Value Oriented Franchise Models
One of the most significant barriers to entry for any new franchise owner or entrepreneur is the capital requirement to invest in a new business or franchise model. This creates an obstacle for many in that the assumption is there are only so many options and most franchised businesses have investment requirements way above the buyer’s capacity to fund the new business venture. One of the great elements of today’s small business market is that businesses have become more and more affordable for the average investor and the new franchise market has opened up opportunities for people who at one time just couldn’t even consider the franchise model.
Today, more than ever before, the opportunity to work from home is not only an option, it has become a major part of the work force and franchise market segment. What was once considered a bit taboo or maybe not legitimate, today is completely normal for people to run, operate and build their business entirely from a virtual, home office location. This makes the investment lower and the opportunity for people to get into business without the cost of real estate, equipment, etc all more realistic for the every day person.
There also has been a significant rise in what the Small business administration refers to as “Micro-businesses”, which are businesses which employ 10 people or less. Many of these even can be operated as a single owner-operator in the business allowing for even less capital outlay. The advances in technology, systems and other efficiency-creating platforms has made business ownership with less people a reality in so many different industries which also creates an opportunity for lower investment businesses.
Digital Marketing has revolutionized virtually every industry segment and business model and also made attracting new customers easier, more efficient and certainly less costly. This includes social media market, pay per click and SEO traffic to targeted and specific customer profiles. In particular, well managed social media campaigns can be executed with very little funding and just some well run social media posting, photography and video work. So many young entrepreneurs have been able to capture incredible presence and customer traffic with personable and consistent social media marketing again, lowering the investment needed to start a new business.
So which franchises would fall into this category of low investment? There are quite a few industry segments making this market segment even more appealing and accessible to a new franchise investor.
- Tax Preparation and Financial Services. Although some of these businesses may require special licensing or have specific owner needs relevant to the industry segment, they make for great low investment franchise offerings as they typically operate with high margins and do not need large amounts of up front capital. Take Prestige Income Tax in a Box for example, a great new franchise system which offers a completely home based business model and can teach anyone how to do tax preparation service work.
- Home Services. This is a big range of different types of businesses and can include anything from painting to landscaping to smart home services and alarm systems. Generally, these are low investment and can also operate with fantastic profit margins. I love Big Jerry’s Fencing in North Carolina, great model, home based and can operate because of advanced technology in place. A new franchise model in this category would include QuickMountTV, which is a smart home service franchise which specializes in TV Mounting services for homes and businesses. Low investment and high margin are certainly part of this home service franchise model.
- Insurance. The insurance world has become more and more a part of the franchise industry and one of the elements that makes this industry segment so appealing is the low cost of entry. Goosehead, Fiesta and a new brand, Renegade Insurance all fall into this category and offer business systems and operating models to franchisees which allow them to leverage the proven business model and get into the highly residual insurance industry segment.
If you are considering most of the low investment franchise models, a couple of items I would point out as important to your consideration and review of which franchise brand would make sense for an investment;
First, make sure you are comfortable with marketing and sales, most of these business models require that you go out and generate your business. Unlike retail, where you might just open the door and customers walk in, these models require that you go out and generate new business.
Second, look for a franchise system that has good technology in place and solid systems. In a low investment, home based franchise model, you will need tech to scale your business and gain value from the franchise system.
Third, find a franchisor that is willing to work with you on all levels of the business and develop a relationship that is beyond just financial. You want a franchise system that will embrace your success and be there for you in every step of your entrepreneurial journey.
Chris Conner has worked in the franchise development industry for almost 20 years and helped over 600 brands franchise their brand and develop franchise distribution channels. He founded Franchise Marketing Systems in 2009, which now includes a team of 27 franchise consultants based in and Canada and supports brands around the world to grow and scale through franchise expansion. Visit www.fmsfranchise.com
For more information on low investment franchises, feel free to email me!