Sponsored Section: How Low Can You Go?
The stereotype of the entrepreneur is someone who wants to take on the world and is willing to risk everything in the contest. Reality is more complex, however. Many business owners just want to earn a living without having to go to an office or mortgage their homes in order to get started.
Low-cost and home-based franchise business opportunities both live in the particular intersection where those two interests meet. And it's a busy street corner, according to Brian Miller, president and CEO of The Entrepreneur's Source, a business coaching company in Southbury, Connecticut, that helps potential franchisees identify suitable business opportunities. Uncertain employment prospects, changing employer relationships, and tight credit markets have combined to channel a great deal of interest into low-cost and home-based franchise businesses, he says.
"More people are looking to create their own destinies," Miller notes. "And home-based businesses can be easier to get into. They can be more affordable and have a lower overhead cost. And in some cases, they can be faster to profitability." Another important factor consists of technological advances that allow Internet-enabled businesses, including those based at home, to inexpensively market to the world, Miller observes.
Signal88 is a business opportunity that is both low in cost and well-suited for home-based operation. Reed Nyffeler, CEO for the Omaha-based franchiser of security services businesses says the minimum required investment is $80,000, for which the the company provides financing sources. And Signal88 works well when conducted from home. "The only thing you'd need to do is interview potential employees," Nyffeler says. "We suggest getting a virtual office or going to a coffee shop for that."
Signal88 offers would-be entrepreneurs an opportunity to participate in the huge security business as a franchisee backed by a proven system, Nyffeler says. The opportunity is suited to almost anyone who is comfortable using personal computers and the internet, as well as those with law enforcement and military backgrounds.
The company has 50 franchise locations-up from nine a year ago-and anticipates adding another 150 to 200 during the next 12 to 18 months, Nyffeler says. With that kind of expansion in mind, almost any U.S. market is in play. "We'd like to get coverage in every major market," Nyffeler says, citing New York, Los Angeles, Chicago, Dallas, and San Francisco as major metros on their short list for growth.
A different kind of security concern drives RetireCo. The company's licensees provide financial products and services to baby boomers, small business owners, and others seeking guaranteed lifetime income after retirement. "We offer the only "business in a box" solution that exists in the financial service industry," says Matthew McGonigle, co-founder and CEO of the Hartland, Wisconsin-based company.
RetireCo emphasizes professional marketing support, employing a consumer website, direct mail, telemarketing, and indoor and outdoor advertising to literally drive consumers to its licensees. Most reps do have office locations, but it can be run from a home office. Prices start as low as $2,500, based on location and type of agreement, McGonigle says. Licensees also pay monthly fees and participate in co-op marketing.
RetireCo has 12 locations, concentrated in the Midwest but with recently opened locations as far apart as California and New York. Several more are pending, McGonigle says, and for the next 12 months, look for RetireCo to expand nationwide. To start with, they're looking for a least one office in every state and major metro market, he adds.
Candy Bouquet International, Inc. is already familiar in many U.S. markets and is enjoying a surge overseas. "This year Europe is really hot," says Margaret McEntire, founder of the Little Rock, Arkansas, chain of candy and chocolate arrangements retailers. "We're adding stores in England, Scotland, Ireland, Norway, France, and Portugal."
The fall in the value of the euro is helping drive interest from Europe, McEntire says. With a franchise fee that starts at $5,000, even less-wealthy franchisees can open a Candy Bouquet store. About half keep operating costs low by working from home, especially in the beginning. "The majority of them start home-based and look around for just the right retail spot," she says. The concept's simplicity and flexibility mean franchisees can switch back and forth from home-based to physical storefront.
Candy Bouquet has 557 franchises and anticipates adding 150 in the next 12 months. That's just counting new franchises awarded by the parent, McEntire adds. Master franchisers in other countries will bring on additional new franchises, such as one in Brazil that will add 50 stores this year and another 200 in 2011.
The majority of Environmental Waste Solutions affiliates work from home, according to Diana Shapiro, vice president for the Baton Rouge, Louisiana, waste and recycling consulting business opportunity company. The concept is well-suited for home operation because affiliates typically spend all their time at home performing the analysis and visiting businesses to make their pitch, which is: "We specialize in helping companies reduce costs associated with waste disposal and recycling; we don't charge an upfront fee for our services; and we simply share-50/50-in whatever savings we put in place." Shapiro says, "There is low overhead, which is nice."
