The 7 Most Overrated Businesses

By Kelly K. Spors and Kevin Salwen

With roughly 6.7 million jobs lost since the start of the recession, it’s tempting – and often a great idea – to launch your own business. That way, of course, you can take matters into your own hands. No more rolling your eyes at the boss; it’s your show.

But many people do a lousy job of picking businesses they can realistically turn into a profitable operation.

“There’s this very sad pattern about how people start businesses,” says Scott Shane, an entrepreneurship professor at Case Western Reserve University in Cleveland, Ohio. “People are most likely to start businesses in industries where start-ups are most likely to fail.”

The problem: Many would-be entrepreneurs are drawn to businesses they like to patronize or the ones that are cheapest and easiest to start. Instead, experts argue, aspiring entrepreneurs should create firms in which they have professional experience so they have a competitive advantage in the market.

So, what are most overrated businesses out there? We spoke with small business experts to find out. Here are seven you might want to think twice about – and then maybe twice more.

1. Restaurants. Dining out and cooking are among Americans’ favorite pastimes. But “restaurants are among the toughest businesses to run,” says Donna Ettenson, vice president of the Association of Small Business Development Centers in Burke, Va.

Far too many people assume their culinary abilities will lead to success in the restaurant business. Instead, about 60% of restaurants close in the first three years, according to a 2003 study at Ohio State University. That’s quite a bit higher than the roughly half of all start-ups that close in the first five years.

The reason: Restaurants typically have low profit margins and need strong managers who can run an ultra-tight ship through seasonal fluctuations and other struggles. Most people don’t have that kind of intense managerial ability to pull it off. By the way, the pitfalls are quite similar for restaurants’ cousin – the catering business. In other words, Chef Emptor.

2. Direct Sales. It’s a tempting pitch: Work from home and earn commissions by selling cosmetics, kitchen knives or cleaning products. But companies that recruit independent sales reps tend to attract new team members by pointing to the success of their highest earners.

A harder look shows that those high earners are making big money in large part by recruiting new reps into the organization and getting bonuses or a cut of their recruits’ commissions, says Ken Yancey, chief executive of SCORE, a Herndon, Va., organization of current and retired business executives who volunteer time counseling entrepreneurs. The new reps then have a much harder job because they need to recruit more people on top of selling product even though the number of reps out there is increasing.

The result, Yancey says: “Most of them wind up with a bunch of jewelry or kitchen equipment sitting in their basement that they can’t sell.”

3. Online Retail. By far, one of the easiest businesses to start is selling items through online marketplaces such as eBay or Amazon. But as online commerce ages and these sites fill up with more established retailers, it’s much harder for new, small sellers to compete for attention and generate a viable income.

“A lot of people are thinking it’s the Web of five or 10 years ago and you stand out simply because you’re on the Web,” says Rieva Lesonsky, chief executive of GrowBiz Media, a content and consulting company for small businesses based in Irvine, Calif.

Instead, successful online retailers today must have a handle on sourcing their products at a low enough price, then layering on clever online marketing and fine-tuned logistics. These businesses won’t generate much income if they can’t be easily found in searches, maintain a good reputation among buyers or add enough value so that sellers can build profit margins high enough to take on bigger players and physical stores.

4. High-End Retail. Many people dream of opening a day spa, luxury jewelry store or designer clothing boutique – businesses they feel good patronizing. But specialty retail businesses close at higher rates than non-specialty stores, according to the Small Business Administration’s Office of Advocacy, and are even riskier now that consumer discretionary spending has dried up and people are no longer spending money on little luxuries.

“It’s going to be a long time before we return to the days of conspicuous consumption,” says Ms. Lesonsky of GrowBiz Media. High-end retailers often suffer from poor locations and lack of understanding of how to source and market their products in an effective way. In today’s economy and in coming years, she says, retail entrepreneurs should be looking to sell non-discretionary consumer goods or offer items at a value rather than high-end products.

5. Independent Consulting. Common advice for aspiring entrepreneurs is to stick with industries they know. So, for many looking to escape the corporate treadmill that means turning their professional expertise into a one-person consulting firm.

