let’s quickly evaluate some of the more common barriers to entry while reviewing the positive and negative aspects of each. This short tip list you should provide you with a better understanding:
1. Start-up cost. The initial investment required to purchase a consulting or business support franchise can range from $20,000 for a Business Round Table franchise to an excess of $250,000 for a PIP Printing & Document Service franchise. The higher the initial cost the fewer people can typically qualify, but a great deal depends upon the franchise itself. Many franchise operations provide various levels of financing or have a proven track record that enables the buyer to obtain favorable financing.
2. Prior Training. Individual knowledge and expertise is also a common barrier to entry. Although many franchise operations provide full training and requires little to no prior experience, other franchise operations require specialized skills, knowledge or prior training in order to own and operate. Franchise operations that require specialized skills or training may prove a good choice for those who may desire a change of career or small business ownership. Those with minimal training or who are making a career change would do well to investigate franchise opportunities that provide internal training opportunities.
3. Exclusivity, including geographic territory rights. Sometimes being the first in the area is enough of an advantage to win over all the available business, simply because there isn’t another provider!
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Secrets to a Business Service Franchise Success
Years ago the Forum Corporation of Boston conducted research to determine the cause of customer satisfaction – and lack of satisfaction – with various companies. Here are the top three secrets to success for a business service franchise.
1. Customer Service Counts. The findings reveal what every successful service business franchise owner knows: customer satisfaction is crucial. Consider these starting statistics, 15% of customers reported dissatisfaction with the product as the main reason they stopped using a product or service but over 70% stopped due to “bad customer service.”
2. Timing. People must need, want and understand your service. For example, several popular business service franchises are available for those who will list items on ebay for others. iSold It LLC, QuickDrop, Sell Your Stuff and Eyardsale.com each cater to a slightly different need but each recognize the timing of the market; they understand the powerful opportunity for eBay sales among those who are too busy to do it themselves.
3. Understanding your market. Market Research is critical to success for a small service franchise. The ability to comprehend market conditions for your business and that of your clients is an ongoing process throughout the lifetime of the business. It allows the small business franchise owner to adjust to changing market conditions, local situations and other opportunities. Some of the best research related sites on the web for small business franchise information include: entrepreneur.com, hoovers.com, stat-use.gov, www.census.gov