Affiliates make a $25,900 total investment, making the opportunity on the low-cost side. And they pay no royalties. The parent company makes its revenues by participating in large consulting gigs that affiliates couldn't handle on their own. And business is good. The company increased its revenues by 50 percent during the recent recession, Shapiro says.
Fees from revenue-sharing with affiliates accounted for 80 percent of Environmental Waste Solutions' revenues last year, Shapiro says. Growth from new affiliates hasn't been as robust, as potential affiliates are still uncertain about spending to start a new business. However, Shapiro notes that studies have shown the best time to start a new business is immediately following a recession. And, she says, interest from potential affiliates has increased lately. The company doesn't have targets for the number of new affiliates it hopes to bring on in the next 12 months, nor their locations. "That's not our emphasis," Shapiro says. "But what we hope to do is get more affiliates for major metropolitan areas."
Another business opportunity riding a wave of customer demand is DVDNow Kiosks, a Vancouver, British Columbia-based company that sells self-service movie-rental kiosks as business opportunities.. "More and more people are making the transition from renting from a traditional rental store to being a regular kiosk customer," says CEO Scott McInnes. "This trend has accelerated as more and more traditional video rental stores close locations."
In addition to the chance to participate in a fast-growth business, DVDNow owner-operators enjoy the flexibility of starting small and scaling up as their abilities and interests allow. Owner-operators often start out with one or a handful of kiosks, then grow that into a sizable business, McInnes says. "It's also a great side business that can be operated without interfering with someone's day job," he says.
The company has nearly 2,000 locations, primarily in the United States, but also in Canada, Ireland, and South Africa. Norway and the Netherlands will soon join the network. For the next 12 months, McInnes says, DVDNow will "continue to focus on expansion within the United States as well as growing our existing and new international markets."
While new business models drive some franchisees, TSS Photography of Duluth, Georgia, is based on a tradition, namely, taking photographs of youth sports teams, and other groups. "People are very familiar with it," says president Joe Lindenmayer. "It's not a fad. It's not a trend, and our future is adapting to the needs and wants of our customers to remain relevant." Of course, today the photographic equipment is digital, but TSS still manufactures the prints and fulfills orders from its central facility.
The concept requires no retail storefront or warehouse space for inventory, and about 85 percent of TSS franchisees operate from home. Costs are relatively low too, starting at less than $40,000 for a rural territory. "That includes everything they'll need," Lindenmayer says. TSS has 230 units throughout the country and would like to have 20 new units in 12 months, Lindenmayer says.
Franchisees usually hire photographers to take the pictures, so they can concentrate on sales and marketing. The modest investment and low overhead makes the opportunity a good fit for people who want to keep working at a job and augment their income with a TSS Photography franchise, or start full-time and make a faster transition, he says.
Caring Transitions, headquartered in Cincinnati, Ohio, is designed to serve a far different customer requirement: families' need for help transitioning loved ones from home to long-term care or retirement facilities. President John Buckles says the company's franchisees help customers assess contents of a family members' house, sell or liquidate extra belongings, store what they want to keep, and prepare homes for sale.
Potential franchisees are attracted by the chance to work in a growth business with few sizable existing competitors, as well as by the opportunity to provide useful service to families in need, Buckles says. Franchises require an initial investment of $38,280 to $66,580 and the business is well-suited to home-based and part-time operation, Buckles says.
Caring Transitions has 75 locations, mostly on the east coast and in the far western U.S. In the next 12 months, Buckles expects to add another 40 locations and is targeting the Midwest as an area where growth is expected.
No matter what the exact opportunity, interest in home-based businesses is anything but lagging, according to Miller, of The Entrepreneur's Source. But home-based businesses have special requirements of their own to go with their particular advantages. For instance, self-discipline isn't as much of a problem for business owners who spend their day working closely with lots of employees in an office. But it can be for business owners who work from where entertainment options and household chores provide ready distractions. "It's not like you're in a retail location where you have foot traffic," he adds.
Home-based business owners have to learn to set limits, not only for themselves but also for others. "Because you don't have a boss looking over your shoulder, and your spouse might ask you to paint the living room or make lunch, you have to establish your boundaries. Say that you're going to service clients from this time to this time," he says.
Even if home-based, low-cost businesses aren't ideal for every entrepreneur, Miller says they serve enduring needs. "There's always going to be a place for the home-based business," he says, "just like there'll always be a place for bricks and mortar businesses."