It seems practical – more companies are indeed relying on independent contractors and freelancers these days – but it’s not as easy to pull off as many imagine, says Dennis Ceru, an entrepreneurship professor at Babson College in Babson Park, Mass. Many consultants struggle with time management problems, spending so much time scouting work that it’s very difficult to earn steady income. “The difficulty many face is they go through peaks and valleys of having work,” says Prof. Ceru. “When the engagement ends, they are frantically looking for work,” which may take weeks or months.

A possible solution: “A successful consulting firm needs people to find the work, grind out the work and mind the work. Unless you know you can do all three yourself, you potentially expose your business to great risk.”

6. Franchise Ownership. The idea of being handed a proven business plan without the uncertainties and headaches that come with building a business from scratch is understandably alluring. But too many people don’t understand the risks associated with franchising and sign restrictive franchise agreements without thoroughly researching their franchisor and their contractual obligations, says SCORE’s Yancey.

Some franchisors, for instance, allow franchisees to open stores too close together, oversaturating the market. Or they simply require their franchisees pay so much in royalties and fees or other operational costs that it’s very difficult to be profitable. Beyond that, when a franchisee fails, a franchisor may make it extremely difficult and costly to get out of its contract.  (get a consultant)

7. Traffic-Driven Web Sites. Everybody has witnessed the success of social-networking sites like Facebook and popular blogs that generate all their revenue off advertising. But as the Internet ages, that’s much harder to accomplish, says Martin Zwilling, a start-up consultant in Fountain Hills, Ariz., who specializes in helping entrepreneurs find angel investors.

Zwilling says he hears pitches for new social-networking sites about once a week, but actively deters people from starting them. “I say, skip it,” he says. “You need to invest $50 million to get any presence” in the social-networking space right now and it’s very difficult to get people to leave established sites. What’s more, he says, the amount of traffic needed to build a lucrative traffic-driven Web site is far more than most new Web entrepreneurs realize: “Until you get to the point where you have a million page views a day, you’re nowhere.”

Rainmaker Plan – Rollover 401k into Privately Held Stock

No doubt the banks are getting pretty stingy with capital these days and it looks as if the days of low interest loans are also numbered.  What is a future business owner to do? 

BeneTrends is the nation’s leading provider of small business retirement plan solutions.  The firm’s most popular retirement plan design, the Rainmaker® Plan, is structured to enable the rollover and investment of retirement money into privately-held company stock as a source of business capital for business acquisition, franchise purchases, business start-up or existing businesses.

Seems a little complicated but it’s really not.  It makes great sense when one considers the near and long term future of the stock market.  Remember, I am not a financial adviser but I do understand what trillions of dollars in debt, a weakening US dollar, and increased government taxation on pay, fuel, and health-care benefits is going to do to the investment outlook in the US.  Oh yes, and let us not forget about paying for carbon credits and the inevitable spike and sustained inflationary cycle just around the corner. 

What do you think the tax rate will be when you eventually tap that 401k?  In Great Britain and much of socialized Europe tax rates already exceed 50% so maybe that tax exempt 401k investment will not turn out to be such a great deal come cash out time.  Maybe it makes just as much sense to access that capital penalty and tax free now and use it to fund your own business, especially when bank lending rates are about to skyrocket.

Again this is just my view and I am not a financial adviser by trade, but if considering a 401k funding option makes sense to you, let me help you with the Benetrends Rainmaker program.  joe@franchiseadvocate.com or visit my website at www.franchiseadvocate.com for information on individual franchise opportunities.

Who Buys In-Home Assisted Living Franchises

Right at Home is a very popular brand operating in the In-Home Assisted Living market.  According to a recent press release Right at Home identifies the following facts about their franchise buyers.

In their system the #1, #2, and #3 franchise owners have never owned a business before.  8 of the top 10 franchise owners have no previous business ownership experience at all.

8 of the top 10 have no healthcare background at all.

8 of the top 10 have no previous experience in sales.

The median age of the average franchisee at signing is 41 years old.

9 out of 10 have children.

Although these numbers pertain specifically to Right at Home, they are not dissimilar to what other franchises operating in this space report.  As I have said on many occassions, the In Home Assisted Living segment offers too many positives to be ignored.  It has it all. 

