Pros & Cons of Diversifying into Service Brands, Part 2
We ended our previous article about the pros and cons of service concepts with the point that many of these businesses are based on customers making the choice to trade money (surplus) for time (deficit). The example we used was maid services, where time-starved customers spend money to buy time they can then spend with their family and friends.
Other examples of businesses built on services that customers could perform themselves –but choose to pay someone else for – include lawn and landscaping services, residential painting, oil changes, and the installation of home entertainment systems. There are many more (see below).
Another, very obvious customer base consists of those unable to perform the service themselves because they lack the technical skills, equipment, discipline, or confidence. Some of these include personal services such as tanning parlors, waxing, eyelashes, massage, coaching, and fitness training.
Some service sectors long considered “recession-proof” – haircuts, massages, child care, for example – were safe bets even during an economic recession. But with the arrival of Covid-19 in March 2020, franchisors and franchisees of brands that require hands-on touch or physical presence learned some hard lessons during a year of mandatory closings and limited occupancy. It’s a lot easier to deliver a pizza than a haircut, massage, or workout (although gyms and fitness centers were able to amp up their online offerings fairly rapidly.)
Seniors, pets, and children share one thing: service business are booming in these sectors. Before the pandemic, spending on children’s after-school enrichment programs benefited from cutbacks in public after-school programs. And as seniors live longer and stay healthier, some of the hottest franchise brands are providing services to meet the growing needs of this expanding demographic.
New technologies continue to form the basis of several franchise concepts that couldn’t exist just a few years ago. Examples include lab testing (anything from blood tests to DNA), detective services, virtual offices, business support functions that can be performed remotely, and Internet-related services such as web design and computer maintenance.
1) Wide variety. Service franchises come in a wide selection, many with a relatively steady demand, no matter what state the economy is in. Here is a list of some of the major categories you can choose from:
Automotive: repair, oil change, car wash, muffler and brake, paint and body, transmission, tires and wheels
Business: tax services, accounting/bookkeeping, coaching, staffing, janitorial, signs, printing, pack and ship, security
Children: art, fitness, sports, tutoring, day care, preschool
Consumer: hair cutting, travel, sports, coaching, massage, tanning
Home: handyman (electrical, plumbing, HVAC, carpentry), painting, security, real estate, inspection, insulation, windows, junk removal, storage pods, moving, real estate
Pets: washing/grooming, training, pet stores, boarding, poop scooping
Seniors: home care, medical services, estate planning, renovations, physical therapy
Technical: computer and other equipment service and repair, web design, telecommunications
2) Easy entry. Service franchises frequently allow entry at a fraction of the cost of a retail or food franchise, especially those that don’t require a brick-and-mortar storefront. Yet the ROI remains attractive to many starting out on a small budget; and for many, the time required to recoup their investment can be shorter than for brands that require a retail storefront.
3) Low overhead. Many service businesses can be started from home, eliminating the expense of monthly rent and equipment. However, depending on the business, some equipment and supplies will be needed, whether it’s tax forms or plumber’s tools. And for a mobile business, at least one vehicle is necessary. Also, think about whether you want a business where you have to hire and manage a lot of people or one in which it’s just yourself and an assistant or partner. Many husband-and-wife teams with complementary skills have succeeded where one provides the service and the other manages the business and the books.
Flexible hours. Some concepts permit you to do business by appointment only, allowing you to set your own hours and balance your personal and business life. You don’t have to open the doors at a set time and keep them open till 9 p.m. While you may earn less by limiting your work hours, you are able to maintain contact with your loved ones, versus managing a staff of teenagers 24 hours a day, 7 days a week.
1) Staff. Some concepts will require you to be the manager and hire staff, rather than do it all yourself. (How many houses can you paint in a day?) If you’re the type who prefers to work alone, choose a concept that allows this. Hiring staff is time-consuming and the source of much indigestion and expense.
2) Skills and training. Some service franchises require a specialized set of skills, training, or licensing to do business. It’s one thing to fix your own electrical problems; it’s another for a licensed electrician to drive to a job in a van with a brand name logo on the side. Also, you may need to brush up on your “people skills”: it’s different fixing a leak for a housewife than repairing a broken pipe in your old job at the factory. Finally, there’s the legal and financial side of managing a franchised business, which can require new tax forms, insurance, hiring skills, etc.
3) Burnout. This can happen in several ways. If business is good, you have so many customers that you work around the clock seven days a week. If your business management and organizational skills are weak, you may end up spending 80 hours a week on what could take 50. Some franchisees, especially those starting out and working at home, find themselves distracted, and end up working long hours after the family has gone to bed, or getting up before the crack of dawn. And if you’re a one-person business, what happens when you get sick, need a vacation to recharge, or have technical problems?
To learn more about service brand franchises, visit our Franchise Business Opportunity page.
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