To learn more about assisted living franchise opportunities please visit www.franchiseadvocate.com and select senior services or e-mail me at joe@franchiseadvocate.com and I will be happy to fill you in.

All Franchise Consultants are Not Created Equal?

Let’s put a common misconception to rest.  A buyer does not pay more for a franchise if they found it through a franchise consultant and there is no cost to a buyer for using a consultants services.  Consultants exist to satisfy both a buyer and franchisor problem.  Time.  Franchisors cannot afford to talk with everybody considering buying a franchise and buyers do not have the time for the multiple franchisor rejections, self education, or relentless sales tactics of used by some franchisors.  The consultant already knows what the buyer can and cannot qualify for.  The consultant provides viable options for the candidate and expedites meaningful exchanges with those franchisors plus a whole lot more.

Consultants do not (should not) make profit representations on behalf of a franchise.  By law those representations can only be made by the franchisor and when made must appear in the Franchise Disclosure Document.  A consultant knows who the ideal candidate is, (and this varies from franchise to franchise) if there is territory available, and what the purchase / financial commitments are.  They can also direct you to recommended CPA, legal, banking, demographic research, real estate, and government related resources.

A great consultant can also provide a means to fast-track a buyers road to success.  For example, the first ninety days of franchise ownership can be exhausting.  There is much to do. 

Would the services of a business coach be helpful during start up?  Because I want the buyers referral and I want the buyer to be successful I arrange these services.  It is a very selfish yet win/win arrangement.

What if the buyer wanted to use a 401k to fund their purchase?  Although this is done frequently and at not penalty there is a cost associated with setting it all up.  What if that cost were funded by the consultant?  Franchise Advocate can make this happen.

What if the buyer wisely chose to thouroughly research the demographics, traffic patterns, and spending habits of the people living in their desired business location and could have the cost of that research reimbursed upon purchase of a franchise?  Franchise Advocate has developed a relationship with MapSystems Inc.  We make it easy for buyers to source data at all levels of detail.  When and if a franchise purchase is made, those expenditures are reimbursed to the franchise buyer.

Most consultants do not go the extra mile.  Why?  Who really knows.  Maybe their business models focus on “fluff” and “pop” creating fixed expenses that make it impossible to support buyers in this fashion.  The expensive office, the endless newspaper ads, those emotionally directed ad campaigns that seem to always start with, “Be your own boss” may contribute to their margin problems.   Maybe they are simply sales mills, churning through expensive lead after lead and selling whatever happens to stick. 

Here is what I do know.  I put client’s first and fully embrace this novel idea.  A successful client generates referrals.  Referrals trump leads hundreds of times over.  I have learned there are actions that have a profound impact on a buyer’s speed of success.  My theory, take the monetary decision to implement one or more of those known interventions off of the buyers plate, and make it happen for them.  

In summation, consultants cost nothing to use and provide many services to those in the exploration process.  They save a buyer tons of time on education, endless calls to franchisors that “might” fit the bill, and provide resources a buyer is going to need. 

A select few consultants provide support after the sale, and Franchise Advocate is one of those consultants.

www.franchiseadvocate.com      info@franchiseadvocate.com

Business Continuity Plans – New Franchise

Franchise Advocate has been highlighting the only Business Continuity franchise available, and for good reason.  This is a remarkable opportunity for professionals to create their own “continuity planning and disaster response” business.  

Firestorm seeks franchisees who recognize a truly rewarding and exciting opportunity.  Over $5,000,000 has been invested to create the most comprehensive business continuity franchise available. 

Where do corporations go to find contingency planning & solutions?  Until now it has been to very expensive consulting firms and insurance companies.  End result, huge dollars spent to buy a plan and when the plan is done, they’re all gone.  Companies could try to do it themselves.  Too often the “home team” falls short of pumping out a compliant and comprehensive plan.  Even plans put together by those “big dollar consultants” can lose something between creation and execution.  Firestorm can assist with the execution phase as well.

Continuity planning and management are necessary tasks but these are complex, time consuming, and often overwhelming for the organization.  Fact is, a corporation of scale generally spends more money trying to do this themselves then they would paying the experts.  And, the do it yourself product does nothing to protect executives from personal accountability associated with having an ill-conceived continuity plan when disaster strikes.

Firestorm offers an inexpensive Business Impact Analysis.  Where, what, and how will your business most likely be impacted?  For example, what happens if you are a bottling company in Mississippi and your only container supplier operates from Kansas.  A tornado in Kansas would put you out of business in Mississippi.

Firestorm helps businesses achieve ISO1799 certification, provides dynamic speakers to address corporate groups, and delivers experienced disaster response teams for “mission critical situations”, (As they did at Virginia Tech)

Franchisees enjoy access to Firestorms massive template data base and has the flexibility to utilize home office resources available at Firestorm to grind out the detail work if they so desire.  General Honore of Katrina fame and C Everett Koop are two shining examples of Firestorms advisory committee.

*see Firestorm video  http://www.firestorm.com/firestorm-franchising/video/

Cash is King to Franchise / Business Owners. (by John Williams)

Cash is king to successful businesses and franchise owners!  Here is what John Williams, B2B CFO consultant, had to say on the subject. 

 

Unfortunately, to many entrepreneurs, cash is often viewed as a secondary consideration that might come from sales or reduction in expenses.  Expense reduction may not cash and focus on sales creation alone can be disaster. 

 

Take the case of a small specialty products company in a niche market with high barriers to entry.  The product is non discretionary but there is limited potential for growth.  The owners are experienced in developing and running the business, but have been focused on growing sales.

The owners had turnover in their accounting manager position, and recently adding an experienced person to manage the administrative operation.  The company was bumping up against its credit line limit and saw bottom line income disappear in the last year. 

A quick review of the balance sheet and sales records pointed out the first significant problem:

 

	Year 1	Year 2	Year 3
Sales	$28,000,000	$27,600,000	$28,400,000
Accounts Receivable	$2,650,000	$2,450,000	$3,975,000
Days Sales Outstanding	34.5	32.4	51.1

 There was no management of the Accounts Receivable occurring.  While the collection effort was divided among several employees, there was no tracking of the success of these calls.  Additionally, there were no clear goals set among the collectors or review of their efforts.  As a result, the percent past due went from 25% to 63%.  Their newly acquired B2B CFO resource set up a management process to review the results of each person’s efforts and measured them against each other.  The result was that in two months the Accounts Receivable balance declined to a Days Sales Outstanding (DSO) of under 30 days.  Instead of the Revolving line balance being at 98% of the limit, it dropped to less than 50% of the loan limit.

*To read John’s blog in it’s entirety, please visit http://www.b2bcfo.com/partners/show,Cash-is-King.html/Itemid,0/ 

Discuss franchise business opportunities at www.franchiseadvocate.com

 

DOTI Franchisees Explore Options with Luxe Home Interiors

It appears there is a big move coming for many of the DOTI(Designs of the Interior) franchisees.  My source describes Greg Wyers as the Ross Perot of furniture sales. It seems he has created a concept combining the best of the DOTI with those he mastered in his traditional retail furniture operations.  Wyers enjoyed great success with his Tulsa, Oklahoma based Norwalk Furniturestore, largely due to his advanced floor placement and marketing strategies.  Then the recession put the Norwalk manufacturing  facility out to pasture and Wyers was compelled to act.  He acquires partial ownership of DOTI and pitches a radical alternative to DOTI franchisees.  The new concept, Luxe Home Interiors maintains the tried and true design and personal attention DOTI franchisees are renowned for, with some twists.  Luxe showrooms will take on a “Pottery Barn” like feel, optimize display space, and offer broader selections appealing to a broader market. 

Dynamic operating changes will maximize utilization of floor space.  For example, designers may actually work from the sales floor at the very pieces displayed for the buying public.  How novel, beautiful desks, chairs, and lamps shown at their functional best.

Luxe Home Interiors will feature a simplified easy to understand fabric pricing scheme and a healthy range of Private Label furniture manufactured by industry icons like Century.  DOTI’s core competency, window / special treatments and professional design remain an important part of the Luxe operating model.  The mission is to provide quality options for an array of budgets, and a simplified yet impulsive buying environment.  Improved capital utilization is achieved by minimizing the display of slow moving inventory, traditionally used to stimulate ideas versus drive sales.  

Luxe is positioned to benefit from increased single piece sales while neutralizing the financial impact of “work from home” designers who use DOTI floors as their personal display centers, but wholesalers as cost savers.  This is how ”work from home” designers justify their fees.  The Luxe “private label” will make things difficult for the free-loading designers.

No Recession in the Senior Services Sector

Recession? What Recession? Not In The Senior Services Sector

Author: Dr. Ellen Brandt, Ph.D. Lifestories Principal
Topics: Anti-Recession

Demographics is Destiny! While other business sectors seem to struggle like 80-year-olds competing in an Olympic sprint,  the sector which caters to 80-year-olds – senior services – is accelerating steadily and strongly, way ahead of the pack. Consider the following:

- By 2030, all the Baby Boomers (now aged 46-63) will be over 65. The percentage of the US population aged 65 and over will stand at close to 20%, with those 75 and over comprising almost 10% of US citizens.

- The chances of becoming disabled increases dramatically with age. For the population 80 years or older, the basic disability rate is a whopping 71%, with 56% described as being severely disabled.

- People 65 and over made an astounding 230 million visits to physicians’ offices in 2005, the last recorded data point, plus an additional 16.5 million visits to hospital outpatient clinics and 17.2 million trips to hospital emergency rooms.  Over 16% of US GDP now goes to healthcare.

I became part of the senior services sector a couple of years ago, when I established a business called Lifestories Limited to videotape the autobiographies of “ordinary” – actually extraordinary – elders, either living independently or in assisted-living, nursing home, and other healthcare-related venues.

I’ve since branched out with a service called Recollections, conducting periodic generational history activity groups for residents of nursing homes and assisted-living sites, and another called Commemorations, which, in conjunction with mortuaries, videotapes reminiscences of recently-deceased loved ones as part of the bereavement and healing process.

Despite the fact that my business is a bit out of the senior services mainstream, I feel the sector has welcomed me with open arms. Other fields may attract more young employees. But senior services is young in its thinking and its willingness to accept talent and creativity at face value.

That’s partly because there are actual shortages of employees – in some niches, quite serious – throughout the sector. The misconception is that such shortages are occurring only at the entry- or unskilled level. And indeed, basic home healthcare workers continue to be in short supply.  (the prolonged recession will continue to have a positive impact on this problem)

The senior services community includes all of the above professionals, as well as owners of homecare agencies, government and non-profit aging specialists, geriatric case managers, long-term care insurance and other financial products purveyors, pharmacists, bereavement and hospice experts, and providers of specialty equipment and services geared to the elderly.

But still, from some, senior services gets no respect!

I think it’s just a matter of time and the recognition of changing demographic realities.

Let me finish with a brief anecdote.

I’m an Ivy Leaguer, and all of the Ivies have been staging near-constant alumni programs dealing with this financial crisis. There’s a pervasive sense of disbelief that our over-dependence on financial services as The Place That Employs The Best and Brightest might finally have come to no good.

I’ve attended a few of these events in order to network, despite the fact that listening to laid-off investment bankers, Wall Street lawyers, and hedge fund managers whine and moan.

At one such event, the organizers staged a panel discussion that included a Distinguished – especially in his own mind – Journalist, who continually talked through his nose. When the floor was opened to comments, I stood up and briefly summarized what I’ve said in this piece: That senior services was a vibrant, creative, growing field and that more Ivy job-hunters should consider it fertile ground for employment.

“No, No!” broke in the Distinguished Journalist. “Those jobs are uninteresting, simply beneath the notice of We Who Rule the World.” Or words to that effect.

“But back in the ’70s when we were in school,” I interjected, “they used to say the exact same thing about Computers and the poor, misguided nerds who were pioneers in that sector.”

Well, I just couldn’t convince the Distinguished Journalist. But after the event, everyone crowded around to give me their business cards. (END)

Franchise Advocate strongly endorses the  assisted living segment.  There are few franchises with so many favorable business and consumer trends to their credit.  The already strong in home assisted living segment will simply get better for years to come.

Where is the right place to do business?

There is a way to assess a community or location’s viability for your new business venture.

Franchise Advocate  has just added this support for business buyers.  I think we all agree finding a great location and knowing there is a market for a business BEFORE you buy it is a wise move!  After months of prodding, Robert Eyer of Map Systems Inc. in Johns Creek, GA   has provided a solution available directly from this blog.   I convinced Robert you need his information plus a deal and now you have it.  Reports from as low as $50.00 with no limit on zip code selection criteria.  Check it out right here.   THERE’S MORE.  (I feel like Billy Mays pitching a vegetable slicer that comes with …. two more vegetable slicers)  These reports are essential and have zero mark up.  In some cases we can completely offset the cost.  You are getting the Map Guys best deal and I’m providing bail out funds!  I do it because, well….GM, Chrysler, and the banks have Obama’s attention and the President has asked me to take care of the franchise buyers of the world.  This is a call to duty.  You want to know how much the average consumer spends a month in restaurants, car washes, vehicle repair, or say hair products/services in your town?  Click right here and check it out.

Firestorm is not your typical franchise.

Have you ever been involved with developing disaster recovery plans at the corporate, community, college, or institutional  level?  Maybe you participated in relief efforts for Katrina, Hugo, Mt. St Helens, 9/11, or Oklahoma City.  Surely you have witnessed the Monday morning quarterbacking, the critiques, and the professional fallout accompanying poorly prepared organizations or municipalities.  Can’t you just hear it!  Personal and professional accountability takes on a whole new meaning the day after a disaster strikes. 

Unforeseen crisis is no longer an excuse.  We have witnessed terrorist attacks, learned the Chinese have infiltrated the power grid, disgruntled employees take out former colleagues on a weekly basis, and that solar pulse capable of taking out our eastern power grid nags our deep conscious.  Not mine because I have a generator but I don’t think that solution works for Duke Power or the customers  they support. 

Firestorm supports leadership BEFORE, DURING, and AFTER a disaster or crisis.  This is not an ice cream store.  Firestorm is for those with mid to high level corporate backgrounds in risk management, finance, and/or operations, preferably with healthy connections.  Yes, there are many fly by night consultants proclaiming expertise in the field, but Firestorms connections, creators, programs, and experience (they handled the recovery efforts at Virginia Tech) will impress even the most jaded. 

Firestorm has developed step by step plans, processes, and procedures to assist companies in planning for and managing disasters and crisis. The Department of Labor concludes 40% of businesses struck by a disaster never reopen and 25% more will close within two years. Congress mandated that the Department of Homeland Security establish a certification program for Business Continuity Plans in the private sector under Public Law 110-53, Title IX.

 

The Firestorm system allows a franchisee to put their business experience and contacts to work using the Predict. Plan. Perform.™systems. Administrative support, response team specialists, world class speakers, and more are at the disposal of franchise owners.  The franchisee’s job is business development.  The rest is on the zor, if you want it to be.  Please contact joe@franchiseadvocate.com  for more information about Firestorm.

 

 

Is Passion important when buying a franchise?

A mother and friend of the Franchise Advocate, with three children stumbles upon a new franchise concept. For just $15.00 per child, they can be  fingerprinted, photographed, and have all their personal information entered into a national database for rapid identification and all points bulletin purposes. She signs her kids up and in quick order buys the franchise. Her passion is to share her euphoric discovery with others, serve the community, and make some money. Sounds good, right?  Wrong!! Turns out moms are busy, moms are not keen on having their children’s information resident on an unknown server, and moms are not thrilled about ever having to utilize the service. Think about it, that would probably be the worst day of a mom’s life.  Apparently moms felt it more important to focus on interventions designed to prevent abductions versus remedies focused on identification and recovery. To make matters worse, most believe child abduction happens to the other person or is committed by a disenfranchised parent. Her passion for child safety is universal, but this particular approach was unceremoniously trashed by the consumer.  After two years of effort, she was forced to abandon her dream.

So here is my view where passion is concerned. Be passionate about financial possibilities, operating models, territories, a success record, affordability, the appropriate “zor” culture, being your own boss, and a long list of happy franchisee’s. However, never let a personal passion blur logic. Success will breed passion, but passion absent a consumer will never create success.

Master Franchise Ownership

The Master Franchise Concept
This opportunity is rare, and reserved for the best, yet they are available if you know where to look. This unusual, highly successful opportunity is called MASTER FRANCHISING.With master franchising you get control of the successful franchise system in a specific geographic area, a proven track record that works, the brand name, and even a partner in the form of a corporate office and other master franchisees.

As a master/regional franchisee your ways of generating income are greatly expanded. With a normal franchise you are offering the product of service directly to the end user. With a master franchise, you generate income through your own store(s) with a significantly reduced royalty and franchise fee AND in you generate huge income through:

• Franchise Fees- When you sell a franchise, you receive a franchise fee. Most franchise fees are between $20,000 to $30,000 and in a typical master franchise program, you keep most of the fee!
• Ongoing Royalties- This is the ultimate income source. Once you help set up the franchises in your Master territory, you receive royalty income or annuity type income for the rest of the life of those franchises. Imagine receiving 2% to 5% of your franchisee’s volume every month.
• Products or additional services-Often products or additional services, needed by the franchisee’s outlet, can bring excellent additional income.
• Real Estate-If real estate is involved with the franchisee’s location, often the master franchisee can become involved in the development of sites and receive other types of real estate related income.

To learn more about Master Franchise opportunities, please visit www.franchiseadvocate.com

Silver Lining in Automotive Segment

The silver lining inside the automotive segment, according to The Franchise Advocate.   This is from the gut, but it makes sense to me.  Also remember location trumps recession.  Find the right location and almost anything will work.   The wrong location rarely works.

  The Advocate’s view on auto related opportunity:

• Interior/upholstery: Make them look good & lift resale.  These businesses go beyond auto related repair. 
• Mechanical repair: Goes without saying. Keep’em longer, gotta fix’em.
• Auto-body: Drive it longer, fix the damage.  Increased repair volume due to theft damage fueled by rising unemployment.  Ohhh. Maybe? I don’t think I would bet the farm on that bullet.
• Rims: For a change if you’re going to keep it another two years or “see theft” thesis.
• Dent repair: Small dent repair services. 
• Towing:  Older cars get towed more often.  Also, volume up as they tow cars back to you after they have been stolen!!!  OK that’s a stretch.

Areas requiring caution:

• Tire shops:  mileage is down, competition is up,  plus there has been huge shift away from expensive, short life performance tires.
• Oil change and fluid change: mileage driven/mileage down
• Brakes (with a caveat): dealership service departments may be losing some volume here due to low trade in volume and that might mean the business owner on the street does OK.  But, brakes are also mileage driven replacement parts and slower gas saving driving habits reduce brake wear.

Alternative views are welcome as are your personal views on the future of the stock market!!

Visual Talking – Visual IT

This is way off topic but I attended a speaking engagement featuring Mark Grace, President and founder of Thinkage and BeyondVia and have to share what I saw.  Visual IT: The Art of Leading, Building Value, and Closing Deals is in part about YOU overcoming others tendencies to apply personal interpretations to your message, effectively bastardizing it beyond recognition when it reaches the big kahuna.  In Mark’s words, eliminate the chance your message becomes figuratively shredded before it hits the board room.  Look, it’s a documented “picture perfect elevator speech” left after a “picture perfect presentation”.  Illustration is more powerful than words.  Now Mark is already thinking beyond the boring business application and is building a massive library of pictures, the building blocks for a visual language database.  Visual Language = Universal Language.  This is not brand new stuff.  Mark’s at least 20,000 to 60,000 years behind the power curve, although digitized cave drawings distributed electronically in nano-seconds and interpreted universally in the blink of an eye qualifies as incremental improvement.  I think he is on to something.

Beware of Lists

I am amazed and frankly miffed by all those “top ten” franchise lists out there?  Is it possible they are little more than well orchestrated come on advertisements disquised as a list?  BEWARE OF LISTS.  There seem to be enough  lists out there to assure hundreds of franchises show up somewhere.  The top ten home based franchise list, women’s franchise list, restaurant list, service company list.  The top fifty “smaller than an elephant but bigger than a breadbox” franchise list.  Would I buy a franchise because some  Idaho based “research” group published it?  NOT.  Am I to believe franchisors are opening up the books to bare their soul to Frick and Frack in hopes of making some top ten list?  NOT  They may want to be on the list, but pay attention to the qualifiers used to build the list.

Countless people see that massage parlor they love, hit the internet, hook up with the franchisor, and buy their dream.  They enter the lion’s den  full of positive emotion.  The lion (sales person) plays this game everyday.  The victim bought that franchise at “Hello, this is Mr. Bought the list hook line and sinker”.  Bought the farm is more like it.  My point is lists can serve as validators for people already emotionally charged.  The list validates their emotional state, the salesperson reals in the fish.  Not good. 

The fit is more important than the concept.  A good concept can be pure hell for the wrong buyer.  Just like people it is what is on the inside that counts where franchises are concerned.  In the kitchen of that beautiful romantic restaurant you want to own is a spoilage issue, language barrier problem, turnover challenge, a potential cockroach infestation, and an occassional rodent adept at showing up just as the health inspector comes around.  It is however a cash business.  To each their own, but make the call with your head on straight.

Senior Care franchises are recession resistant.

One of my personal recession resistant favorites is the in-home assisted living segment.  The average client uses 3 to 4 hours of service, 3 to 4 days a week.  Services bill between $18.00 to $25.00 per hour while employee wage runs between $9.00 and $12.00 per hour.  Office space is small so fixed costs are very low. (These numbers may vary between franchise models)

These are recession resistant because a loved one who needs assisted living services NEEDS assisted living services.  This is not like deciding to go without  steak or buying a car.  Think about the options.  A loved one could quit their job and provide care personally or engage a senior living facility or nursing home.  The expense of a nursing home is prohibitive for most, and your favorite senior must leave their home.  I assure you that will be a problem.  Giving up a job is often more expensive than purchasing assisted services.  The in-home assisted living concept is the least expensive, least intrusive, and most accepted option for those who need a little help, and there are entitlements that fund portions of the service. 

A caring community oriented individual satisfies an important emotional need by owning an in-home assisted living franchise.  A business person seeking a franchise that can scale appreciates the segment for entirely different reasons.  These can be million dollar plus businesses. 

They do require people and a down economy actually helps address hiring needs.  Thousands of not ready to retire sixty-plus year olds will provide an unending pool of potential employees.  Good people and organization skills are necessary to run these businesses.

To learn more about In-Home Assisted Living concepts visit Franchise Advocate and select the Senior Care tab under the industry segments section to the left.

Is there a franchise fit for this economy?

The economy has changed us.  We do not buy new cars, we pass on the big screen televisions, and we save money for a rainy day.  Some believe it is raining pretty hard right now.  Demand drops, unemployment rises, and our minds stagnate, urging us to hunker down.  You know the feeling.  It is the 401k dilemma.  We either go to cash too late, or go to stocks too late, or simply do nothing. 

Studying how we have changed as consumers and noodling through how those changes impact our lives provides clarity.  Opportunity certainly exists.  If we are not buying homes we are repairing them.   For a car to last another few years, we need to fix it.  Businesses having a tough time raising capital will pursue less traditional options.  A small business struggling to squeeze out profits, or generate new customers engages specialists or consultants.  With a little thought I can quickly identify many franchises designed to fill those needs or take advantage of them.

It gets better.  The cost to lease space has cratered, terms are very flexible, and sourcing employees is like catching raindrops in a thunderstorm with a big bucket!  Consider the countless mom and pop operations that have been riding an amazing wave of prosperity  but are not prepared to deal with today’s reality.  There is no doubt someone will be there to service all their stranded customers.  The only question is who?

Regardless of conditions, owning a franchise is not for everyone.  However now may be a once in a lifetime chance for qualified people to start their franchise business.  FranchiseAdvocate provides a detailed outline of the seven step process toward franchise ownership.   Stay tuned as I plan on providing specifics in my next post.